BILL ANALYSIS
SB 1231
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1231 (Corbett) - As Amended: May 17, 2010
Policy Committee: Labor and
Employment Vote: 4-1
Judiciary 7-4
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill refocuses and modestly expands existing statutes that
prohibit businesses contracting with the state from supplying
goods produced by abusive labor practices.
FISCAL EFFECT
1)One-time costs of $50,000 to $100,000 to the Department of
Industrial Relations (DIR) and the Department of General
Services (DGS) combined, to develop regulations, update
contracting terms, and post revised processes and other
information on the internet (General and special funds).
2)Increase in enforcement and oversight costs, potentially
exceeding $150,000 annually (GF and special funds). The
magnitude depends partly on the extent to which the bill
results in greater number of reports and investigations of
violations.
3)Unknown, potentially moderate increase in contracting costs,
to the extent that added administrative requirements and risks
to contractors and subcontractors are reflected in procurement
bids.
SUMMARY (Continued)
Specifically, the bill:
1)Requires contractors, which are required under current law to
sign a certification that they will comply with the slave and
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sweat free code of conduct, to also have their subcontractors
sign the certification. Contractors complying with this
requirement would then be exempt from sanctions for subsequent
violations by their subcontractors, and the sanctions would
instead be imposed directly against the subcontractors.
2)Extends the period a contractor is removed from the bidder's
list, from 360 days to two years, for violations of the slave
and sweat free code of conduct.
3)Requires the Department of Industrial Relations (DIR) to
establish a contractor responsibility program by January 1,
2012 and requires DIR and other appropriate agencies to
initially implement the program with respect to garments and
accessories. Also requires the DIR and agencies to
subsequently implement the program with respect to other
targeted industries based on verified sweatshop conditions.
Allows the agencies to use information from the U.S.
Department of Labor's list of goods produced by child labor or
forced labor in identifying procurement categories appropriate
for its phased implementation.
4)Makes it explicit that DIR and DGS are the agencies
responsible for establishing a mechanism for soliciting and
reviewing information indicating violations of the slave and
sweat free code of conduct by contractors or subcontractors.
Current law places this responsibility with the "appropriate
agencies."
5)Requires contractors that have manufacturing and assembly
locations outside the United State to comply with
international laws or treaties binding on their countries.
COMMENTS
1)Background . Existing law, as established by Senate Bill 578
(Alarc?n), Chapter 711/2003, requires that businesses entering
into procurement contracts with the state (exclusive of public
works contracts) must certify that the products were not
produced by sweatshop labor, forced labor, convict labor,
indentured labor, abusive forms of child labor, or
exploitation of children in sweatshop labor. If a contractor
knew or should have known the specified products furnished to
the state were produced using the specified types of
prohibited labor practices, the contractor may be removed from
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the bidder's list for 360 days.
Current law also requires DIR to establish a contractor
monitoring programs, and requires "appropriate agencies" to
establish a method for soliciting and reviewing any
information indicating violations. According to proponents of
this bill, the lack of specificity regarding which agencies
are responsible for soliciting and reviewing such information
has resulted in lax enforcement. They note that there have
been no sanctions issued against contractors since the current
program was initiated in 2004.
2)Purpose . Proponents of this bill contend that enforcement of
current law code-of-conduct provisions has lagged, partly
because current law is not specific enough with regard to
which agency is responsible for soliciting information about
violations and enforcing sanctions against violators. This
bill is intended to make existing law more effective by
clarifying that DIR and DGS are responsible for enforcement,
and by increasing penalties for non-compliance. Supporters
contend that, while the state cannot always eradicate slave-
and abusive labor conditions, it should not support these
practices by doing business with those who engage in them.
3)Opponents object to the bill on several grounds, asserting
that it will lead to greater litigation risks and raise the
costs of procurement contracting at a time the state faces
major budget shortfalls.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081