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 Amended: April 8, 2010
Hearing Date: April 13, 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 contractors to certify that the apparel,
garments, corresponding accessories, equipment, materials
or supplies furnished to the state are not items that
appear on the U.S. Department of Labor's List of Goods
Produced by Child Labor or Forced Labor as it may be
updated from time to time.
3. Requires the Department of Industrial Relations to
maintain on its Internet Web site a link to the U.S.
Department Labor's List of Goods Produced by Child Labor
or Forced Labor. Also, requires the Department to
consider any feasible and cost-effective monitoring that
will encourage compliance with the law.
4. Applies the state's Sweatfree Code of Conduct
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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.
5. 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.
6. Renames the Sweatfree Code of Conduct to read the Slave
and Sweat Free Code of Conduct and makes other conforming
code maintenance changes.
7. 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.
8. 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.
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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.
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
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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." One of the principal purposes of the List is to
inform the public of the significant incidence of child
labor and forced labor in the production of certain goods.
It is ILAB's intent that the List (published in 2009) will
serve as a useful tool for consumers, firms, governments,
and others who do not want to support such practices
through their purchases with the end goal being the
abolition of these practices. The List contains122 goods
produced with forced labor, child labor, or both, in 58
countries. When grouped by sector, agricultural crops
comprise the largest category. There are 60 agricultural
goods on the List, 38 manufactured goods, and 23 mined or
quarried goods. Production of pornography was a separate
category.
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 require contractor
certification that the procurement of products, equipment,
materials, or supplies are not items that appear on the
U.S. Department of Labor's list of tainted goods (goods
produced through child labor or forced labor). SB 1231
would also apply the state's "sweat free" procurement
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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 referenced above.
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 point out that SB 1231
inappropriately makes California employers responsible for
the actions of businesses with which they have no
contractual relationships, are located in other countries,
and could be engaged in activities that may best be handled
on a diplomatic level.
Opponents note 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.
Opponents state that simply referencing a List of tainted
goods creates uncertainty and great risk within the
business community because the products and goods found on
the List are too broad. For example, "nails,"
"electronics," and "bricks" from China are all on the List.
Opponents reference the fact that public works contracts
often involve multiple 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
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.
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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
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
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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 April 9, 2010:
Alliance to Stop Slavery and End Trafficking
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Labor Federation
California Teamsters Public Affairs Council
Coalition to Abolish Slavery & Trafficking
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
OPPOSE: As of April 9, 2010:
American Council of Engineering Companies
Associated General Contractors of California
California Association of Sheet Metal & Air Conditioning
Contractors' National Assoc.
California Business Properties Association
California Chamber of Commerce
California Chapter of the American Fence Association
California Chapters of the National Electrical Contractors
Association
California Fence Contractors Association
California Independent Grocers Association
California Landscape Contractors Association
California Legislative Conference of the Plumbing, Heating,
and Piping Industry
California Manufacturers and Technology Association
California Nevada Cement Association
California Retailers Association
Construction Employers Association
Engineering Contractors Association
Engineering and Utility Contractors Association
Flasher Barricade Association
Marin Builders Association
National Federation of Independent Businesses
Southern California Contractors Association
Western Electrical Contractors Association
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FISCAL COMMITTEE: Senate Appropriations Committee