AB 381: State contracts: certification process: forced labor and human trafficking.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2025-05-23
Current Status:
In Progress
(2025-08-29: In committee: Held under submission.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of labor, including forced labor, as defined. Existing law makes any person who falsely certifies pursuant to these provisions guilty of a misdemeanor.
This bill would would, for a contract entered into or renewed on or after January 1, 2026, revise the above contracting requirements to also require a contractor to certify that the contract complies with specified requirements relating to human trafficking, including certain prohibitions on contractors, contractor employees, subcontractors, subcontractor employees, and their agents. The bill would revise the definition of forced labor to mean knowingly providing or obtaining labor or services of a person by, among other things, threats of serious harm to, or physical restraint against, that person or another person.
This bill would require contractors and subcontractors to notify employees of specified prohibited activities and the actions that may be taken against them for violations. The bill would provide that a contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract under these provisions if the contractor has failed to certify its compliance. The bill would also require a contractor to exercise due diligence in ensuring that its subcontractors comply with those requirements, including requiring each subcontractor to sign a certification. By expanding the scope of a crime, the bill would impose a state-mandated local program.
This bill would require, before a contract or subcontract is awarded, a proposed contractor or proposed subcontractor to provide a certification to the contracting officer or contractor, as applicable, that states the contractor or subcontractor has implemented a compliance plan, as specified, and has conducted due diligence that either (1) to the best of the contractors or subcontractors knowledge and belief, certain parties have not engaged in any specified prohibited activities or (2) if the contractor or subcontractor is aware of abuses relating to the specified prohibited activities, then certain parties have taken the appropriate remedial and referral actions.
This bill would require a contractor or subcontractor to take specified actions to ensure compliance with the above-described provisions, including requiring the contractor or subcontractor to disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity. The bill would specify certain actions a contractor would be required to take if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates these provisions or specified provisions, including, among others, notifying its employees of the actions that will be taken against the employee or agent for violations.
Existing law authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions, including, among others, voiding the contract under which the prohibited apparel, garments, or corresponding accessories, equipment, materials, or supplies were laundered or provided at the option of the state agency and removing the contractor from the bidders list for a period not to exceed 360 days.
This bill would would, for a contract entered into or renewed on or after January 1, 2026, authorize additional sanctions, including, among others, requiring a contractor to remove a contractor employee from the performance of the contract, requiring the contractor to terminate a subcontractor, and suspending contract payments until the contractor has taken appropriate remedial action. The bill would also specify that these requirements govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
Existing law authorizes a contractor to request a hearing before an administrative law judge when sanctions are imposed. Existing law requires the administrative law judge to consider any measures the contractor has taken to ensure compliance with the above-described provisions and authorizes the administrative law judge to waive any or all sanctions if it is determined that the contractor has acted in good faith.
This bill would would, for a contract entered into or renewed on or after January 1, 2026, authorize the administrative law judge to additionally consider mitigating factors and aggravating factors, as specified.
Existing law authorizes a state agency that investigates a complaint against a contractor for violation of the above-described provisions to limit its investigation to evaluating the information provided by the person or entity submitting the complaint and information provided by the contractor.
This bill would would, for a contract entered into or renewed on or after January 1, 2026, authorize the state agency to limit its investigation to credible information. The bill would require the contracting officer, upon receipt of credible information regarding a violation of specified provisions, to promptly notify the state agency with oversight, the agency debarring and suspending official, and law enforcement officials with jurisdiction over the alleged offense, as specified. The bill would authorize the contracting officer to direct the contractor to take specific steps to abate the alleged violation or enforcement of the requirements of its compliance plan.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of labor, including forced labor, as defined. Existing law makes any person who falsely certifies pursuant to these provisions guilty of a misdemeanor.
This bill would revise the above contracting requirements to also require a contractor to certify that the contract complies with specified requirements relating to human trafficking, including certain prohibitions on contractors, contractor employees, subcontractors, subcontractor employees, and their agents. The bill would revise the definition of forced labor to mean knowingly providing or obtaining labor or services of a person by, among other things, threats of serious harm to, or physical restraint against, that person or another person.
This bill would require contractors and subcontractors to notify employees of specified prohibited activities and the actions that may be taken against them for violations. The bill would provide that a contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract under these provisions if the contractor has failed to certify its compliance. The bill would also require a contractor to exercise due diligence in ensuring that its subcontractors comply with those requirements, including requiring each subcontractor to sign a certification. By expanding the scope of a crime, the bill would impose a state-mandated local program.
This bill would require, before a contract or subcontract is awarded, a proposed contractor or proposed subcontractor to provide a certification to the contracting officer or contractor, as applicable, that states the contractor or subcontractor has implemented a compliance plan, as specified, and has conducted due diligence that either (1) to the best of the contractors or subcontractors knowledge and belief, certain parties have not engaged in any specified prohibited activities or (2) if the contractor or subcontractor is aware of abuses relating to the specified prohibited activities, then certain parties have taken the appropriate remedial and referral actions.
This bill would require a contractor or subcontractor to take specified actions to ensure compliance with the above-described provisions, including requiring the contractor or subcontractor to disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity. The bill would specify certain actions a contractor would be required to take if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates these provisions or specified provisions, including, among others, notifying its employees of the actions that will be taken against the employee or agent for violations.
Existing law authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions, including, among others, voiding the contract under which the prohibited apparel, garments, or corresponding accessories, equipment, materials, or supplies were laundered or provided at the option of the state agency and removing the contractor from the bidders list for a period not to exceed 360 days.
This bill would authorize additional sanctions, including, among others, requiring a contractor to remove a contractor employee from the performance of the contract, requiring the contractor to terminate a subcontractor, and suspending contract payments until the contractor has taken appropriate remedial action. The bill would also specify that these requirements govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
Existing law authorizes a contractor to request a hearing before an administrative law judge when sanctions are imposed. Existing law requires the administrative law judge to consider any measures the contractor has taken to ensure compliance with the above-described provisions and authorizes the administrative law judge to waive any or all sanctions if it is determined that the contractor has acted in good faith.
This bill would authorize the administrative law judge to additionally consider mitigating factors and aggravating factors, as specified.
Existing law authorizes a state agency that investigates a complaint against a contractor for violation of the above-described provisions to limit its investigation to evaluating the information provided by the person or entity submitting the complaint and information provided by the contractor.
This bill would authorize the state agency to limit its investigation to credible information. The bill would require the contracting officer, upon receipt of credible information regarding a violation of specified provisions, to promptly notify the state agency with oversight, the agency debarring and suspending official, and law enforcement officials with jurisdiction over the alleged offense, as specified. The bill would authorize the contracting officer to direct the contractor to take specific steps to abate the alleged violation or enforcement of the requirements of its compliance plan.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(a)(1)(A)Every contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, shall require that a contractor certify to both of the following:
(i)That no apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state pursuant to the contract have been laundered or produced in whole or in part by sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor, or with the benefit of sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. The contractor shall agree to comply with this provision of the contract.
(ii)The contract complies with the requirements in subparagraph (B).
(B)Contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
(i)Engaging in severe forms of trafficking in persons during the performance period of the contract.
(ii)Using forced labor in the performance of the contract.
(iii)Destroying, concealing, confiscating, or otherwise denying access by an employee to the employees identity or immigration documents, including passports or drivers licenses, regardless of the issuing authority.
(iv)Using misleading or fraudulent practices during the recruitment of employees or offering of employment, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations during the recruitment of employees regarding the key terms and conditions of employment, including all of the following:
(I)Wages and fringe benefits.
(II)The location of work.
(III)The living conditions, housing, and associated costs, if provided or arranged by the employer or agent.
(IV)Any significant costs to be charged to the employee or potential employee.
(V)The hazardous nature of the work, if applicable.
(v)Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
(vi)Charging employees or potential employees recruitment fees.
(vii)(I)Failing to provide or pay for the cost of return transportation upon the end of employment, for either of the following:
(ia)An employee who is not a national of the country where the work is taking place and who was brought into that country for the purpose of working on a state contract or subcontract.
(ib)An employee who is not a United States national and who was brought into the United States for the purpose of working on a state contract or subcontract, if the payment of the cost is required under existing temporary worker programs or pursuant to a written agreement with the employee.
(II)The requirements of subclause (I) do not apply to an employee who meets one of the following criteria:
(ia)The employee is legally permitted to remain in the country where the work is performed and chooses to remain in the country where the work is performed.
(ib)The employee is exempted by an authorized official of the contracting agency, designated by a chief official of a state agency in accordance with agency procedures.
(III)For a victim of trafficking in persons who is seeking victim services or legal redress in the country or for a witness in an enforcement action related to trafficking in persons in which the work is performed, or a portion of the work is performed, the contractor shall provide or pay the cost of return transportation as specified in subclause (I) in a way that does not obstruct the victim services, legal redress, or witness activity, including offering return transportation to a witness at a time that supports the witnesss need to testify.
(viii)Providing or arranging housing that fails to meet the country where the work is performed housing and safety standards.
(ix)If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing.
(I)The written document shall be in a language the employee understands.
(II)If the employee must relocate to perform the work, the written document shall be provided to the employee at least five days prior to the employee relocating.
(III)The written document shall include, but is not limited to, a work description, wages, the prohibition on charging recruitment fees as specified in clause (vi), the work location, the living accommodations and associated costs, the amount of time off, the round-trip transportation arrangements, a grievance process, and the content of applicable laws and regulations that prohibit trafficking in persons.
(IV)The contracting officer shall consider the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons, and the number of non-United States citizens expected to be employed, when deciding whether to require work documents in the contract.
(C)Contractors and subcontractors are required to notify employees of the prohibited activities described in subparagraph (B) and the actions that may be taken against them for violations.
(D)The contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract under this section if that contractor has failed to certify compliance with subparagraph (A).
(E)The contractor shall also exercise due diligence in ensuring that its subcontractors comply with subparagraph (A), including requiring each subcontractor to sign a certification.
(2)Before a contract is awarded, a proposed contractor shall provide a certification to the contracting officer that states both of the following:
(A)The contractor has implemented a compliance plan that includes both of the following:
(i)Procedures to prevent any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)Procedures to monitor, detect, and terminate a contract with a subcontractor or agent engaging in any prohibited activities described in subparagraph (B) of paragraph (1).
(B)The contractor has conducted due diligence and one of the following applies:
(i)To the best of the contractors knowledge and belief, the contractor, its agents, proposed subcontractors, or their agents, have not engaged in any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)If the contractor is aware of abuses relating to the prohibited activities described in subparagraph (B) of paragraph (1), the contractor or proposed subcontractors have taken the appropriate remedial and referral actions.
(3)Before a subcontract is awarded, the contractor shall obtain a certification from the proposed subcontractor that states both of the following:
(A)The subcontractor has implemented a compliance plan that includes both of the following:
(i)Procedures to prevent any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)Procedures to monitor, detect, and terminate a contract with a subcontractor or agent engaging in any prohibited activities described in subparagraph (B) of paragraph (1).
