BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  SB  
          1231
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis



          SB 1231  Author:  Corbett
          As Introduced:  February 19, 2010
          Hearing Date:  March 23, 2010 
          Consultant:  Art Terzakis


                                     SUBJECT  
            Public Contracts: sweatshop labor: slave and sweat free  
                                code of conduct

                                   DESCRIPTION
           
          SB 1231 makes the following substantive and clarifying  
          changes to existing provisions of the Public Contract Code  
          (Section 6108) related to "sweatfree" procurement policy  
          and code of conduct:

          1.  Expands the scope of the Sweatfree Code of Conduct to  
            include abusive forms of labor performed by all persons,  
            not just child labor.

          2.  Requires contractor certification to include all raw  
            materials in the supply chain used to produce or  
            manufacture the goods produced.

          3.  Applies the state's Sweatfree Code of Conduct  
            provisions to public works projects if the contract for  
            building materials is in excess of  $20,000  .  Also,  
            prohibits a contractor from splitting a contract into  
            separate accounts to avoid the minimum threshold. 

          4.  Extends the time frame (sanction) from one year to two  
            years that a contractor may be removed from the bidder's  
            list if he/she knew or should have known any products  
            were laundered or produced by abusive labor.  





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          5.  Renames the Sweatfree Code of Conduct to read the Slave  
            and Sweat Free Code of Conduct and makes other conforming  
            code maintenance changes.

          6.  Deletes the requirements that the appropriate agency,  
            in consultation with the Director of Industrial  
            Relations, employ an approach to implement the Slave and  
            Sweat Free Code of Conduct and that the Department  
            explore mechanisms to ensure that businesses that  
            contract with state agencies are in compliance with this  
            body of law. 

          7.  Requires contractors whose manufacturing and assembly  
            locations are outside the United States to comply with  
            international laws or treaties binding on their  
            countries.
                                   EXISTING LAW

           Existing law generally provides the Department of General  
          Services (DGS) with the governing authority related to  
          state procurement activities, including acquisition of  
          materials, supplies and services.

          Existing law requires every contract entered into by a  
          state agency for the procurement of equipment, materials,  
          supplies, apparel, garments, and accessories and the  
          laundering thereof, excluding public works contracts, to  
          require a contractor to certify that no equipment,  
          materials, supplies, apparel, garments, or accessories  
          provided under the contract are produced by sweatshop  
          labor, forced labor, convict labor, indentured labor under  
          penal sanction, abusive forms of child labor, or  
          exploitation of children in sweatshop labor.  The law  
          provides for misdemeanor liability in the case of a knowing  
          false certification.

          Existing law provides that if a contractor knew or should  
          have known the specified products furnished to the state  
          were laundered or produced by the specified types of  
          prohibited labor, the contractor may be removed from the  
          bidder's list for 360 days. 

          Existing law requires the Department of Industrial  
          Relations to establish a contractor responsibility program,  
          on or before February 1, 2004, including a Sweatfree Code  
          of Conduct. 




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          Existing law also requires the appropriate procurement  
          agency, in consultation with the Director of Industrial  
          Relations, to employ an approach to implement the Sweatfree
          Code of Conduct, as specified.   Additionally, Existing law  
          requires the Department of Industrial Relations to explore  
          mechanisms to ensure that businesses that contract with  
          state agencies are in compliance with this section, as  
          prescribed.

                                   BACKGROUND
           
           Human Trafficking:   Human trafficking is the modern-day  
          practice of slavery.  It's one of the fastest growing  
          criminal industries in the world, consisting of the  
          subjugation, recruitment, harboring, and/or transportation  
          of people for the purpose of forced or coerced labor or  
          commercial sexual exploitation.  Every year traffickers  
          generate billions of dollars by exploiting those seeking to  
          cross international borders in search of a better life as  
          well as those vulnerable within the United States,  
          including within the State of California. 

          Since passage of the Trafficking Victims Protection Act in  
          2000 and the United Nations Palermo Protocol, international  
          awareness of human trafficking has increased and new human  
          trafficking laws have been introduced in over half of the  
          countries around the world.  The International Labor  
          Organization estimates that over 12 million people  
          worldwide are working in some form of forced labor on  
          bondage and that more than 200 million children are at  
          work, many in hazardous forms of labor.  

          Hilda Solis, the U.S. Secretary of Labor, recently stated  
          the "most vulnerable persons - including women, indigenous  
          groups, and migrants - are the most likely to fall into  
          these exploitive situations and the current global economic  
          crisis has only exacerbated their vulnerability." 

          In 2005, Congress passed the Trafficking Victims Protection  
          Reauthorization Act, directing the Secretary of Labor and  
          the Department of Labor's Bureau of International Labor  
          Affairs (ILAB) to compile "a list of goods that ILAB has  
          reason to believe were produced using forced labor or child  
          labor" in order to provide consumers and firms with this  
          sort of information. 




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          Purpose of SB 1231:   In December of 2009, the Senate  
          Judiciary and the Senate Labor and Industrial Relations  
          Committees held a joint informational hearing on the  
          subject of human trafficking and supply chains - the basis  
          for this measure arose from the discussions at that  
          hearing.  

