Eradicating Human Trafficking in Global Supply Chains

Jeff Tsai, Special Assistant Attorney General, Office of the Attorney General of California and Hanna Chung, Deputy Attorney General, California Department of Justice

The crime of human trafficking is, in its broadest terms, the modern-day enslavement of a person. It encompasses many types of conduct, including sex trafficking and forced labor, and regularly targets particular groups such as underage children. And increasingly, human trafficking is becoming a high-profit enterprise of sophisticated transnational criminal organizations, a trend that California Attorney General Kamala Harris examined in 2012’s The State of Human Trafficking in California.[1]

Attorney General Harris observed in her report that human trafficking is particularly insidious because it is routinely “hidden in plain sight.” In the context of goods and products, consumers are often unaware of the potential that their purchases may be the result of human trafficking. For instance, in 2009, the U.S. Department of Labor identified 122 goods (from almost 60 countries) believed to be the product of unlawful labor practices. From everyday goods such as coffee or cotton, to specialty products like carpets, minerals or furniture, unsuspecting consumers and businesses across the United States – including those in California – routinely make purchases that “inadvertently promote the crime of trafficking.”[2]

With the passage of a recent civil law called the “Transparency in Supply Chains Act,” California is doing its part to continue the fight against human trafficking by empowering consumers with access to information regarding retailers and manufacturers’ efforts to eradicate human trafficking in their supply chains.

Human Trafficking and Supply Chains

Supply chain practices that permit or promote child and forced labor contribute to the persistence of human trafficking around the world. The United Nations’ International Labour Organization estimates that 9.8 million people are exploited by private individuals and criminal enterprises in industries as varied as agriculture, mining, and services.[3] Annual profits from this activity are estimated to be approximately $31.6 billion.[4]

In response, numerous companies and industry associations across the globe have devoted significant resources towards compliance programs designed to stop and prevent human trafficking from global supply chains. Despite the increasing attention to this issue, we are far from the finish line in rooting out human trafficking from supply chains. For example, a recent survey conducted by the United Nations indicated that less than 60 percent of businesses reported having a company policy addressing human trafficking.[5]

The California Transparency in Supply Chains Act

As the world’s ninth largest economy[6] and the home of over 50 Fortune 500 companies,[7] California is in a unique position to help companies address the problem of supply chains infected by human trafficking. In 2010, the California Legislature passed, and then-Governor Arnold Schwarzenegger signed, the Transparency in Supply Chains Act (“Supply Chains Act”). The Supply Chains Act, which went into effect on Jan. 1, 2012, requires that covered retailers and manufacturers disclose information to the public related to their efforts to eradicate human trafficking from their global supply chains.

In considering the initial bill, the California Legislature made two key legislative findings. First, it found that consumers and businesses are inadvertently promoting and sanctioning human trafficking by purchasing products and goods tainted by the use of slave or child labor in their supply chains. Second, the Legislature determined that, unlike other types of product information, the absence of public disclosures about anti-trafficking measures puts consumers at a disadvantage in distinguishing companies based on their efforts to produce goods free from trafficking.

The Supply Chains Act builds on the principle that consumers are among the best means to drive human trafficking out of the marketplace for goods and products. This disclosure-based statute gives consumers and investors the ability to make more informed choices, which can play an important part in reducing human-trafficked labor.

The Supply Chains Act applies to businesses – identified by California’s Franchise Tax Board – that self-identify as retail sellers and manufacturers on their California tax returns, do business in California, and have annual worldwide gross receipts over $100 million. The law requires that a covered business disclose its efforts to eradicate slavery and human trafficking from the direct supply chains of the tangible goods it offers for sale.[8] The disclosures relate to five specific categories:

Risk Assessment. The business must disclose whether it engages in “verification of product supply chains to evaluate and address risks of human trafficking and slavery.”[9] The law additionally requires a disclosure specifying whether “the verification was not conducted by a third party.”[10]