(B)The subcontractor has conducted due diligence and one of the following applies:
(i)To the best of the subcontractors knowledge and belief, the subcontractor, its agents, proposed subcontractors, or their agents, have not engaged in any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)If the subcontractor is aware of abuses relating to the prohibited activities described in subparagraph (B) of paragraph (1), the subcontractor or proposed subcontractors have taken the appropriate remedial and referral actions.
(4)A compliance plan must comply with all of the following criteria:
(A)The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, including the number of non-United States citizens expected to be employed and the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons.
(B)The compliance plan shall include, at minimum, all of the following:
(i)An awareness program to inform employees about the prohibited activities described in subparagraph (B) of paragraph (1), and the actions that will be taken against the employee for violations.
(ii)A process for employees to report, without fear of retaliation, activity inconsistent with the policy prohibiting trafficking in persons, including a means to make available to all employees the hotline phone number of the Global Human Trafficking Hotline at 1-844-888-FREE and email address at [email protected].
(iii)A recruitment and wage plan that does all of the following:
(I)Only permits the use of recruitment companies with trained employees.
(II)Prohibits charging recruitment fees to the employee or potential employee.
(III)Ensures that wages meet the legal requirements or explains any variance of the applicable country where the work is performed.
(iv)If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
(v)Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described in subparagraph (B) of paragraph (1) and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
(5)A contractor and subcontractor shall comply with all of the following requirements:
(A)Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described in subparagraph (B) of paragraph (1) and the individuals responsible for the conduct.
(B)Provide timely and complete responses to state auditors and investigators requests for documents.
(C)Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section, or any other applicable law or regulation establishing restrictions on trafficking in persons or the use of forced labor.
(D)Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
(E)Not prevent or hinder an employee from cooperating fully with government authorities.
(6)The contracts shall provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this section.
(7)The contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractors records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations, or the Department of Justice determine the contractors compliance with the requirements under this section.
(b)(1)Any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of the conditions specified in subdivision (a) when entering into a contract pursuant to subdivision (a), may, subject to subdivision (c), have any or all of the following sanctions imposed:
(A)The contract under which the prohibited apparel, garments, or corresponding accessories, equipment, materials, or supplies were laundered or provided may be voided at the option of the state agency to which the equipment, materials, or supplies were provided.
(B)The contractor may be assessed a penalty that shall be the greater of one thousand dollars ($1,000) or an amount equaling 20 percent of the value of the apparel, garments, corresponding accessories, equipment, materials, or supplies that the state agency demonstrates were produced in violation of the conditions specified in paragraph (1) of subdivision (a) and that were supplied to the state agency under the contract.
(C)The contractor may be removed from the bidders list for a period not to exceed 360 days.
(D)The contractor may be required to remove a contractor employee from the performance of the contract.
(E)The contractor may be required to terminate a subcontractor.
(F)Contract payments may be suspended until the contractor has taken appropriate remedial action.
(G)If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
(H)The state may decline to exercise available options under the contract.
(I)The contractor may be subject to suspension or debarment.
(2)If a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates subdivision (a) of Section 236.1 of the Penal Code, the federal Trafficking Victims Protection Act of 2000 (Division A, Public Law 106-386), as amended, federal Executive Order No. 13627 (September 25, 2012), or this section the contractor shall do all of the following:
(A)Notify its employees and agents of both of the following:
(i)The prohibited activities described in subparagraph (B) of paragraph (1) of subdivision (a).
(ii)The actions that will be taken against the contractor employee, subcontractor, subcontractor employee, or agent for violations of this section, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
(B)Take appropriate action, including termination against a contractor employee, subcontractor, subcontractor employee, or agent that violates the policy in subparagraph (B) of paragraph (1) of subdivision (a).
(C)Inform the contracting officer and the state agency with oversight immediately of both of the following:
(i)Any credible information it receives from any source, including the law enforcement of the country where the work is performed, that alleges a contractor employee, subcontractor, subcontractor employee, or their agent has engaged in conduct that violates the policy in subparagraph (B) of paragraph (1) of subdivision (a).
(ii)Any actions taken against a contractor employee, subcontractor, subcontractor employee, or their agent pursuant to this paragraph.
(D)If the allegation may be associated with more than one state contract, inform the contracting officer for the contract with the highest dollar value.
(E)Disclose to the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described in subparagraph (B) of paragraph (1) of subdivision (a) and the individuals responsible for the conduct.
(F)Provide timely and complete responses to state auditors and investigators requests for documents.
(G)(i)Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section, or any other applicable law or regulation establishing restrictions on trafficking in persons or the use of forced labor.
(ii)The requirement in clause (i) does not foreclose any contractor rights arising in law or the terms of the contract. The requirement does not do any of the following:
(I)Require the contractor to waive its attorney-client privilege or the protections afforded by the attorney work product doctrine.
(II)Require any officer, director, owner, employee, or agent of the contractor, including a sole proprietor, to waive their attorney-client privilege or Fifth Amendment to the Constitution rights.
(III)Restrict the contractor from conducting an internal investigation or defending a proceeding or dispute arising under the contract or related to a potential or disclosed violation.
(H)Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, prior to returning to the country from which the employee was recruited, and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
(I)Post the minimum requirements of the compliance plan as stated in subparagraph (B) of paragraph (1) of subdivision (a), no later than the initiation of contract performance, at the workplace, unless the work is to be performed in the field or not in a fixed location, and on the contractors internet website, if applicable. If posting at the workplace or on the internet website is impracticable, the contractor shall provide the minimum requirements of the compliance plan as stated in subparagraph (B) of paragraph (1) of subdivision (a) to each worker in writing.
(J)Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
(3)Any moneys collected pursuant to this subdivision shall be deposited into the General Fund.
(c)(1)When imposing the sanctions described in subdivision (b), the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice. The hearing shall be before an administrative law judge of the Office of Administrative Hearings in accordance with the procedures specified in Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The administrative law judge shall take into consideration any measures the contractor has taken to ensure compliance with this section, and may waive any or all of the sanctions if it is determined that the contractor has acted in good faith.
(2)The administrative law judge may consider both of the following factors:
(A)Mitigating factors, including all of the following:
(i)The contractor had a compliance plan at the time of the violation.
(ii)The contractor was in compliance with the compliance plan at the time of the violation.
(iii)The contractor has taken appropriate remedial actions for the violations, including reparation to victims for the violations.
(B)Aggravating factors, including the contractor failed to abate an alleged violation or failed to enforce the requirements of a compliance plan when directed to do so.
(3)The agency shall be assessed the cost of the administrative hearing, unless the agency has prevailed in the hearing, in which case the contractor shall be assessed the cost of the hearing.
(d)(1)(A)Upon receipt of credible information regarding a violation listed in paragraph (2) of subdivision (b), the contracting officer shall promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense.
(B)Upon receipt of credible information regarding a violation listed in paragraph (2) of subdivision (b), the contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
(2)Any state agency that investigates a complaint against a contractor for violation of this section may limit its investigation to evaluating the credible information provided by the person or entity submitting the complaint and the credible information provided by the contractor.
(3)Whenever a contracting officer of the contracting agency has reason to believe that the contractor failed to comply with subdivision (a), the agency shall refer the matter for investigation to the head of the agency and, as the head of the agency determines appropriate, to either the Director of Industrial Relations or the Department of Justice.
(e)For purposes of this section, the following terms have the following meanings:
(1)Abusive forms of child labor means any of the following:
(A)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.
(B)The use, procuring, or offering of a child for prostitution, for the production of pornography, or for pornographic performances.
(C)The use, procuring, or offering of a child for illicit activities, in particular for the production and trafficking of illicit drugs.
(D)All work or service exacted from or performed by any person under the age of 18 years 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.
(E)All work or service exacted from or performed by a child in violation of all applicable laws of the country of manufacture governing the minimum age of employment, compulsory education, and occupational health and safety.
(2)Agent means any individual, including a director, an officer, an employee, or an independent contractor, authorized to act on behalf of the organization.
(3)Apparel, garments, or corresponding accessories includes, but is not limited to, uniforms.
(4)Coercion means any of the following:
(A)Threats of serious harm to or physical restraint against any person.
(B)Any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person.
(C)The abuse or threatened abuse of the legal process.
(5)Contractor employee means an employee of the contractor directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance.
(6)Debt bondage means the status or condition of a debtor arising from a pledge by the debtor of their personal services or of those of a person under their control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined.
(7)Employee means a contractor employee or subcontractor employee.
(8)Exploitation of children in sweatshop labor means 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.
(9)Forced labor means knowingly providing or obtaining the labor or services of a person by any of the following:
(A)By threats of serious harm to, or physical restraint against, that person or another person.
(B)By means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform labor or services, that person or another person would suffer serious harm or physical restraint.
(C)By means of the abuse or threatened abuse of law or the legal process.
(10)Involuntary servitude includes a condition of servitude induced by means of either of the following:
(A)Any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in those conditions, that person or another person would suffer serious harm or physical restraint.
(B)The abuse or threatened abuse of the legal process.
(11)Recruitment fees means fees of any type, including charges, costs, assessments, or other financial obligations, that are associated with the recruiting process, regardless of the time, manner, or location of imposition or collection of the fee. Recruitment fees include, but are not limited to, fees for any of the following, when they are associated with the recruiting process:
(A)Soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, training, providing orientation to, skills testing, recommending, or placing employees or potential employees.
(B)Advertising.
(C)Obtaining permanent or temporary labor certification, including any associated fees.
(D)Processing applications and petitions.
(E)Acquiring visas, including any associated fees.
(F)Acquiring photographs and identity or immigration documents, such as passports, including any associated fees.
(G)Accessing the job opportunity, including required medical examinations and immunizations, background, reference, and security clearance checks and examinations, and additional certifications.
(H)An employers recruiters, agents, or attorneys, or other notary or legal fees.
(I)Language interpretation or translation, arranging for or accompanying on travel, or providing other advice to employees or potential employees.
(J)Government-mandated fees, including border crossing fees, levies, or worker welfare funds.
(K)Transportation and subsistence costs, including both of the following:
(i)While in transit, including, but not limited to, airfare or costs of other modes of transportation, terminal fees, and travel taxes associated with travel from the country of origin to the country of performance and the return journey upon the end of employment.
(ii)From the airport or disembarkation point to the worksite.
(L)Security deposits, bonds, and insurance.
(M)Equipment charges.
(12)Severe forms of trafficking in persons means either of the following:
(A)Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
(B)The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
(13)State agency means any state agency in this state.
(14)Subcontract means any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract.
(15)Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor.
(16)Subcontractor employee means an employee of the subcontractor directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance.
(17)Sweatshop labor means all work or service exacted from or performed by any person in violation of more than one law of the country of manufacture governing wages, employee benefits, occupational health, occupational safety, nondiscrimination, or freedom of association.