          As noted above, existing law, the Sweatfree Code of  
          Conduct, Public Contract Code Section 6108, prohibits state  
          agencies from procuring goods and services from contractors  
          and subcontractors who use abusive forms of labor is  
          limited to child labor.  

          In summary, this measure would expand the scope of the  
          Sweatfree Code of Conduct to prohibit the abusive labor of  
          all persons, not just children.  It is modified to include  
          slavery and sweatshop labor, and the procurement of all raw  
          materials used in the supply chain.  SB 1231 would also  
          apply the state's "sweat free" procurement policies to  
          public works projects that cost over $20,000.  Public works  
          projects have been exempted to date.  The author has chosen  
          to include such materials and supplies because bricks,  
          glass and other such materials used in public works  
          projects appear on the U.S. Department of Labor's list of  
          tainted goods (goods produced through child labor).  

          The author's office emphasizes that businesses have  
          asserted in the past that it is too 
          burdensome and difficult to monitor supply chains.   
          However, the author's office contends that there are a  
          number of businesses which already monitor supply chains in  
          order to promote good labor practices with their  
          subcontractors.  

           Arguments in Opposition  :  Opponents concern with this  
          measure is limited to the inability of a public works  
          contractor to know where all of the materials or supplies  
          used in a construction project were produced and the  
          characteristics of the workforce used in their production.   
          Opponents point out that many construction materials,  
          supplies and equipment are produced overseas and pass  
          through multiple intermediary business entities (exporter,  
          importer, distributor, retailer) before they are acquired  
          by a contractor for use in a public works project.  In  
          addition, public works contracts often involve multiple  




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          specialty contractors, each of whom would have to certify  
          to the prime contractor that all the materials, supplies,  
          and equipment they brought to the project were not produced  
          by sweatshop labor.  Opponents also argue that a public  
          works contractor is essentially at the end of a long supply  
          chain and in most cases has no contractual relationship  
          with the manufacturer of the components used in a  
          construction project and therefore lacks leverage to force  
          the manufacturer to meet labor standards.

          Furthermore, opponents believe that SB 1231 would result in  
          new and expensive compliance burdens for small business,  
          create new opportunities for protesting and delaying  
          construction project awards and encourage more litigation  
          against contractors.

                            PRIOR/RELATED LEGISLATION
           
           SB 657 (Steinberg) 2009-10 Session.   Would, among other  
          things, beginning January 1, 2011, require retail sellers  
          and manufacturers doing business in the state to develop,  
          maintain, and implement policies related to their  
          compliance with federal and state trafficking from their  
          supply chain.  (Pending in Assembly Judiciary Committee)
          
           SB 1649 (Steinberg), 2007-08 Session.   Substantively  
          similar to SB 657 (Steinberg) of 2009-10 Session.  (Died in  
          Assembly Appropriations Committee)

           SB 180 (Kuehl), Chapter 239, Statutes of 2005.   Established  
          the California Alliance to Combat Trafficking and Slavery  
          (California ACTS) Task Force.
           
           AB 22 (Lieber), Chapter 240, Statutes of 2005.   Established  
          civil and criminal penalties for human trafficking and  
          allowed for forfeiture of assets derived from human          
             trafficking.

           SB 578 (Alarcon) Chapter 711, Statutes of 2003.   Enacted  
          non sweatshop labor guidelines to state procurement  
          policies to ensure that goods and services purchased by the  
          State of California are produced in workplaces that adhere  
          to minimum standards for protecting workers.

           SB 1888 (Hayden) Chapter 891, Statutes of 2000.   Extended  
          existing law that prohibited state agencies from procuring  




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          foreign goods made by forced labor, convict labor, or  
          indentured labor to include goods made by abusive forms of  
          child labor or exploitation of children in sweatshop labor.

           AB 2457 (Figueroa) Chapter 1149, Statutes of 1996.    
          Required every contract entered into by a state agency for  
          the procurement of equipment, materials or supplies to  
          specify that no foreign-made equipment, materials or  
          supplies furnished to the state may be produced by forced  
          labor, convict labor or indentured labor under penal  
          sanction (forced labor).  Also, required contractors to  
          agree to comply with this provision, and imposed sanctions  
          on contractors who violate this provision, as specified.

           SUPPORT:   As of March 19, 2010:

          Alliance to Stop Slavery and End Trafficking
          California Conference Board of the Amalgamated Transit  
          Union
          California Conference of Machinists
          California Teamsters Public Affairs Council
          Engineers and Scientists of California, IFPTE Local 20
          International Longshore and Warehouse Union 
          Professional and Technical Engineers, IFPTE Local 21
          United Food and Commercial Workers Western States Council
          UNITE-HERE
























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           OPPOSE:   As of March 19, 2010:

          American Council of Engineering Companies
          Associated General Contractors
          California Association of Sheet Metal & Air Conditioning  
          Contractors
          California Business Properties Association
          California Chamber of Commerce
          California Chapter of the American Fence Association
          California Fence Contractors Association
          California Independent Grocers Association
          California Landscape Contractors Association
          California Nevada Cement Association
          Construction Employers Association
          Engineering Contractors Association
          Engineering and Utility Contractors Association
          Flasher Barricade Association
          Marin Builders Association
          National Federation of Independent Business
          Southern California Contractors Association
          Western Electrical Contractors Association
           
          FISCAL COMMITTEE:   Senate Appropriations Committee

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