California Transparency in Supply Chains Act

The California Transparency in Supply Chains Act (“TISCA”) is a law that was enacted in 2010 in California. The primary goal of this legislation is to address and combat human trafficking and slavery in global supply chains by requiring qualifying companies to disclose their efforts to eradicate slavery and human trafficking from their supply chains. These disclosures are usually made on the company’s website and are intended to provide consumers and stakeholders with information about the steps a company is taking to ensure that its supply chain is free from such exploitative practices.

Who is Covered by the Supply Chains Act?

– Retail Sellers or Manufacturers

– Doing Business in the State of California

– With Annual Worldwide Gross Receipts in Excess of $100,000,000

Required Disclosures

Companies subject to the Transparency in Supply Chains Act must disclose the extent of their efforts in five areas: verification, audits, certification, internal accountability, and training. Specifically, in its supply chains disclosure, a company must disclose to what extent, if any, it:

– Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure shall specify if the verification was not conducted by a third party.

– Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.

– Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.

– Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.

– Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.

The California Transparency in Supply Chains Act does not mandate that businesses implement new measures to ensure that their product supply chains are free from human trafficking and slavery. Instead, the law only requires that covered businesses make the required disclosures – even if they do little or nothing at all to safeguard their supply chains. Companies subject to the Act must therefore disclose particular information within each disclosure category, and the Act offers companies discretion in how to do so.