(18)Notwithstanding any other provision of this section, forced labor and convict labor do not include work or services permissible under state law performed by an inmate or a person employed by the Prison Industry Authority.
(f)(1)On or before February 1, 2004, the Department of Industrial Relations shall establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts. Any state agency responsible for procurement shall ensure that the Sweatfree Code of Conduct is available for public review at least 30 calendar days between the dates of receipt and the final award of the contract. The Sweatfree Code of Conduct shall list the requirements that contractors are required to meet, as set forth in subdivision (g).
(2)Upon implementation in the manner described in paragraph (4), every contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or for the procurement of equipment or supplies, shall require that the contractor certify in accordance with the Sweatfree Code of Conduct that no apparel, garments, or corresponding accessories, or equipment, materials, or supplies, furnished to the state pursuant to the contract have been laundered or produced, in whole or in part, by sweatshop labor.
(3)The appropriate procurement agency, in consultation with the Director of Industrial Relations, shall employ a phased and targeted approach to implementing the Sweatfree Code of Conduct. Sweatfree Code of Conduct procurement policies involving apparel, garments, and corresponding accessories may be permitted a phase-in period of up to one year for purposes of feasibility and providing sufficient notice to contractors and the general public. The appropriate procurement agency, in consultation with the Director of Industrial Relations, shall target other procurement categories based on the magnitude of verified sweatshop conditions and the feasibility of implementation, and may set phase-in goals and timetables of up to three years to achieve compliance with the principles of the Sweatfree Code of Conduct.
(4)In order to facilitate compliance with the Sweatfree Code of Conduct, the Department of Industrial Relations shall explore mechanisms employed by other governmental entities, including, but not limited to, New Jersey Executive Order No. 20, of 2002, to ensure that businesses that contract with this state are in compliance with this section and any regulations or requirements promulgated in conformance with this section, as amended by Section 2 of Chapter 711 of the Statutes of 2003. The mechanisms explored may include, but not be limited to, authorization to contract with a competent nonprofit organization that is neither funded nor controlled, in whole or in part, by a corporation that is engaged in the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies. The Department of Industrial Relations, in complying with this paragraph, shall also consider any feasible and cost-effective monitoring measures that will encourage compliance with the Sweatfree Code of Conduct.
(5)To ensure public access and confidence, the Department of Industrial Relations shall ensure public awareness and access to proposed contracts by postings on the internet and through communication to advocates for garment workers, unions, and other interested parties. The appropriate agencies shall establish a mechanism for soliciting and reviewing any information indicating violations of the Sweatfree Code of Conduct by prospective or current bidders, contractors, or subcontractors. The agencies shall make their findings public when they reject allegations against bidding or contracting parties.
(6)Contractors shall ensure that their subcontractors comply in writing with the Sweatfree Code of Conduct, under penalty of perjury. Contractors shall attach a copy of the Sweatfree Code of Conduct to the certification required by subdivision (a).
(g)No state agency may enter into a contract with any contractor unless the contractor meets the following requirements:
(1)Contractors and subcontractors in California shall comply with all appropriate state laws concerning wages, workplace safety, rights to association and assembly, and nondiscrimination standards as well as appropriate federal laws. Contractors based in other states in the United States shall comply with all appropriate laws of their states and appropriate federal laws. For contractors whose locations for manufacture or assembly are outside the United States, those contractors shall ensure that their subcontractors comply with the appropriate laws of countries where the facilities are located.
(2)Contractors and subcontractors shall maintain a policy of not terminating any employee except for just cause, and employees shall have access to a mediator or to a mediation process to resolve certain workplace disputes that are not regulated by the National Labor Relations Board.
(3)Contractors and subcontractors shall ensure that workers are paid, at a minimum, wages and benefits in compliance with applicable local, state, and national laws of the jurisdiction in which the labor, on behalf of the contractor or subcontractor, is performed. Whenever a state agency expends funds for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, the applicable labor standards established by the local jurisdiction through the exercise of either local police powers or local spending powers in which the labor, in compliance with the contract or purchase order for which the expenditure is made, is performed shall apply with regard to the contract or purchase order for which the expenditure is made, unless the applicable local standards are in conflict with, or are explicitly preempted by, state law. A state agency may not require, as a condition for the receipt of state funds or assistance, that a local jurisdiction refrain from applying the labor standards that are otherwise applicable to that local jurisdiction. The Department of Industrial Relations may, without incurring additional expenses, access information from any nonprofit organization, including, but not limited to, the World Bank, that gathers and disseminates data with respect to wages paid throughout the world, to allow the Department of Industrial Relations to determine whether contractors and subcontractors are compensating their employees at a level that enables those employees to live above the applicable poverty level.
(4)All contractors and subcontractors shall comply with the overtime laws and regulations of the country in which their employees are working.
(5)All overtime hours shall be worked voluntarily. Workers shall be compensated for overtime at either (A) the rate of compensation for regular hours of work, or (B) as legally required in the country of manufacture, whichever is greater.
(6)No person may be employed who is younger than the legal age for children to work in the country in which the facility is located. In no case may children under the age of 15 years be employed in the manufacturing process. Where the age for completing compulsory education is higher than the standard for the minimum age of employment, the age for completing education shall apply to this section.
(7)There may be no form of forced labor of any kind, including slave labor, prison labor, indentured labor, or bonded labor, including forced overtime hours.
(8)The work environment shall be safe and healthy and, at a minimum, be in compliance with relevant local, state, and national laws. If residential facilities are provided to workers, those facilities shall be safe and healthy as well.
(9)There may be no discrimination in hiring, salary, benefits, performance evaluation, discipline, promotion, retirement, or dismissal on the basis of age, sex, pregnancy, maternity leave status, marital status, race, nationality, country of origin, ethnic origin, disability, sexual orientation, gender identity, religion, or political opinion.
(10)No worker may be subjected to any physical, sexual, psychological, or verbal harassment or abuse, including corporal punishment, under any circumstances, including, but not limited to, retaliation for exercising their right to free speech and assembly.
(11)No worker may be forced to use contraceptives or take pregnancy tests. No worker may be exposed to chemicals, including glues and solvents, that endanger reproductive health.
(12)Contractors and bidders shall list the names and addresses of each subcontractor to be utilized in the performance of the contract, and list each manufacturing or other facility or operation of the contractor or subcontractor for performance of the contract. The list, which shall be maintained and updated to show any changes in subcontractors during the term of the contract, shall provide company names, owners or officers, addresses, telephone numbers, email addresses, and the nature of the business association.
(h)Any person who certifies as true any material matter pursuant to this section that they know to be false is guilty of a misdemeanor.
(i)The provisions of this section, as amended by Section 2 of Chapter 711 of the Statutes of 2003, shall be in addition to any other provisions that authorize the prosecution and enforcement of local labor laws and may not be interpreted to prohibit a local prosecutor from bringing a criminal or civil action against an individual or business that violates the provisions of this section.
(j)(1)The certification requirements set forth in subdivisions (a) and (f) do not apply to a credit card purchase of goods of two thousand five hundred dollars ($2,500) or less.
(2)The total amount of exemption authorized herein shall not exceed seven thousand five hundred dollars ($7,500) per year for each company from which a state agency is purchasing goods by credit card. It shall be the responsibility of each state agency to monitor the use of this exemption and adhere to these restrictions on these purchases.
(3)The requirements set forth in this section govern contracts and subcontracts entered into by a state agency, regardless of the place of performance.
(k)The amendments made to this section by the act adding this subdivision shall apply only to contracts entered into or renewed on or after January 1, 2026.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)(1)(A)Every contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, shall require that a contractor certify that to both of the following:
(i)That no apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state pursuant to the contract have been laundered or produced in whole or in part by sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor, or with the benefit of sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. The contractor shall agree to comply with this provision of the contract.
(ii)The contract complies with the requirements in subparagraph (B).
(B)Contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
(i)Engaging in severe forms of trafficking in persons during the performance period of the contract.
(ii)Using forced labor in the performance of the contract.
(iii)Destroying, concealing, confiscating, or otherwise denying access by an employee to the employees identity or immigration documents, including passports or drivers licenses, regardless of the issuing authority.
(iv)Using misleading or fraudulent practices during the recruitment of employees or offering of employment, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations during the recruitment of employees regarding the key terms and conditions of employment, including all of the following:
(I)Wages and fringe benefits.
(II)The location of work.
(III)The living conditions, housing, and associated costs, if provided or arranged by the employer or agent.
(IV)Any significant costs to be charged to the employee or potential employee.
(V)The hazardous nature of the work, if applicable.
(v)Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
(vi)Charging employees or potential employees recruitment fees.
(vii)(I)Failing to provide or pay for the cost of return transportation upon the end of employment, for either of the following:
(ia)An employee who is not a national of the country where the work is taking place and who was brought into that country for the purpose of working on a state contract or subcontract.
(ib)An employee who is not a United States national and who was brought into the United States for the purpose of working on a state contract or subcontract, if the payment of the cost is required under existing temporary worker programs or pursuant to a written agreement with the employee.
(II)The requirements of subclause (I) do not apply to an employee who meets one of the following criteria:
(ia)The employee is legally permitted to remain in the country where the work is performed and chooses to remain in the country where the work is performed.
(ib)The employee is exempted by an authorized official of the contracting agency, designated by a chief official of a state agency in accordance with agency procedures.
(III)For a victim of trafficking in persons who is seeking victim services or legal redress in the country or for a witness in an enforcement action related to trafficking in persons in which the work is performed, or a portion of the work is performed, the contractor shall provide or pay the cost of return transportation as specified in subclause (I) in a way that does not obstruct the victim services, legal redress, or witness activity, including offering return transportation to a witness at a time that supports the witnesss need to testify.
(viii)Providing or arranging housing that fails to meet the country where the work is performed housing and safety standards.
(ix)If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing.
(I)The written document shall be in a language the employee understands.
(II)If the employee must relocate to perform the work, the written document shall be provided to the employee at least five days prior to the employee relocating.
(III)The written document shall include, but is not limited to, a work description, wages, the prohibition on charging recruitment fees as specified in clause (vi), the work location, the living accommodations and associated costs, the amount of time off, the round-trip transportation arrangements, a grievance process, and the content of applicable laws and regulations that prohibit trafficking in persons.
(IV)The contracting officer shall consider the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons, and the number of non-United States citizens expected to be employed, when deciding whether to require work documents in the contract.
(C)Contractors and subcontractors are required to notify employees of the prohibited activities described in subparagraph (B) and the actions that may be taken against them for violations.
(D)The contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract under this section if that contractor has failed to certify compliance with subparagraph (A).
(E)The contractor shall also exercise due diligence in ensuring that its subcontractors comply with subparagraph (A), including requiring each subcontractor to sign a certification.
(2)Before a contract is awarded, a proposed contractor shall provide a certification to the contracting officer that states both of the following:
(A)The contractor has implemented a compliance plan that includes both of the following:
(i)Procedures to prevent any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)Procedures to monitor, detect, and terminate a contract with a subcontractor or agent engaging in any prohibited activities described in subparagraph (B) of paragraph (1).
