California Supply Chains Transparency Act
The California Transparency in Supply Chains Act of 2010 (SB 657), codified at California Civil Code Section 1714.43, requires certain large retailers and manufacturers doing business in California to publicly disclose their efforts to eradicate slavery and human trafficking from their direct product supply chains.
Who Is Covered by the Act?
The Act applies to any company that (1) identifies itself as a retail seller or manufacturer on its California tax returns, (2) does business in the state of California, and (3) has annual worldwide gross receipts exceeding $100 million. Importantly, coverage extends to companies headquartered outside California, including global brands that sell goods into the U.S. market, whenever their commercial activity meets California's threshold for doing business in the state.
Required Disclosures
Covered companies must post disclosures on their websites addressing five specific categories of supply chain activity. Even if a company does not engage in any such efforts, it must disclose that fact for each category. The five required disclosure areas are:
Verification -- Whether the company verifies product supply chains to evaluate and address risks of human trafficking and slavery, and whether such verification is conducted by a third party.
Audits -- Whether the company conducts audits of suppliers to evaluate compliance with company standards for trafficking and slavery, and whether such audits are independent and unannounced.
Certification -- Whether the company requires direct suppliers to certify that materials incorporated into products comply with the laws regarding slavery and human trafficking of the countries in which they do business.
Internal Accountability -- Whether the company maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
Training -- Whether the company provides employees and management with direct responsibility for supply chain management training on human trafficking and slavery, particularly with respect to mitigating risks within product supply chains.
Intersection with Customs and Trade Law
For companies that import goods into the United States, supply chain transparency obligations intersect directly with customs and international trade compliance. U.S. Customs and Border Protection (CBP) enforces prohibitions on the importation of goods produced with forced labor under 19 U.S.C. Section 1307, and CBP's use of Withhold Release Orders (WROs) and findings has increased significantly in recent years. Companies participating in the Customs-Trade Partnership Against Terrorism (CTPAT) program are also expected to maintain supply chain security practices that align with forced labor prevention efforts. The Act's disclosure requirements should therefore be coordinated with broader trade compliance measures, including CTPAT participation, Foreign Corrupt Practices Act (FCPA) programs, and existing supplier audit frameworks.
Enforcement
The California Attorney General is authorized to bring actions for injunctive relief against companies that fail to comply with the Act's posting requirements. While the Act does not prescribe specific supply chain practices, it does mandate transparency. Companies that fail to post the required disclosures, or that post materially misleading statements, face enforcement risk and potential reputational harm. The California Attorney General has published guidance and a list of companies believed to fall within the Act's scope to facilitate compliance monitoring.
How NE&J Can Help
NE&J advises companies on compliance with the California Transparency in Supply Chains Act and related federal trade regulations. Our services include drafting and reviewing supply chain disclosure statements, coordinating compliance strategies with existing customs and trade programs such as CTPAT and FCPA frameworks, assessing supply chain risk exposure related to forced labor and human trafficking, and advising on the intersection of state transparency requirements with CBP enforcement actions, including Withhold Release Orders. We help clients develop comprehensive compliance programs that satisfy legal requirements while supporting responsible sourcing practices. Contact us to discuss how we can assist with your supply chain transparency obligations.