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Key Problems with SB 657 (Steinberg)
FISCAL: The bill is keyed fiscal because the Franchise Tax Board has new responsibilities to annually
create a list of companies who must comply. It was NOT heard in the Appropriations Committee and its
cost analyzed. We don’t know how FTB will determine companies with worldwide gross receipts over
$100 million.
The Attorney General has not identified resources to verify that companies are complying with bill. The
amount of time necessary will be great given the vague requirements, lack of definition and other
information included on company websites.
UNFAIR PROCESS: The bill does NOT direct the FTB to notify a business entity if they have met the
threshold to comply with this bill – totally unclear if a single disclosure is sufficient for each corporation,
or if separate products would require individualized disclosure if the answers to the questions would be
different for various products.
The bill does not require the AG to notify a company before an injunction is filed. So a company that has
posted everything in good faith may face an injunction due to the lack of clarity on what is proper
disclosure.
UNCLEAR WHO IS COVERED: It is completely undefined on which “homepage” website page the link to
the disclosure must be displayed: corporate vs. brand or product? Consumers will be confused.
Large multinational companies with thousands of products and many subsidiary companies and brands
may have supply chain management functions and policies that vary among the companies and subs.
The bill requires one “homepage” posting – does this mean all the information for all the subs and
brands needs to be combined from the single link to the “homepage?”
Guidance is so weak that the Attorney General would have too much authority to determine who is
subject to the bill and what sufficient compliance includes.
UNDEFINED TERMS IN DISCLOSURE REQUIREMENT:
No authoritative body has endorsed this specific list of questions to cover the issues important to
dealing with this problem. In fact, experts say that the variety of circumstances require customized
approaches.
No definition of human trafficking: Supply chain management efforts also include child labor, working
conditions, health and safety issues, etc. Do the policies for human trafficking need to be separately
disclosed from these other issues?
No definition of supply chain, third party verification, direct supplier, internal accountably standards.
Definitions vary from industry to industry, disclosure could vary dramatically.
LITIGATION: SB 657 provides exclusive remedy to the AG to file an injunction to force compliance but is
also states Nothing in this section shall limit remedies available for a violation of any other state or
federal law. Thus a company could be sued by a consumer who relies on a company disclosure for their
purchasing decisions and thereafter alleges that the policy is untrue. This could be despite good faith
efforts of the company to keep the policy and the posting up to date and accurate.