(B)The contractor has conducted due diligence and one of the following applies:
(i)To the best of the contractors knowledge and belief, the contractor, its agents, proposed subcontractors, or their agents, have not engaged in any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)If the contractor is aware of abuses relating to the prohibited activities described in subparagraph (B) of paragraph (1), the contractor or proposed subcontractors have taken the appropriate remedial and referral actions.
(3)Before a subcontract is awarded, the contractor shall obtain a certification from the proposed subcontractor that states both of the following:
(A)The subcontractor has implemented a compliance plan that includes both of the following:
(i)Procedures to prevent any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)Procedures to monitor, detect, and terminate a contract with a subcontractor or agent engaging in any prohibited activities described in subparagraph (B) of paragraph (1).
(B)The subcontractor has conducted due diligence and one of the following applies:
(i)To the best of the subcontractors knowledge and belief, the subcontractor, its agents, proposed subcontractors, or their agents, have not engaged in any prohibited activities described in subparagraph (B) of paragraph (1).
(ii)If the subcontractor is aware of abuses relating to the prohibited activities described in subparagraph (B) of paragraph (1), the subcontractor or proposed subcontractors have taken the appropriate remedial and referral actions.
(4)A compliance plan must comply with all of the following criteria:
(A)The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, including the number of non-United States citizens expected to be employed and the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons.
(B)The compliance plan shall include, at minimum, all of the following:
(i)An awareness program to inform employees about the prohibited activities described in subparagraph (B) of paragraph (1), and the actions that will be taken against the employee for violations.
(ii)A process for employees to report, without fear of retaliation, activity inconsistent with the policy prohibiting trafficking in persons, including a means to make available to all employees the hotline phone number of the Global Human Trafficking Hotline at 1-844-888-FREE and email address at [email protected].
(iii)A recruitment and wage plan that does all of the following:
(I)Only permits the use of recruitment companies with trained employees.
(II)Prohibits charging recruitment fees to the employee or potential employee.
(III)Ensures that wages meet the legal requirements or explains any variance of the applicable country where the work is performed.
(iv)If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
(v)Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described in subparagraph (B) of paragraph (1) and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
(5)A contractor and subcontractor shall comply with all of the following requirements:
(A)Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described in subparagraph (B) of paragraph (1) and the individuals responsible for the conduct.
(B)Provide timely and complete responses to state auditors and investigators requests for documents.
(C)Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section, or any other applicable law or regulation establishing restrictions on trafficking in persons or the use of forced labor.
(D)Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
(E)Not prevent or hinder an employee from cooperating fully with government authorities.
(6)The contracts shall provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this section.
(2)(7)The contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractors records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations, or the Department of Justice determine the contractors compliance with the requirements under paragraph (1). this section.
(b)(1)Any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of the conditions specified in subdivision (a) when entering into a contract pursuant to subdivision (a), may, subject to subdivision (c), have any or all of the following sanctions imposed:
(A)The contract under which the prohibited apparel, garments, or corresponding accessories, equipment, materials, or supplies were laundered or provided may be voided at the option of the state agency to which the equipment, materials, or supplies were provided.
(B)The contractor may be assessed a penalty that shall be the greater of one thousand dollars ($1,000) or an amount equaling 20 percent of the value of the apparel, garments, corresponding accessories, equipment, materials, or supplies that the state agency demonstrates were produced in violation of the conditions specified in paragraph (1) of subdivision (a) and that were supplied to the state agency under the contract.
(C)The contractor may be removed from the bidders list for a period not to exceed 360 days.
(D)The contractor may be required to remove a contractor employee from the performance of the contract.
(E)The contractor may be required to terminate a subcontractor.
(F)Contract payments may be suspended until the contractor has taken appropriate remedial action.
(G)If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
(H)The state may decline to exercise available options under the contract.
(I)The contractor may be subject to suspension or debarment.
(2)If a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates subdivision (a) of Section 236.1 of the Penal Code, the federal Trafficking Victims Protection Act of 2000 (Division A, Public Law 106-386), as amended, federal Executive Order No. 13627 (September 25, 2012), or this section the contractor shall do all of the following:
(A)Notify its employees and agents of both of the following:
(i)The prohibited activities described in subparagraph (B) of paragraph (1) of subdivision (a).
(ii)The actions that will be taken against the contractor employee, subcontractor, subcontractor employee, or agent for violations of this section, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
(B)Take appropriate action, including termination against a contractor employee, subcontractor, subcontractor employee, or agent that violates the policy in subparagraph (B) of paragraph (1) of subdivision (a).
(C)Inform the contracting officer and the state agency with oversight immediately of both of the following:
(i)Any credible information it receives from any source, including the law enforcement of the country where the work is performed, that alleges a contractor employee, subcontractor, subcontractor employee, or their agent has engaged in conduct that violates the policy in subparagraph (B) of paragraph (1) of subdivision (a).
(ii)Any actions taken against a contractor employee, subcontractor, subcontractor employee, or their agent pursuant to this paragraph.
(D)If the allegation may be associated with more than one state contract, inform the contracting officer for the contract with the highest dollar value.
(E)Disclose to the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described in subparagraph (B) of paragraph (1) of subdivision (a) and the individuals responsible for the conduct.
(F)Provide timely and complete responses to state auditors and investigators requests for documents.
(G)(i)Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section, or any other applicable law or regulation establishing restrictions on trafficking in persons or the use of forced labor.
(ii)The requirement in clause (i) does not foreclose any contractor rights arising in law or the terms of the contract. The requirement does not do any of the following:
(I)Require the contractor to waive its attorney-client privilege or the protections afforded by the attorney work product doctrine.
(II)Require any officer, director, owner, employee, or agent of the contractor, including a sole proprietor, to waive their attorney-client privilege or Fifth Amendment to the Constitution rights.
(III)Restrict the contractor from conducting an internal investigation or defending a proceeding or dispute arising under the contract or related to a potential or disclosed violation.
(H)Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, prior to returning to the country from which the employee was recruited, and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
(I)Post the minimum requirements of the compliance plan as stated in subparagraph (B) of paragraph (1) of subdivision (a), no later than the initiation of contract performance, at the workplace, unless the work is to be performed in the field or not in a fixed location, and on the contractors internet website, if applicable. If posting at the workplace or on the internet website is impracticable, the contractor shall provide the minimum requirements of the compliance plan as stated in subparagraph (B) of paragraph (1) of subdivision (a) to each worker in writing.
(J)Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
(2)(3)Any moneys collected pursuant to this subdivision shall be deposited into the General Fund.
(c)(1)When imposing the sanctions described in subdivision (b), the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice. The hearing shall be before an administrative law judge of the Office of Administrative Hearings in accordance with the procedures specified in Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The administrative law judge shall take into consideration any measures the contractor has taken to ensure compliance with this section, and may waive any or all of the sanctions if it is determined that the contractor has acted in good faith.
(2)The administrative law judge may consider both of the following factors:
(A)Mitigating factors, including all of the following:
(i)The contractor had a compliance plan at the time of the violation.
(ii)The contractor was in compliance with the compliance plan at the time of the violation.
(iii)The contractor has taken appropriate remedial actions for the violations, including reparation to victims for the violations.
(B)Aggravating factors, including the contractor failed to abate an alleged violation or failed to enforce the requirements of a compliance plan when directed to do so.
(2)(3)The agency shall be assessed the cost of the administrative hearing, unless the agency has prevailed in the hearing, in which case the contractor shall be assessed the cost of the hearing.
(d)(1)(A)Upon receipt of credible information regarding a violation listed in paragraph (2) of subdivision (b), the contracting officer shall promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense.
(B)Upon receipt of credible information regarding a violation listed in paragraph (2) of subdivision (b), the contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
(d)(1)(2)Any state agency that investigates a complaint against a contractor for violation of this section may limit its investigation to evaluating the credible information provided by the person or entity submitting the complaint and the credible information provided by the contractor.
(2)(3)Whenever a contracting officer of the contracting agency has reason to believe that the contractor failed to comply with paragraph (1) of subdivision (a), the agency shall refer the matter for investigation to the head of the agency and, as the head of the agency determines appropriate, to either the Director of Industrial Relations or the Department of Justice.
(e)(1)For purposes of this section, forced labor shall have the same meaning as in Section 1307 of Title 19 of the United States Code. the following terms have the following meanings:
(2)(1)Abusive forms of child labor means any of the following:
(A)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.
(B)The use, procuring, or offering of a child for prostitution, for the production of pornography, or for pornographic performances.
(C)The use, procuring, or offering of a child for illicit activities, in particular for the production and trafficking of illicit drugs.
(D)All work or service exacted from or performed by any person under the age of 18 years 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.
(E)All work or service exacted from or performed by a child in violation of all applicable laws of the country of manufacture governing the minimum age of employment, compulsory education, and occupational health and safety.
(2)Agent means any individual, including a director, an officer, an employee, or an independent contractor, authorized to act on behalf of the organization.
(3)Apparel, garments, or corresponding accessories includes, but is not limited to, uniforms.
(4)Coercion means any of the following:
(A)Threats of serious harm to or physical restraint against any person.
(B)Any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person.
(C)The abuse or threatened abuse of the legal process.
(5)Contractor employee means an employee of the contractor directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance.
(6)Debt bondage means the status or condition of a debtor arising from a pledge by the debtor of their personal services or of those of a person under their control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined.
(7)Employee means a contractor employee or subcontractor employee.
(3)(8)Exploitation of children in sweatshop labor means 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.
(9)Forced labor means knowingly providing or obtaining the labor or services of a person by any of the following:
(A)By threats of serious harm to, or physical restraint against, that person or another person.
(B)By means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform labor or services, that person or another person would suffer serious harm or physical restraint.
(C)By means of the abuse or threatened abuse of law or the legal process.
(10)Involuntary servitude includes a condition of servitude induced by means of either of the following:
(A)Any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in those conditions, that person or another person would suffer serious harm or physical restraint.
(B)The abuse or threatened abuse of the legal process.
(11)Recruitment fees means fees of any type, including charges, costs, assessments, or other financial obligations, that are associated with the recruiting process, regardless of the time, manner, or location of imposition or collection of the fee. Recruitment fees include, but are not limited to, fees for any of the following, when they are associated with the recruiting process:
(A)Soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, training, providing orientation to, skills testing, recommending, or placing employees or potential employees.
(B)Advertising.
(C)Obtaining permanent or temporary labor certification, including any associated fees.
(D)Processing applications and petitions.
(E)Acquiring visas, including any associated fees.
(F)Acquiring photographs and identity or immigration documents, such as passports, including any associated fees.
(G)Accessing the job opportunity, including required medical examinations and immunizations, background, reference, and security clearance checks and examinations, and additional certifications.
(H)An employers recruiters, agents, or attorneys, or other notary or legal fees.
(I)Language interpretation or translation, arranging for or accompanying on travel, or providing other advice to employees or potential employees.
