The California Transparency in Supply Chains Act requires large retailers and manufacturers doing business in California to publicly disclose what they do — if anything — to address forced labor and human trafficking in their product supply chains. It applies to companies with more than $100 million in annual worldwide gross receipts, and it is a disclosure law, not a conduct law. You are not required to audit suppliers, train staff, or certify materials. You are required to tell consumers whether you do.
Who the Law Applies To
Three criteria must all be met. Your company must be classified as a retail seller or a manufacturer based on the principal business activity code on its California tax return. It must be doing business in California, meaning actively engaging in transactions for financial gain in the state. And its annual worldwide gross receipts must exceed $100 million.1State of California Department of Justice – Office of the Attorney General. SB 657 Related Code Sections
The tax-return classification matters as much as the revenue number. A company whose principal activity code is wholesale distribution or logistics is not covered, even if it clears $100 million. Gross receipts are calculated under Section 25120 of the Revenue and Taxation Code: the gross amounts realized from sales, services, rents, royalties, interest, and dividends, without subtracting cost of goods sold or basis of property sold.2Franchise Tax Board. Multistate Audit Technical Manual Chapter 7500 – Sales Factor The figure is worldwide, not California-only. A company with $60 million in U.S. sales and $50 million overseas is over the line.
You do not self-identify to the Attorney General. The California Franchise Tax Board reviews state tax returns each year, identifies companies meeting all three criteria, and sends that list to the AG’s office. The most recent publicly available count identified roughly 1,700 companies as likely subject to the law.3California Department of Justice. The California Transparency in Supply Chains Act – A Resource Guide
One more boundary: the Act covers only tangible goods offered for sale.1State of California Department of Justice – Office of the Attorney General. SB 657 Related Code Sections A service business that meets the revenue threshold and is coded as a retailer on its tax return still has no disclosure obligation if it sells no physical products.
What You Must Disclose
The statute requires disclosure of “to what extent, if any” the company takes steps across five categories.4State of California Department of Justice – Office of the Attorney General. California Transparency in Supply Chains Act Those two words, “if any,” are the whole mechanism. A company that does nothing in a given category can comply by saying so. What it cannot do is skip the category.
The five required areas are:
- Verification. Describe your process for evaluating and addressing forced labor risks in product supply chains. If the verification is not conducted by a third party, you must say so.1State of California Department of Justice – Office of the Attorney General. SB 657 Related Code Sections
- Audits. State whether you audit suppliers against your company standards for trafficking and slavery. If any audits are not independent and unannounced, you must disclose that too.
- Certification. Disclose whether you require direct suppliers to certify that their materials comply with slavery and trafficking laws in the countries where they operate.
- Internal accountability. Describe any standards and procedures for employees or contractors who fail to meet your company’s anti-trafficking expectations.
- Training. Explain what training, if any, you provide to employees and managers with direct supply chain responsibility, focused on identifying and reducing trafficking risks.
For verification and audits, the statute specifically requires you to flag the absence of third-party or independent involvement. The legislature wanted consumers to know not only whether these checks happen but whether they carry any outside credibility.
Where to Post the Disclosure
The disclosure must appear on your company’s website behind a “conspicuous and easily understood” link on your homepage.1State of California Department of Justice – Office of the Attorney General. SB 657 Related Code Sections The AG’s resource guide recommends placing the link at the top or bottom of the homepage where consumers naturally look, and making the link text at least as prominent as surrounding navigation elements.3California Department of Justice. The California Transparency in Supply Chains Act – A Resource Guide Common labels include “Supply Chain Transparency” or “California Transparency Act.”
If your company does not maintain a website, you must provide a written copy of the disclosure to any consumer who requests one in writing, within 30 days of the request.
The statute does not specify how often to refresh the disclosure. Updating it as the supply chain evolves is the safer practice.
Enforcement and Penalties
The California Attorney General has exclusive enforcement authority. The sole remedy the statute authorizes is injunctive relief: the AG can sue to force your company to post the required disclosure. The Act itself imposes no monetary fines or civil penalties for noncompliance.1State of California Department of Justice – Office of the Attorney General. SB 657 Related Code Sections No private citizen, advocacy group, or competitor can sue directly under the statute.
Because the Franchise Tax Board sends the AG’s office an annual list of covered companies, identifying companies that have posted nothing is straightforward. The practical pressure, though, tends to come from reputational exposure rather than enforcement actions.
Lawsuits Under Other Theories
The Act blocks private lawsuits brought under it, but it preserves remedies under other state and federal laws. Plaintiffs have tried to use California’s Unfair Competition Law to go after companies that failed to disclose labor practices on their products. In one case, a consumer sued a chocolate manufacturer for not disclosing child and forced labor in its supply chain, arguing the omission was a fraudulent business practice. The Ninth Circuit rejected the theory, holding that without an affirmative misrepresentation, the manufacturer had no duty to disclose labor conditions on its product labels.5United States Court of Appeals for the Ninth Circuit. Hodsdon v. Mars, Inc.
The lesson is practical. A company that stays silent about its supply chain is in a different legal position than one that advertises ethical sourcing and falls short. The first is hard to sue. The second invites scrutiny under consumer protection statutes.
Federal Forced Labor Laws That Still Apply
California’s law is transparency only. Two federal laws go further and ban conduct outright, and complying with California does not shield you from them.
Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307) prohibits importing any goods “mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor.” U.S. Customs and Border Protection enforces this ban and can seize shipments at the border.6Office of the Law Revision Counsel. 19 U.S. Code 1307 – Convict-Made Goods; Importation Prohibited
The Uyghur Forced Labor Prevention Act, signed into law in December 2021, creates a rebuttable presumption that any goods produced wholly or in part in China’s Xinjiang Uyghur Autonomous Region, or by entities on the UFLPA Entity List, are made with forced labor and barred from entry into the United States.7U.S. Department of Labor. Uyghur Forced Labor Prevention Act Your California disclosure can honestly state that you audit suppliers, but if those audits miss forced labor in a UFLPA-covered region, federal authorities can still detain your imports.