Audits. The business must disclose whether it “conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains.”[11] If the audits are not independent and unannounced, the business must make that disclosure.[12]

Certification. The business must disclose whether it 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.”[13]

Standards. The business must disclose whether it maintains “internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.”[14]

Training. The business must disclose if it 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.”[15]

A business covered by the Supply Chains Act must make the required disclosures through its website by way of a “conspicuous and easily understood link.”[16] For a business that lacks a website, a written disclosure must be provided within 30 days of receiving a request from a consumer.[17]

The statute authorizes the attorney general to seek injunctive relief against covered businesses that fail to make the required disclosures.[18] Although the Supply Chains Act does not include monetary or criminal penalties, the statute allows purchasers to share in the responsibility to eliminate human trafficking from the marketplace. This law should also motivate companies to review internal controls over their supply chains, evaluate the efficacy of those controls, and assess what kind of role they would like to play in combating human trafficking.

Attorney General Harris has made the eradication of human trafficking one of her top priorities; so, too, have her partners in the law enforcement community, including district attorneys, sheriffs, police chiefs, and probation officers throughout California. The fight against human trafficking continues on many fronts, and the Transparency in Supply Chains Act is part of the effort to combat this terrible crime.



[1] The Hon. Kamala D. Harris, The State of Human Trafficking in California 2012, at 90, available at http://oag.ca.gov/sites/all/files/agweb/pdfs/ht/human-trafficking-2012.pdf.

[2] U.S. Dep’t of Labor, The Department of Labor’s List of Goods Produced by Child Labor or Forced Labor, (2009), at 13-28, available at www.dol.gov/ilab/programs/ocft/PDF/2009TVPRA.pdf .

[3] Int’l Labour Org., Booklet 2: Employers’ Frequently Asked Questions, Combating Forced Labour: A Handbook for Employers and Business 8 (2008), at 11, available at http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_101171.pdf.

[4] Id. at 11.

[5] Int’l Labour Org., UN.GIFT, & United Nations Global Compact, Human Trafficking: Everybody’s Business2, at 3, available at http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2009_03_27/Story_Survey_Final.pdf.

[6] Legislative Analyst’s Office, Cal Facts 2013 (2013), available at http://www.lao.ca.gov/reports/2013/calfacts/calfacts_010213.pdf.

[7] CNN Money, Fortune 500 2012: States: California Companies, http://money.cnn.com/magazines/fortune/fortune500/2012/states/CA.html?iid=top3 (last visited July 22, 2013).

[8] Cal. Civ. Code,§1714.43, subd. (a)(1).

[9] Id. § 1714.43, subd. (c)(1).

[10] Id.

[11] Id. § 1714.43, subd. (c)(2).

[12] Id.

[13] Id. § 1714.43, subd. (c)(3).

[14] Id. § 1714.43, subd. (c)(4).

[15] Id. § 1714.43, subd. (c)(5).

[16] Id. § 1714.43, subd. (b).

[17] Id.

[18] Id. § 1714.43, subd. (d).

red logo

Jeff Tsai
Jeff Tsai, Special Assistant Attonery General, Office of the Attorney General of California

ARCHIVE

SAVE THE DATE

2014 Chief Deputies/Chiefs of Staff Meeting

April 23 - 25, 2014
San Diego, CA
Contact: Jeffrey Hunter

Persuasive Legal Writing

April 23 - 25, 2014
National Advocacy Center, Columbia, SC
Contact: Judy McKee

Intellectual Property Theft Training Seminar: Hazard, KY

April 23, 2014
Perry County Public Library Auditorium
Contact: Judy McKee

Intellectual Property Theft Training Seminar: Louisville, KY

April 25, 2014
Louisville Metro Police Department, LMPD Training Academy
Contact: Judy McKee

National Cybercrime Conference

April 28 - 30, 2014
Sheraton Four Points, Norwood, MA
Contact: Hedda Litwin

Representation of State Agencies

April 29 - 30, 2014
Louisville, KY
Contact: Bill Malloy