(J)Government-mandated fees, including border crossing fees, levies, or worker welfare funds.
(K)Transportation and subsistence costs, including both of the following:
(i)While in transit, including, but not limited to, airfare or costs of other modes of transportation, terminal fees, and travel taxes associated with travel from the country of origin to the country of performance and the return journey upon the end of employment.
(ii)From the airport or disembarkation point to the worksite.
(L)Security deposits, bonds, and insurance.
(M)Equipment charges.
(12)Severe forms of trafficking in persons means either of the following:
(A)Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
(B)The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
(13)State agency means any state agency in this state.
(14)Subcontract means any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract.
(15)Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor.
(16)Subcontractor employee means an employee of the subcontractor directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance.
(4)(17)Sweatshop labor means all work or service exacted from or performed by any person in violation of more than one law of the country of manufacture governing wages, employee benefits, occupational health, occupational safety, nondiscrimination, or freedom of association.
(5)Apparel, garments, or corresponding accessories includes, but is not limited to, uniforms.(6)(18)Notwithstanding any other provision of this section, forced labor and convict labor do not include work or services permissible under state law performed by an inmate or a person employed by the Prison Industry Authority.
Debt bondage means the status or condition of a debtor arising from a pledge by the debtor of their personal services or of those of a person under their control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined.(f)(1)On or before February 1, 2004, the Department of Industrial Relations shall establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts. Any state agency responsible for procurement shall ensure that the Sweatfree Code of Conduct is available for public review at least 30 calendar days between the dates of receipt and the final award of the contract. The Sweatfree Code of Conduct shall list the requirements that contractors are required to meet, as set forth in subdivision (g).
(2)Upon implementation in the manner described in paragraph (4), every contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or for the procurement of equipment or supplies, shall require that the contractor certify in accordance with the Sweatfree Code of Conduct that no apparel, garments, or corresponding accessories, or equipment, materials, or supplies, furnished to the state pursuant to the contract have been laundered or produced, in whole or in part, by sweatshop labor.
(3)The appropriate procurement agency, in consultation with the Director of Industrial Relations, shall employ a phased and targeted approach to implementing the Sweatfree Code of Conduct. Sweatfree Code of Conduct procurement policies involving apparel, garments, and corresponding accessories may be permitted a phasein phase-in period of up to one year for purposes of feasibility and providing sufficient notice to contractors and the general public. The appropriate procurement agency, in consultation with the Director of Industrial Relations, shall target other procurement categories based on the magnitude of verified sweatshop conditions and the feasibility of implementation, and may set phasein phase-in goals and timetables of up to three years to achieve compliance with the principles of the Sweatfree Code of Conduct.
(4)In order to facilitate compliance with the Sweatfree Code of Conduct, the Department of Industrial Relations shall explore mechanisms employed by other governmental entities, including, but not limited to, New Jersey Executive Order No. 20, of 2002, to ensure that businesses that contract with this state are in compliance with this section and any regulations or requirements promulgated in conformance with this section, as amended by Section 2 of Chapter 711 of the Statutes of 2003. The mechanisms explored may include, but not be limited to, authorization to contract with a competent nonprofit organization that is neither funded nor controlled, in whole or in part, by a corporation that is engaged in the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies. The Department of Industrial Relations, in complying with this paragraph, shall also consider any feasible and cost-effective monitoring measures that will encourage compliance with the Sweatfree Code of Conduct.
(5)To ensure public access and confidence, the Department of Industrial Relations shall ensure public awareness and access to proposed contracts by postings on the Internet internet and through communication to advocates for garment workers, unions, and other interested parties. The appropriate agencies shall establish a mechanism for soliciting and reviewing any information indicating violations of the Sweatfree Code of Conduct by prospective or current bidders, contractors, or subcontractors. The agencies shall make their findings public when they reject allegations against bidding or contracting parties.
(6)Contractors shall ensure that their subcontractors comply in writing with the Sweatfree Code of Conduct, under penalty of perjury. Contractors shall attach a copy of the Sweatfree Code of Conduct to the certification required by subdivision (a).
(g)No state agency may enter into a contract with any contractor unless the contractor meets the following requirements:
(1)Contractors and subcontractors in California shall comply with all appropriate state laws concerning wages, workplace safety, rights to association and assembly, and nondiscrimination standards as well as appropriate federal laws. Contractors based in other states in the United States shall comply with all appropriate laws of their states and appropriate federal laws. For contractors whose locations for manufacture or assembly are outside the United States, those contractors shall ensure that their subcontractors comply with the appropriate laws of countries where the facilities are located.
(2)Contractors and subcontractors shall maintain a policy of not terminating any employee except for just cause, and employees shall have access to a mediator or to a mediation process to resolve certain workplace disputes that are not regulated by the National Labor Relations Board.
(3)Contractors and subcontractors shall ensure that workers are paid, at a minimum, wages and benefits in compliance with applicable local, state, and national laws of the jurisdiction in which the labor, on behalf of the contractor or subcontractor, is performed. Whenever a state agency expends funds for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, the applicable labor standards established by the local jurisdiction through the exercise of either local police powers or local spending powers in which the labor, in compliance with the contract or purchase order for which the expenditure is made, is performed shall apply with regard to the contract or purchase order for which the expenditure is made, unless the applicable local standards are in conflict with, or are explicitly preempted by, state law. A state agency may not require, as a condition for the receipt of state funds or assistance, that a local jurisdiction refrain from applying the labor standards that are otherwise applicable to that local jurisdiction. The Department of Industrial Relations may, without incurring additional expenses, access information from any nonprofit organization, including, but not limited to, the World Bank, that gathers and disseminates data with respect to wages paid throughout the world, to allow the Department of Industrial Relations to determine whether contractors and subcontractors are compensating their employees at a level that enables those employees to live above the applicable poverty level.
(4)All contractors and subcontractors shall comply with the overtime laws and regulations of the country in which their employees are working.
(5)All overtime hours shall be worked voluntarily. Workers shall be compensated for overtime at either (A) the rate of compensation for regular hours of work, or (B) as legally required in the country of manufacture, whichever is greater.
(6)No person may be employed who is younger than the legal age for children to work in the country in which the facility is located. In no case may children under the age of 15 years be employed in the manufacturing process. Where the age for completing compulsory education is higher than the standard for the minimum age of employment, the age for completing education shall apply to this section.
(7)There may be no form of forced labor of any kind, including slave labor, prison labor, indentured labor, or bonded labor, including forced overtime hours.
(8)The work environment shall be safe and healthy and, at a minimum, be in compliance with relevant local, state, and national laws. If residential facilities are provided to workers, those facilities shall be safe and healthy as well.
(9)There may be no discrimination in hiring, salary, benefits, performance evaluation, discipline, promotion, retirement, or dismissal on the basis of age, sex, pregnancy, maternity leave status, marital status, race, nationality, country of origin, ethnic origin, disability, sexual orientation, gender identity, religion, or political opinion.
(10)No worker may be subjected to any physical, sexual, psychological, or verbal harassment or abuse, including corporal punishment, under any circumstances, including, but not limited to, retaliation for exercising his or her their right to free speech and assembly.
(11)No worker may be forced to use contraceptives or take pregnancy tests. No worker may be exposed to chemicals, including glues and solvents, that endanger reproductive health.
(12)Contractors and bidders shall list the names and addresses of each subcontractor to be utilized in the performance of the contract, and list each manufacturing or other facility or operation of the contractor or subcontractor for performance of the contract. The list, which shall be maintained and updated to show any changes in subcontractors during the term of the contract, shall provide company names, owners or officers, addresses, telephone numbers, e-mail email addresses, and the nature of the business association.
(h)Any person who certifies as true any material matter pursuant to this section that he or she knows they know to be false is guilty of a misdemeanor.
(i)The provisions of this section, as amended by Section 2 of Chapter 711 of the Statutes of 2003, shall be in addition to any other provisions that authorize the prosecution and enforcement of local labor laws and may not be interpreted to prohibit a local prosecutor from bringing a criminal or civil action against an individual or business that violates the provisions of this section.
(j)(1)The certification requirements set forth in subdivisions (a) and (f) do not apply to a credit card purchase of goods of two thousand five hundred dollars ($2,500) or less.
(2)The total amount of exemption authorized herein shall not exceed seven thousand five hundred dollars ($7,500) per year for each company from which a state agency is purchasing goods by credit card. It shall be the responsibility of each state agency to monitor the use of this exemption and adhere to these restrictions on these purchases.
(3)The requirements set forth in this section govern contracts and subcontracts entered into by a state agency, regardless of the place of performance.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
REVISIONS: HeadingLine 2.|
Date
|
Status
|
|---|---|
| Aug 29, 2025 | In committee: Held under submission. |
| Aug 18, 2025 | In committee: Referred to suspense file. |
| Jul 9, 2025 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 5. Noes 0.) (July 9). Re-referred to Com. on APPR. |
| Jun 24, 2025 | From committee: Do pass and re-refer to Com. on L., P.E. & R. with recommendation: To Consent Calendar. (Ayes 15. Noes 0.) (June 24). Re-referred to Com. on L., P.E. & R. |
| Jun 18, 2025 | Referred to Coms. on G.O. and L., P.E. & R. |
| Jun 4, 2025 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Jun 3, 2025 | Read third time. Passed. Ordered to the Senate. (Ayes 79. Noes 0. Page 2004.) |
| May 27, 2025 | Read second time. Ordered to third reading. |
| May 23, 2025 | Read second time and amended. Ordered returned to second reading. |
| May 23, 2025 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 0.) (May 23). |
| May 23, 2025 | Assembly Rule 63 suspended. (Ayes 51. Noes 16. Page 1644.) |
| May 7, 2025 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 24, 2025 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (April 23). Re-referred to Com. on APPR. |
| Apr 14, 2025 | Coauthors revised. |
| Apr 3, 2025 | From committee: Do pass and re-refer to Com. on L. & E. (Ayes 21. Noes 0.) (April 2). Re-referred to Com. on L. & E. |
| Mar 17, 2025 | Referred to Coms. on G.O. and L. & E. |
| Feb 4, 2025 | From printer. May be heard in committee March 6. |
| Feb 3, 2025 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 18, 2025 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 9, 2025 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Labor, Public Employment and Retirement |
Passed |
|
| Jun 24, 2025 | Do pass, but first be re-referred to the Committee on [Labor, Public Employment and Retirement ] with the recommendation: To Consent Calendar | Senate Standing Committee on Governmental Organization |
Passed |
|
| Jun 3, 2025 | AB 381 Stefani Assembly Third Reading | Assembly Floor |
Passed |
|
| May 23, 2025 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 23, 2025 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Labor and Employment |
Passed |
|
| Apr 2, 2025 | Do pass and be re-referred to the Committee on [Labor and Employment] | Assembly Standing Committee on Governmental Organization |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Asian Americans Advancing Justice Southern California | ** Support | |
| Bet Tzedek Legal Services | ** Support | |
| Board of Supervisors for the City and County of San Francisco | ** Support | |
| California Federation of Labor Unions | ** Support | |
| California Nurses Association | ** Support | |
| California Women's Law Center | ** Support | |
| Center for Human Rights and Constitutional Law | ** Support | |
| Central Valley Justice Coalition | ** Support | |
| Coalition to Abolish Slavery and Trafficking | ** Support | |
| Earthworks | ** Support | |
| Ethix Merch | ** Support | |
| Gaia | ** Support | |
| International Corporate Accountability Roundtable | ** Support | |
| International Institute of Los Angeles | ** Support | |
| Investor Advocates for Social Justice | ** Support | |
| jobs to move america | ** Support | |
| La Raza Centro Legal | ** Support | |
| Loyola Law School, the Sunita Jain Anti-trafficking Initiative | ** Support | |
| National Council of Jewish Women, San Francisco Bay Area Section | ** Support | |
| National Domestic Workers Alliance | ** Support | |
| Praeveni U.S., INC. | ** Support | |
| Public Citizen, Inc. | ** Support | |
| REACH | ** Support | |
| San Francisco Board of Supervisors | ** Support | |
| San Francisco Safehouse | ** Support | |
| Santa Barbara Women's Political Committee | ** Support | |
| Sierra Club California | ** Support | |
| Sunita Jain Anti-Trafficking Initiative, Loyola Law School | ** Support | |
| United Food And Commercial Workers Western States Council | ** Support | |
| Verité | ** Support | |
| Waymakers | ** Support | |
| Women's Employment Rights Clinic at Golden Gate University School of Law | ** Support | |
| Women's Transitional Living Center, INC. | ** Support | |
| Worksafe | ** Support |
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2025 - 2026 Regular Session
AB 381 (Stefani) - State contracts: certification process: forced labor and human trafficking
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
AB 381 revises, for a contract entered into or renewed on or after January 1, 2026, specified state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards; creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified; and expands the list of potential sanctions for violations of these provisions.
