BILL ANALYSIS
SB 1231
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Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
SB 1231 (Corbett) - As Amended: May 17, 2010
SENATE VOTE : 21-13
SUBJECT : Public contracts: slave and sweat free code of
conduct.
SUMMARY : Makes various changes to existing provisions of the
Public Contract Code related to "sweat free" procurement policy
and a related code of conduct Specifically, this bill :
1 Renames the "Sweat Free Code of Conduct" as the "Slave and
Sweat Free Code of Conduct" and makes conforming changes.
2)Expands the scope of the code of conduct to include abusive
forms of labor performed by all persons, not just child labor.
3)Extends the period that a contractor may be removed from the
bidder's list for violations of these requirements from 360
days to two years, as specified.
4)Specifies that contractors must only exercise "due diligence"
(rather than "ensure") that their contractors comply with the
Slave and Sweat Free Code of Conduct.
5)Provides that a contractor shall not be subject to sanctions
for violations of which the contractor had no knowledge that
were committed solely by a subcontractor. Sanctions shall
instead be imposed against the subcontractor that committed
the violation.
6)Specifies that for contractors whose manufacturing or assembly
locations are located outside the United States, those
contractors shall ensure that their subcontractors comply with
the appropriate laws of countries where the facilities are
located "or international laws or treaties binding upon those
countries."
7)Specifies that the Department of Industrial Relations (DIR)
shall establish a contractor responsibility program by January
1, 2012, as specified.
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8)Authorizes the appropriate procurement agency and DIR to use
the United States Department of Labor's "List of Goods
Produced by Child Labor or Forced Labor" in identifying
procurement categories appropriate for phased implementation.
9)Requires DIR and the Department of General Services (DGS) to
post procedures and contact information for filing complaints
on their respective web sites.
EXISTING LAW :
1 Provides DGS with the governing authority related to state
procurement activities, including acquisition of materials,
supplies and services.
2)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 such items 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 child labor. The law provides for
misdemeanor liability in the case of a knowing false
certification.
3)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.
4)Requires contractors to "ensure" that their subcontractors
comply with the Sweat Free Code of Conduct, under penalty of
perjury.
5)Requires the DIR to establish a contractor responsibility
program, including a Sweat Free Code of Conduct, as specified.
6)Requires the appropriate procurement agency, in consultation
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with DIR, to employ a phased and targeted approach to
implement the Sweat Free Code of Conduct, as specified.
FISCAL EFFECT : Unknown
COMMENTS : This bill proposes to make several changes related
to state procurement policy regarding materials produced by
abusive forms of labor.
Background on the "Sweat Free Code of Conduct"
On October 8, 2003, Governor Davis signed Senate Bill 578
(Alarc?n), Chapter # 711, Statutes of 2003. SB 578 represented
a landmark piece of legislation designed to establish a
statewide "sweat free" procurement policy to ensure that
specified goods purchased by the state are produced in
workplaces free of sweatshop conditions.
In recent years, other local entities (including cities,
counties, school districts, colleges and universities) across
the state and the nation have enacted their own policies and/or
ordinances designed to prevent the procurement of materials
produced by sweatshop labor. Many of these efforts couple
"sweat free" codes of conduct with enforcement facilitated
through the use of an independent outside monitor.
California Procurement Policy Prior to SB 578
Prior to the enactment of SB 578, there were several bills
enacted addressing the state's procurement of goods and
materials by various forms of labor.
AB 2457 (Figueroa), Chapter # 1149, Statutes of 1996, required
state agencies to provide in every contract for procurement that
the contractor certify that no foreign-made equipment, materials
or supplies provided under the contract are produced by forced
labor, convict labor, or indentured labor under penal sanction.
That bill essentially provided for state enforcement of the
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Smoot-Hawley Tariff Act of 1930 - the federal law that prohibits
the importation of any goods produced by forced labor. AB 2457
also was designed to strengthen deficiencies in enforcement
under federal law by imposing additional state law requirements.
SB 1888 (Hayden), Chapter # 891, Statutes of 2000, expanded the
provisions of the law by prohibiting the procurement by state
agencies of goods that have been made by forced or indentured
child labor, abusive forms of child labor, or exploitation of
children in sweatshop labor.
