BILL ANALYSIS
SB 1231
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 1231 (Corbett) - As Amended: May 17, 2010
SENATE VOTE : 21-13
SUBJECT : Public contracts: state agency: sweatshop labor:
slave and sweat free code of conduct.
SUMMARY : Renames the Sweatfree Code of Conduct (SCC) to the
Slave and Sweat Free Code of Conduct (SSFCC), and expands the
scope of the code of conduct to include abusive forms of labor
performed by all persons, not only child labor. Specifically,
this bill :
1)Renames the SCC to the SSFCC 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)Requires contractors to exercise due diligence in ensuring
that their subcontractors comply with the SSFCC and:
a) Requires contractors to attach a copy of the SSFCC to
the required certification that specified products were not
produced by abusive labor, and requires each subcontractor
to sign the certification under penalty of perjury; and,
b) Sanctions subcontractors who violate the SSFCC. Does
not sanction contractors who have no knowledge of the SSFFC
violations committed solely by a subcontractor.
4)Extends the time that a contractor may be removed from the
bidder's list if the contractor knows or should have known
that products were laundered or produced by abusive labor,
from one to two years.
5)Allows the appropriate procurement agency and the Department
of Industrial Relations (DIR) to use the United States (U.S.)
Department of Labor's List of Goods Produced by Child Labor or
Forced Labor to identify procurement categories appropriate to
implement the SSFCC.
SB 1231
Page 2
6)Requires the DIR and the Department of General Services (DGS)
to establish a mechanism for soliciting and reviewing any
information indicating violations of the SSFCC by prospective
or current bidders, contractors, or subcontractors, and
requires the following:
a) The DIR and the DGS to post the procedures and contact
information for filing complaints on their respective
Internet Web sites; and,
b) State agencies to make their findings public when they
reject allegations against bidding or contracting parties.
7)Requires the DIR to establish a contractor responsibility
program on the SSFCC on or before January 1, 2012.
8)Requires contractors whose manufacturing or assembly locations
are outside the U.S., to ensure that their subcontractors
comply with the appropriate laws of countries where
international laws or treaties are binding.
9)Makes technical and clarifying changes.
EXISTING LAW :
1)Provides the 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 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
knowingly 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
SB 1231
Page 3
contractor may be removed from the bidder's list for 360 days.
4)Requires contractors to ensure that their subcontractors
comply with the SFCC, under penalty or perjury.
5)Requires the DIR to establish a contractor responsibility
program on the SCC, by February 1, 2004.
6)Requires the appropriate procurement agency, in consultation
with the DIR, to employ a phased and targeted approach to
implement the SCC.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "Since
the enactment of SB 578 (Alarcon), Chapter 711, Statutes of
2003, the California Alliance to Combat Trafficking and Slavery
Task Force has released its final report on its findings of
human trafficking in California. The report was released in
2007, bringing to light the existence of modern day slavery in
the labor force. California law must be updated to reflect its
stance against such practices and to ensure that taxpayer
dollars are not being used to purchase goods produced through
cruel forms of labor, both domestically and abroad.
"This bill would also specify which state agencies are
responsible for establishing a mechanism to solicit information
about violations of the SSFCC. Current law only states that the
appropriate agencies shall establish this mechanism. Because of
this ambiguity, no agency has undertaken this task, which means
that an important tool for enforcement is lacking."
Background . SB 578 (Alarcon), Chapter 711, Statutes of 2003,
established a statewide sweat-free procurement policy to ensure
that specified goods purchased by the state are produced in
workplaces free of sweatshop conditions. 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.
In addition to SB 578, other local entities (including cities,
SB 1231
Page 4
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.
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 the 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 use of child labor and forced labor in the
production of certain goods and to serve as a tool for
consumers, firms, governments, and others who do not want to
support such practices through their purchases.
In December 2009, the Senate Judiciary and 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. In summary, this measure would expand the scope of the
SCC to prohibit the abusive labor of all persons, not just
children.
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 fewest 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
always eradicate such labor conditions, it should not legitimize
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
SB 1231
Page 5
taxpayer dollars.
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
the 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 this 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 this 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) requires specified
retailers and manufacturers to develop, maintain, and implement
policies related to their compliance with federal and state
trafficking prohibitions related to procurement and their supply
chain, beginning January 1, 2011. This bill is currently
pending in the Assembly Judiciary Committee.
Previous Legislation . SB 578 (Alarcon), Chapter 711, Statutes
of 2003, established the SCC that requires state agency
contracts to contain sweat-free procurement policies.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation
SB 1231
Page 6
California Employment Lawyers Association
Coalition to Abolish Slavery & Trafficking
Alliance to Stop Slavery and End Trafficking
California Conference Board of the Amalgamated Transit Union
UNITE-HERE
United Food & Commercial Workers Western States Council
California Conference of Machinists
Professional and Technical Engineers, IFPTE Local 21
Engineers and Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
California Teamsters Public Affairs Council
Opposition
California Chamber of Commerce
American Council of Engineering Companies - California
Associated Builders and Contractors of California
California Business Properties Association
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
National Federation of Independent Business
TechAmerica
Western Electrical Contractors Association
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301