Fiscal Impact:
- The Department of General Services (DGS) reports:
- Total one-time cost of approximately $170,000 for a limited term staff for a term of 24 months to create, update, and manage initial revisions of state contracting regulations.
- Total ongoing costs of approximately $340,000 for two permanent staff to address a potential increase in contract disputes and lawsuits, assist with compliance workload, and address Small Business/Disabled Veteran Business Enterprise program inquiries, complaints, investigations, and referrals (General Fund).
- Unknown, potentially significant increase in state procurement cost pressures, as contractors generally pass increased business expenses to the state through increased contracting costs, higher bids, and quoted prices. DGS notes contractors may also choose not to do business with state agencies, limiting competition which may lead to increased bid costs. Additionally, DGS notes that to the extent this bill slows down the contract and procurement process thereby jeopardizing time sensitive funding sources or the use of low dollar expeditious acquisition methods, there may be a corresponding fiscal impact to state agencies’ procurement activities.
- Unknown, potentially significant fiscal impact across all impacted departments that utilize garment and equipment procurement or laundering services (General Fund and various special funds). Additional workload includes implementing new employment and contracting practices, performing new contract management duties to oversee labor and business practices of contractors and subcontractors, and enforcing compliance with the mandates of this bill.
Background:
Existing law imposes a series of requirements on state contractors awarded state contracts for the procurement of equipment, material, supplies, and garments. It requires that all state contractors comply with a DIR contractor responsibility program, including a “Sweat Free Code of Conduct.”
Generally, the Sweat Free Code of Conduct requires all contractors and subcontractors to certify, under penalty of perjury, that products supplied to the state are not produced with sweatshop labor or other abusive labor practices. The law is intended to ensure that contractors engaging in public contracts with the state adhere to labor standards that respect human rights and dignity.
The certification must affirm that none of the products supplied were made in conditions that violate those principles. Any person who certifies as true any material matter pursuant to the above requirement that they know to be false is guilty of a misdemeanor. The contracting certification requirements do not apply to credit card purchases of $2,500 or less (this exemption shall not exceed $7,500 per year for each company from which a state agency is purchasing goods).
Further, existing law requires contractors cooperate with state agencies by granting access to their records and premises for compliance checks by state agencies or the DIR, and outlines penalties for contractors found to be in violation, including voiding contracts, imposing fines, and banning from future contracts.
In cases where a contractor is found to have violated these conditions, the Sweat Free Code of Conduct outlines various sanctions including financial penalties of up to $1,000 or twenty percent of the value of the products and/or the contractor or subcontractor being barred from participating in future state contracts. Existing law grants contractors the ability to appeal sanctions, including hearings before an administrative law judge (ALJ). These sanctions are intended to serve as a deterrent against the exploitation of workers and ensure that contractors maintain high labor standards.
Contractors are required to ensure that their subcontractors are in compliance with the Sweat Free Code of Conduct. Any person who certifies as true any material matter pursuant to the above requirements that they know to be false is guilty of a misdemeanor.
Proposed Law:
- Requires, for a contract entered into or renewed on or after January 1, 2026, every contractor working with a state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to certify that the contract, among other things, complies with the requirement that contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
- Engaging in severe forms of trafficking in persons during the performance period of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority.
- Using misleading or fraudulent practices during the recruitment or hiring of employees, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations regarding the key terms and conditions of employment, as specified.
- Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
- Charging employees or potential employees recruitment fees.
Failing to provide or pay for the cost of required return transportation upon the end of employment, as specified.
- Providing or arranging housing that fails to meet the housing and safety standards of the country where the work is performed.
- If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing, as specified.
- Requires contractors and subcontractors to notify employees of the prohibited activities described above and the actions that may be taken against them for violations.
- Provides that the contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract described above if that contractor has failed to certify compliance, as specified.
- Requires a contractor, before a contract or subcontract is awarded, to provide or obtain from the proposed subcontractor and then provide to the contracting officer a certification that states both of the following: the contractor and/or subcontractor has implemented a compliance plan, as specified; and the contractor and/or subcontractor has conducted due diligence, as specified.
- Requires the compliance plan, contractors, and subcontractors to comply with specified criteria and disclosure requirements.
- Requires contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this bill.
- Provides that the contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations (DIR), or the Department of Justice (DOJ) to determine the contractor’s compliance with the requirements under this bill.
- Provides, for a contract entered into or renewed on or after January 1, 2026, that any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions when entering into a contract pursuant to the above, may, in addition to existing sanctions, have other specified sanctions applied.
- Provides that when imposing the sanctions, the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice, as specified.
- Authorizes, for a contract entered into or renewed on or after January 1, 2026, an administrative law judge, during a hearing requested by a contractor on the imposition of sanctions, to consider both mitigating and aggravating factors, as specified.
- Provides that when imposing the sanctions, the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice, as specified.
- Provides that if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates specified provisions of the Penal Code, the federal Trafficking Victims Protection Act of 2000, Federal Executive Order 13627, or this bill the contractor must complete specified notification and other requirements.
- Requires, for a contract entered into or renewed on or after January 1, 2026, a contracting officer, upon receipt of credible information regarding a violation described above, to promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense. The contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
- Specifies that requirements set forth in this bill shall govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
Related Legislation:
SB 1157 (Hurtado, 2024) was similar to this bill and would have revised existing contracting requirements to require compliance with specified human trafficking prohibitions; required contractors and subcontractors to certify that contracts comply with specified provisions of law under the penalty of perjury, as specified; required posted compliance plans, as specified; included due diligence and annual reporting requirements; and specified required actions for noncompliance violations, as specified. SB 1157 was held on the Suspense File in this committee.
-- END --
SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT
Senator Lola Smallwood-Cuevas, Chair
2025 - 2026 Regular
Bill No: AB 381 Hearing Date: July 9, 2025
Author: | Stefani | ||
Version: | May 23, 2025 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Emma Bruce | ||
SUBJECT: State contracts: certification process: forced labor and human trafficking
KEY ISSUE
This bill revises state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards. Additionally, the bill creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified, and expands the list of potential sanctions for violations of these provisions.
ANALYSIS
Existing law:
- Under the California Occupational Safety and Health Act, assures safe and healthful working conditions for all California workers by authorizing the enforcement of effective standards, assisting and encouraging employers to maintain safe and healthful working conditions, and by providing for research, information, education, training, and enforcement in the field of occupational safety and health. (Labor Code §6300)
- Requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of forced labor, as specified. (Public Contract Code §6108)
- Specifies that a contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations (DIR), or the Department of Justice (DOJ) to determine the contractor’s compliance, as specified. (Public Contract Code §6108(a))
- Authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions including, among others, voiding the contract under which the items were laundered or provided at the option of the state agency and removing the contractor from the bidder’s list for a period not to exceed 360 days. (Public Contract Code §6108(b))
- Prohibits any state agency from entering into a contract with any contractor unless the contractor meets the following requirements, among others:
- Contractors and subcontractors in California shall comply with all appropriate state laws concerning wages, workplace safety, rights to association and assembly, and nondiscrimination standards as well as appropriate federal laws.
- Contractors and subcontractors shall maintain a policy of not terminating any employee except for just cause, and employees shall have access to a mediator or to a mediation process to resolve certain workplace disputes that are not regulated by the National Labor Relations Board.
- Contractors and subcontractors shall ensure that workers are paid, at a minimum, wages and benefits in compliance with applicable local, state, and national laws of the jurisdiction in which the labor, on behalf of the contractor or subcontractor, is performed.
- All contractors and subcontractors shall comply with the overtime laws and regulations of the country in which their employees are working.
- There may be no form of forced labor of any kind, including slave labor, prison labor, indentured labor, or bonded labor, including forced overtime hours.
- No worker may be subjected to any physical, sexual, psychological, or verbal harassment or abuse, including corporal punishment, under any circumstances, including, but not limited to, retaliation for exercising his or her right to free speech and assembly.
- No worker may be forced to use contraceptives or take pregnancy tests. No worker may be exposed to chemicals, including glues and solvents, that endanger reproductive health.
- Contractors and bidders shall list the names and addresses of each subcontractor to be utilized in the performance of the contract, and list each manufacturing or other facility or operation of the contractor or subcontractor for performance of the contract. The list, which shall be maintained and updated to show any changes in subcontractors during the term of the contract, shall provide company names, owners or officers, addresses, telephone numbers, e-mail addresses, and the nature of the business association.
(Public Contract Code §6108(g))
- Specifies that any person who certifies as true any material matter pursuant to the above provisions that he or she know to be false is guilty of a misdemeanor. (Public Contract Code §6108(h))
- Requires DIR to establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts, as specified. (Public Contract Code §6108(f))
- Requires employers to establish, implement, and maintain an effective Injury and Illness Prevention Program (IIPP) that must include, among other things, a system for identifying and evaluating workplace hazards. (Labor Code §6401.7)
- Requires employers, as specified, to establish, implement, and maintain an effective workplace violence prevention plan that includes, among other elements, requirements to maintain incident logs, provide specified trainings, and conduct periodic reviews of the plan. (Labor Code §6401.9)
This bill:
- Requires, for a contract entered into or renewed on or after January 1, 2026, every contractor working with a state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to certify that the contract, among other things, complies with the requirement that contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
- Engaging in severe forms of trafficking in persons during the performance period of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority.