Under SB 1888, "abusive forms of child labor" was defined to
mean any of the following:
All forms of slavery or practices similar to slavery,
such as the sale and trafficking of children, debt bondage,
and serfdom and forced or compulsory labor, including
forced or compulsory recruitment of children for use in
armed conflict.
The use, procuring, or offering of a child for
prostitution, for the production of pornography, or for
pornographic performances.
The use, procuring, or offering of a child for illicit
activities, in particular for the production and
trafficking of illicit drugs.
All work or service exacted from or performed by any
person under the age of 18 either under the menace of any
penalty for its nonperformance and for which the worker
does not offer oneself voluntarily, or under a contract,
the enforcement of which can be accomplished by process or
penalties.
All work or service exacted from or performed by a child
in violations of all applicable laws of the country of
manufacture governing the minimum age of employment,
compulsory education, and occupational health and safety.
SB 1888 defined "exploitation of children in sweatshop labor" as
all work or service exacted from or performed by any person
under the age of 18 years in violation of more than one law of
the country of manufacture governing wage and benefits,
occupational health and safety, nondiscrimination, and freedom
of association.
SB 1888 also increased the enforcement ability of contracting
state agencies.
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Specific Provisions of SB 578
California's procurement law prior to the enactment of SB 578
focused primarily on foreign-made goods produced under
indentured/convict labor and other exploitative forms of child
labor. SB 578 broadened the existing prohibition to include
domestic-made goods and applied procurement restrictions to a
broader classification of "sweatshop labor."
Among other things, SB 578 made the following major changes to
existing law:
Expanded existing law to include contracts involving the
procurement or laundering of apparel, garments and
corresponding accessories (including uniforms), in addition
to the procurement of equipment, materials or supplies.
Expanded existing law to cover contracts involving
domestic-made or laundered goods.
Required DIR to establish a contractor responsibility
program, including a "Sweat Free Code of Conduct,"
consisting of 13 specified terms and conditions of
employment, to be signed by all bidders on state contracts
and subcontracts.
Required state contractors to certify that no covered
items have been laundered or produced in whole or in part
by or with the benefit of sweatshop labor.
Defined "sweatshop labor" as all work or service exacted
from or performed by any person under the age of 18 years
in violation of more than one law of the country of
manufacture governing wage and benefits, occupational
health and safety, nondiscrimination, and freedom of
association.
Prohibited contracting between state agencies and any
contractor that does not meet the requirements of the
"Sweat Free Code of Conduct."
Required contractors to ensure, under penalty of
perjury, that their subcontractors comply in writing with
the "Sweat Free Code of Conduct."
Required the state to post proposed contracts on the
Internet and required state agencies to establish a
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mechanism for soliciting and reviewing any information
indicating violations of the "Sweat Free Code of Conduct."
Required the appropriate procurement agency, in
consultation with DIR, to employ a phased and targeted
approach to implementing the "Sweat Free Code of Conduct."
Authorized procurement policies involving apparel,
garments and corresponding accessories to have a phase-in
period of up to one year for purposes of feasibility and
providing sufficient notice to contractors and the general
public.
Required the appropriate procurement agency, in
consultation with DIR, to target other procurement
categories based on the magnitude of verified sweatshop
conditions and the feasibility of implementation, and
authorized them to set phase-in goals and timetables of up
to three years in order to achieve compliance with the
"Sweat Free Code of Conduct."
Required DIR to explore feasible and cost-effective
monitoring measures, as specified, to ensure compliance
with the law.
Authorized DIR to access information from nonprofit
organizations to determine whether contractors or
subcontractors "are compensating their employees at a level
that enables those employees to live above the applicable
poverty level."
Established a misdemeanor penalty for any person who
certifies as true any material matter pursuant to the
provisions of the law that he or she knows is false.
Local Sweat Free Policies in California
In addition to SB 578, several governmental or other entities
throughout the nation have established their own sweat free
procurement policies, some of which include enforcement via the
use of an independent outside monitor.
Background on Human Trafficking
According to the Senate Committee on Governmental Organization's
analysis of this bill:
"Human trafficking is the modern-day practice of slavery.
It's one of the fastest growing criminal industries in the
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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.' 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."
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On June 14, 2010, the United States Department of State issued
its tenth annual "Trafficking in Persons Report." That report
stated the following:
"With the majority of modern slaves in agriculture and
mining around the world - and forced labor prevalent in
cotton, chocolate, steel, rubber, tin, tungsten, coltan,
sugar, and seafood - it is impossible to get dressed, drive
to work, talk on the phone, or eat a meal without touching
products tainted by forced labor. Even reputable companies
can profit from abuse when they do not protect their supply
chain - whether at the level of raw materials, parts, or
final products - from modern slavery?
?There is no way to effectively monitor a supply chain
without tracing it all the way down to raw materials. Such
research will lead to an understanding of supply and demand
factors used to encourage greater protections of the
workers whose labor contributes to downstream profits."
Recent Oversight
In December of 2009, the Senate Judiciary Committee and the
Senate Committee on Labor and Industrial Relations held a joint
informational hearing on the subject of human trafficking and
supply chains. According to the author's office, this
legislation is a product of that hearing and subsequent
discussions.
ARGUMENTS IN SUPPORT :
Supporters argue that, in a global economy, we have seen a race
to the bottom as free trade policies have allowed corporations
to jump from country to country in search of the cheapest labor
and the least regulations. As a result, products are produced
throughout the globe using forced labor, child labor, indentured
servitude and other abusive conditions. The current global
economic crisis has only exacerbated the problem by worsening
the degree of poverty that is often a precursor to slavery and
trafficking.
Supports contend that while the State of California cannot
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always eradicate such labor conditions, it should not legitimate
them by doing business with those who engage in immoral
practices. They argue that as the eighth largest economy, and
one of the largest purchasers of goods in the world, California
bears a moral responsibility to be a leader in socially
responsible procurement and purchasing practices that insist on
humane and lawful labor standards. This bill would help further
ensure that human rights violations are not subsidized with
taxpayer dollars.
ARGUMENTS IN OPPOSITION :
Opponents argue that this bill will raise the cost for
businesses through increased litigation, either against
businesses or because businesses will believe they were
inappropriately targeted, and delay project and service
delivery. This in turn will raise the cost of state procurement
at a time when California is facing a cash and budget crisis.
To the extent that these projects are delayed by protests and
litigation, this bill would slow the state's economic recovery
at a time when unemployment continues to hover at high levels.
Opponents also state that, according to their discussions with
DIR, the current law has yet to be enforced. Therefore, this
bill would expand a section of law that has yet to be used, even
though there is no estimation of how effective the current law
is and whether it should be expanded. Opponents also contend
that the bill inappropriately allows state agencies to contract
with non-profit organizations and non-governmental
organizations. They express serious concerns about this type of
third-party enforcement of state law on private businesses.
Opponents conclude that, while the business community opposes
slavery and the abusive treatment of workers, this bill seeks to
use a one-size-fits-all approach on businesses of varying sizes
and industries. They contend that the bill will ultimately
increase costs to the state over a very difficult issue that is
best handled on federal and international levels.
RELATED LEGISLATION :
SB 657 (Steinberg) would, among other things, beginning January
1, 2011, require specified retailers and manufacturers doing
business in the state to develop, maintain, and implement
policies related to their compliance with federal and state
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trafficking prohibitions related to procurement and their supply
chain. SB 657 is currently pending in the Assembly Judiciary
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance to Stop Slavery and End Trafficking
California Commission on the Status of Women
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California Teamsters Public Affairs Council
Coalition to Abolish Slavery and Trafficking
Engineers and Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
Jockeys' Guild
Professional and Technical Engineers, IFPTE Local 21
United Food and Commercial Workers, Western States Council
UNITE-HERE!
Utility Workers Union of America, Local 132
Opposition
American Council of Engineering Companies - California
Associated Builder and Contractors of California
California Business Properties Association
California Chamber of Commerce
California Chapter of the American Fence Association
California Fence Contractors Association
California Independent Grocers Association
California Manufacturers and Technology Association
California Retailers Association
Engineering Contractors Association
Flasher Barricade Association
Marin Builders Association
TechAmerica
Western Electrical Contractors Association
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091