- Using misleading or fraudulent practices during the recruitment or hiring of employees, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations regarding the key terms and conditions of employment, as specified.
- Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
- Charging employees or potential employees recruitment fees.
- Failing to provide or pay for the cost of required return transportation upon the end of employment, as specified.
- Providing or arranging housing that fails to meet the housing and safety standards of the country where the work is performed.
- If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing, as specified.
- Requires contractors and subcontractors to notify employees of the prohibited activities described above and the actions that may be taken against them for violations.
- Provides that the contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract described above if that contractor has failed to certify compliance, as specified.
- Requires a contractor to exercise due diligence in ensuring that its subcontractors comply with the provisions in 1), above, including requiring each subcontractor to sign a certification.
- Requires a contractor, before a contract or subcontract is awarded, to provide or obtain from the proposed subcontractor and then provide to the contracting officer a certification that states both of the following: the contractor and/or subcontractor has implemented a compliance plan, as specified; and the contractor and/or subcontractor has conducted due diligence, as specified.
- Requires the compliance plan to comply with all of the following criteria:
- The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, as specified.
- The compliance plan shall include, at minimum, all of the following:
- An awareness program to inform employees about the prohibited activities described above and the actions that will be taken against them for violations.
- A process for employees to report activity inconsistent with the above provisions, as specified.
- A recruitment and wage plan, as specified.
- If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
- Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described above and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
- Requires a contractor and subcontractor to comply with all of the following:
- Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described above and the individuals responsible for the conduct.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section and other anti-human trafficking laws.
- Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
- Not prevent or hinder an employee from cooperating fully with government authorities.
- Requires contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with these provisions.
- Provides that any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions when entering into a contract pursuant to the above, may, in addition to existing sanctions, have any or all of the following sanctions applied:
- The contractor may be required to remove a contractor employee from the performance of the contract.
- The contractor may be required to terminate a subcontractor.
- Contract payments may be suspended until the contractor has taken appropriate remedial action.
- If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
- The state may decline to exercise available options under the contract.
- The contractor may be subject to suspension or debarment.
- Provides that if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates specified provisions of the Penal Code, the federal Trafficking Victims Protection Act of 2000, Federal Executive Order 13627, or these provisions, the contractor shall, among other things, do all of the following:
- Notify its employees and agents of the prohibited activities described above, and the consequences for violating these provisions, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
- Take appropriate action against a contractor employee, subcontractor, subcontractor employee, or agent that violates these provisions.
- Inform the contracting officer and all appropriate state agencies with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity and the individuals responsible for the conduct, as specified.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance, as specified.
- Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, as specified and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
- Post the minimum requirements of the compliance plan, as specified.
- Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
- Authorizes an administrative law judge, during a hearing requested by a contractor on the imposition of sanctions, to consider both mitigating and aggravating factors, as specified.
- Requires a contracting officer, upon receipt of credible information regarding a violation of these provisions, to promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense. The contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
- Defines “forced labor” as knowingly providing or obtaining the labor or services of a person by any of the following:
- By threats of serious harm to, or physical restraint against, that person or another person.
- By means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform labor or services, that person or another person would suffer serious harm or physical restraint.
- By means of the abuse or threatened abuse of law or the legal process.
- Defines “severe forms of trafficking in persons” as either of the following:
- Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
- The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
- Specifies that requirements set forth in this bill shall govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
- Includes various other definitions, as specified.
- Makes technical and conforming changes.
COMMENTS
1. Background:
Human and Labor Trafficking in California
A series of 2020 reports by the Little Hoover Commission highlighted the obstacles to tracking and preventing labor trafficking in California.[1] Among the issues identified were the absence of an aggressive state response and a focus on sex trafficking. The Commission also found that while several state agencies play a role in combatting human trafficking, there is no coordinated strategy to target the crime statewide. The state’s ability to “flip the script by proactively and strategically looking for traffickers” requires the effective use of state resources.[2]
In 2024, the Legislature passed and governor signed AB 1888 (Arambula, Chapter 614, Statutes of 2024), which created, upon appropriation by the Legislature, the Labor Trafficking Unit within the DOJ to receive labor trafficking reports from law enforcement agencies and other entities, and refer these reports to appropriate agencies for investigation, prosecution, or other remedies. The Legislature has yet to appropriate funds for this office.
Existing State Contracting Requirements
Existing law requires state contractor awardees to certify that no apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state have been laundered or produced in whole or in part by sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. Any person who knowingly provides a false certification is guilty of a misdemeanor.
Contractors must also comply with the Sweatfree Code of Conduct (Code). This Code requires, among other things, that all state contractors and subcontractors certify under penalty of perjury that they do not use any form of forced labor and that they adhere to all appropriate state and federal laws concerning wages, workplace safety, rights to association and assembly, and nondiscrimination standards.[3] The existing law section of this analysis lists all of the contractor and subcontractor requirements contained in the Code. In cases where a contractor violates these conditions, the Code outlines various sanctions including financial penalties of up to $1,000 or twenty percent of the value of the products and/or barring the contractor or subcontractor from participating in future state contracts.
Existing Federal Contractor Requirements
According to the Senate Governmental Organization Committee:
“The United States federal government has long had a policy prohibiting government employees and contractor personnel from engaging in trafficking persons. The efficacy of this policy was strengthened in 2015 when the Federal Acquisition Regulation (FAR) rule, entitled ‘Ending Trafficking in Persons,’ implemented trafficking-related prohibitions for federal contractors and subcontractors.
The FAR requires contractors and subcontractors to notify government procurement personnel whenever they receive credible information of human trafficking or violations of the prohibited practices associated with trafficking, and puts parties on notice that federal agencies may impose remedies, up to and including suspension and debarment, for failure to comply with the requirements.
The regulations apply to all contracts and prohibit contractors and subcontractors from engaging in prohibited practices including:
- Engaging in severe forms of trafficking persons.
- Procuring commercial sex acts during the performance of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to his or her identity or immigration documents.
- Using misleading or fraudulent recruitment practices.
- Using recruiters that do not comply with local labor laws.
- Charging employees recruitment fees.
- Failing to provide return transportation for employees upon the end of the contract.
- Providing or arranging housing that fails to meet the host country housing and safety standards.
- If required by law or contract, failing to provide an employment contract in writing.
The FAR also requires that U.S. government contracting personnel check the Department of Labor’s ‘List of Goods Produced by Forced or Indentured Child Labor’ when issuing a solicitation for supplies. If the product appears on the list, the contractor is required to certify that it will not supply any end product from countries (subject to certain exceptions) that appear on the list; or to certify that it has made a good faith effort to determine whether forced or indentured labor was used to mine, produce, or manufacture any end product to be furnished under the contract.
If U.S. government personnel have reason to believe that forced or indentured child labor was used to produce an end product, they are required to contact the agency Inspector General, the Attorney General, or the Secretary of the Treasury. Noncompliance with this regulation can lead to termination of the contract, suspension of the contractor, or debarment for up to three years.”
AB 381 Additional Certification Requirements, New Sanctions, and Compliance Plans
This bill would expand the list of prohibitions a contractor must certify compliance with before entering into a contract with any state agency. The expanded list is consistent with existing labor law protections. Additionally, the bill would expand the potential sanctions for a contractor who knew or should have known that items furnished to the state were laundered or produced in violation of specified conditions. Among other sanctions, a contractor may now be required to remove a contractor employee from the performance of the contract, terminate a subcontractor, or face suspension of contract payments. Lastly, the bill would require both contractors and subcontractors to implement and maintain a compliance plan to prevent and detect prohibited activities. Before the state awards a contract, these plans must be drafted and posted at the workplace and/or on the contractor’s website. These posting requirements are consistent with those required for other workplace protection plans.
2. Comments:
The provisions of this bill aim to protect workers by requiring contractors, subcontractors, and their agents to certify that they are not engaging in a series of prohibited actions and that they have implemented a compliance plan. Outside of the compliance plan, this certification only requires contractors to affirm they are following existing law and does not impose any new requirements that are not already illegal. Regardless of certification, a state contractor who violates any of the enumerated prohibitions faces potential sanctions.
The Sweatfree Code of Conduct, described above, requires contractors to certify under penalty of perjury that they comply with all appropriate state and federal laws concerning wages, workplace safety, rights to association and assembly, and nondiscrimination standards. Because federal and state law already outlaw all of the prohibitions enumerated in AB 381, any state contract awardee has already certified their compliance. For example, destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority, is included in the expanded certification requirement. Existing federal law, under 18 U.S.C. §1592, prohibits this, thus any state contract awardee has already certified compliance under the Code.
3. Need for this bill?
According to the author:
“The federal government, unlike California, has updated measures in place prohibiting companies who contract with government departments from engaging in human trafficking, forced labor, commercial sex and child labor trafficking. This bill would bring California in line with federal government policy by requiring that any company that contracts with the state takes specified measures to prevent human trafficking…
This bill would revise existing law by requiring that any business that wishes to contract with the state of California complies with updated provisions currently enumerated in federal regulations in 2016. These provisions would better identify and prevent human trafficking and other forms of labor exploitation in company supply chains if an applicant for a California contract or a contractor fails to certify that they are taking the enumerated steps to prevent trafficking in their supply chains, then they are not eligible to receive a California contract or can lose their procurement contract with the state…
This bill would provide further guidance on prohibited actions that involve fraud and misrepresentation, so that companies that contract with the California government would understand what is expected. Guidance would include failing to provide key terms of employment in a workers’ native language, charging recruitment fees, and failing to provide return transportation for workers.”
4. Proponent Arguments:
The sponsors of the measure, the Sunita Jain Anti-Trafficking Initiative, argue:
“AB 381 is not only good policy—it is also a cost-efficient measure with far-reaching implications for preventing human trafficking, both within California’s supply chains and globally, given the immense size and influence of California’s economy. The evidence supporting this legislation is rooted in publicly available data and findings from federal procurement experts, as well as reports like the Department of State’s Trafficking in
Persons Report (TIP Report), published annually…
California, with its nearly $300 billion budget, is uniquely positioned to lead the fight against forced labor, human trafficking, and child labor. By updating its government procurement policies, the state can ensure that goods purchased by its agencies are free from exploitation. Public procurement accounts for 13–20% of global GDP, and from 2022-23 alone, California spent $18.98 billion on contracts and purchases. California’s immense purchasing power provides an unparalleled opportunity to set global standards, compelling companies to scrutinize their supply chains and eliminate exploitative practices. Businesses, both within the United States and abroad, should not have to compete with unethical producers who undermine working families through the use of forced and trafficked labor…
AB 381 represents a unique opportunity for California to address labor exploitation, protect vulnerable workers, and establish its global leadership in combating trafficking— all while incurring minimal fiscal impact.”
5. Opponent Arguments:
None received.
6. Double Referral:
The Senate Rules Committee referred this bill to the Senate Governmental Organization Committee and to the Senate Labor, Public Employment and Retirement Committee.
7. Prior Legislation:
SB 1157 (Hurtado, 2024) was nearly identical to AB 381. This bill was held in the Senate Appropriations Committee.
AB 1888 (Arambula, Chapter 614, Statutes of 2024) established, upon appropriation by the Legislature, the Labor Trafficking Unit within the DOJ to receive labor trafficking reports from law enforcement agencies and other entities and refer these reports to appropriate agencies for investigation, prosecution, or other remedies.
AB 380 (Arambula, 2023) would have established the Labor Trafficking Unit within DIR’s DLSE. This bill was held in the Senate Appropriations Committee.
AB 235 (B. Rubio, 2023) would have established the Labor Trafficking Unit within the CRD. This bill was held in the Assembly Appropriations Committee.
AB 964 (Ortega, 2023) was nearly identical to AB 381. This bill was held in the Assembly Appropriations Committee.
SB 657 (Steinberg, Chapter 556, Statutes of 2010) enacted the California Transparency in Supply Chains Act to require retail sellers and manufacturers doing business in the state to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale, as specified.
SB 1231 (Corbett, 2010) would have made various changes including renaming the code of conduct to the Slave and Sweat Free Code of Conduct, mandating state procurement contracts to include certifications that products are not made with abusive labor, and increasing penalties for non-compliance, as specified. Governor Schwarzenegger vetoed this bill.
SB 578 (Alarcon, Chapter 711, Statutes of 2003) enacted non-sweatshop labor guidelines to state procurement policies to ensure that goods and services purchased by the State of California be produced in workplaces that adhere to minimum standards for protecting workers.
SB 1888 (Hayden, Chapter 891, Statutes of 2000) extended existing law that prohibits state agencies from procuring foreign goods made by forced labor, convict labor, or indentured labor to include goods made by abusive forms of child labor or exploitation of children in sweatshop labor.
AB 2457 (Figueroa, Chapter 1149, Statutes of 1996) required every contract entered into by a state agency for the procurement of equipment, materials, or supplies to specify that no foreign-made equipment, materials, or supplies furnished to the state may be produced by forced labor, convict labor, or indentured labor, as specified.
SUPPORT
Sunita Jain Anti-Trafficking Initiative, Loyola Law School (Sponsor)
Asian Americans Advancing Justice-southern California
Bet Tzedek Legal Services
Board of Supervisors for the City and County of San Francisco
California Federation of Labor Unions
California Nurses Association
California Women's Law Center
Center for Human Rights and Constitutional Law
Central Valley Justice Coalition
Coalition to Abolish Slavery and Trafficking
Earthworks
Ethix Merch
Gaia
International Corporate Accountability Roundtable
International Institute of Los Angeles
Investor Advocates for Social Justice
Jobs to Move America
LA Raza Centro Legal
Loyola Law School, the Sunita Jain Anti-trafficking Initiative
National Council of Jewish Women- San Francisco Bay Area Section
Praeveni U.S. Inc.
Public Citizen, Inc.
Reach
San Francisco Board of Supervisors
San Francisco Safehouse
Santa Barbara Women's Political Committee
Sierra Club California
United Food and Commercial Workers Western States Council
Verité
Waymakers
Women's Employment Rights Clinic at Golden Gate University School of Law
Women's Transitional Living Center, INC.
Worksafe
OPPOSITION
None received.
-- END --
Little Hoover Commission (September 2020, pages 3-4). Labor Trafficking: Strategies to Uncover this Hidden Crime ↑
Little Hoover Commission (September 2020, page 2). Labor Trafficking: Strategies to Uncover this Hidden Crime ↑
“Sweatfree Code of Conduct,” Department of Industrial Relations, https://www.dir.ca.gov/sweatfreecode.htm ↑
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Steve Padilla
Chair
2025 - 2026 Regular
Bill No: AB Hearing Date: 6/24/2025
Author: | Stefani, et, al. | ||
Version: | Amended | ||
Urgency: | Fiscal: | ||
Consultant: | |||
SUBJECT:
DIGEST: This bill revises, for a contract entered into or renewed on or after January 1, 2026, specified state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards; creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified; and expands the list of potential sanctions for violations of these provisions.
ANALYSIS:
Existing law:
- Requires a contract entered into by any state agency for the procurement of laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of labor, as specified.
- Makes any person who falsely certifies pursuant to the above provisions guilty of a misdemeanor.
- Authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions including, among others, voiding the contract under which the prohibited apparel, garments, or corresponding accessories, equipment, materials, or supplies were laundered or provided at the option of the state agency and removing the contractor from the bidder’s list for a period not to exceed 360 days.
- Specifies that any person who certifies as true any material matter pursuant to the above requirements that he or she know to be false is guilty of a misdemeanor.
- Specifies that the above certification requirements do not apply to credit card purchases of goods of $2,500 or less, as specified.
This bill:
- Requires, for a contract entered into or renewed on or after January 1, 2026, every contractor working with a state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to certify that the contract, among other things, complies with the requirement that contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
- Engaging in severe forms of trafficking in persons during the performance period of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority.
- Using misleading or fraudulent practices during the recruitment or hiring of employees, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations regarding the key terms and conditions of employment, as specified.
- Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
- Charging employees or potential employees recruitment fees.
- Failing to provide or pay for the cost of required return transportation upon the end of employment, as specified.
- Providing or arranging housing that fails to meet the housing and safety standards of the country where the work is performed.
- If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing, as specified.
- Requires contractors and subcontractors to notify employees of the prohibited activities described above and the actions that may be taken against them for violations.
- Provides that the contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract described above if that contractor has failed to certify compliance, as specified.
- Requires a contractor, before a contract or subcontract is awarded, to provide or obtain from the proposed subcontractor and then provide to the contracting officer a certification that states both of the following: the contractor and/or subcontractor has implemented a compliance plan, as specified; and the contractor and/or subcontractor has conducted due diligence, as specified.
- Requires the compliance plan to comply with all of the following criteria:
- The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, as specified.
- The compliance plan shall include, at minimum, all of the following:
- An awareness program to inform employees about the prohibited activities described above and the actions that will be taken against them for violations.
- A process for employees to report activity inconsistent with the above provisions, as specified.
- A recruitment and wage plan, as specified.
- If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
- Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described above and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
- Requires a contractor and subcontractor to comply with all of the following:
- Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described above and the individuals responsible for the conduct.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section and other anti-human trafficking laws.
- Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
- Not prevent or hinder an employee from cooperating fully with government authorities.
- Requires contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this bill.
- Provides that the contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations (DIR), or the Department of Justice (DOJ) to determine the contractor’s compliance with the requirements under this bill.
- Provides, for a contract entered into or renewed on or after January 1, 2026, that any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions when entering into a contract pursuant to the above, may, in addition to existing sanctions, have any or all of the following sanctions applied:
- The contractor may be required to remove a contractor employee from the performance of the contract.
- The contractor may be required to terminate a subcontractor.
- Contract payments may be suspended until the contractor has taken appropriate remedial action.
- If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
- The state may decline to exercise available options under the contract.
- The contractor may be subject to suspension or debarment.
- Provides that if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates specified provisions of the Penal Code, the federal Trafficking Victims Protection Act of 2000, Federal Executive Order 13627, or this bill the contractor must, among other things:
- Notify its employees and agents of the prohibited activities described above, and the actions that will be taken for violations of this bill, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
- Inform the contracting officer and all appropriate state agencies with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity and the individuals responsible for the conduct, as specified.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance, as specified.
- Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, as specified and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
- Post the minimum requirements of the compliance plan, as specified.
- Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
- Provides that when imposing the above sanctions, the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice, as specified.
- Authorizes, for a contract entered into or renewed on or after January 1, 2026, an administrative law judge, during a hearing requested by a contractor on the imposition of sanctions, to consider both mitigating and aggravating factors, as specified.
- Requires, for a contract entered into or renewed on or after January 1, 2026, a contracting officer, upon receipt of credible information regarding a violation described above, to promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense. The contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
- Defines “severe forms of trafficking in persons” as either of the following:
- Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
- The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
- Includes various other definitions for words and terms relevant to the bill, as specified.
- Specifies that requirements set forth in this bill shall govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
17) Makes technical and conforming changes.
Background
Author Statement. According to the author’s office, “forced labor and human trafficking remain pervasive in global supply chains, with millions of workers trapped in exploitative conditions. As the world’s fifth-largest economy, California has the power and the responsibility to lead in the fight against human trafficking. By ensuring that no taxpayer money contributes to forced labor, we take a stand for human dignity and justice—not just here in California, but across the globe. Every dollar our state spends should uphold our values, not enable exploitation. AB 381 strengthens California’s procurement policies by aligning them with federal standards, requiring companies to take proactive steps to prevent trafficking and forced labor in their supply chains. This legislation uses our economic strength to protect the most vulnerable, reinforcing our commitment to human rights and ensuring taxpayer dollars do not support exploitation.”
State Procurement and Sweat Free Code of Conduct. Existing law imposes a series of requirements on state contractors awarded state contracts for the procurement of equipment, material, supplies, and garments. It requires that all state contractors comply with a DIR contractor responsibility program, including a “Sweat Free Code of Conduct.”
Generally speaking, existing law requires contractors to certify that products supplied to the state are not produced with sweatshop labor or other abusive labor practices. The law is intended to ensure that contractors engaging in public contracts with the state adhere to labor standards that respect human rights and dignity.
The certification must affirm that none of the products supplied were made in conditions that violate those principles. Any person who certifies as true any material matter pursuant to the above requirement that they know to be false is guilty of a misdemeanor. The contracting certification requirements do not apply to credit card purchases of $2,500 or less (this exemption shall not exceed $7,500 per year for each company from which a state agency is purchasing goods).
Further, existing law requires contractors cooperate with state agencies by granting access to their records and premises for compliance checks by state agencies or the DIR, and outlines penalties for contractors found to be in violation, including voiding contracts, imposing fines, and banning from future contracts.
In cases where a contractor is found to have violated these conditions, the Sweat Free Code of Conduct outlines various sanctions including financial penalties of up to $1,000 or twenty percent of the value of the products and/or the contractor or subcontractor being barred from participating in future state contracts. Existing law grants contractors the ability to appeal sanctions, including hearings before an administrative law judge (ALJ). These sanctions are intended to serve as a deterrent against the exploitation of workers and ensure that contractors maintain high labor standards.
Contractors are required to ensure that their subcontractors are in compliance with the Sweat Free Code of Conduct, under penalty of perjury. Any person who certifies as true any material matter pursuant to the above requirements that they know to be false is guilty of a misdemeanor.
Federal Acquisition Regulation. The United States federal government has long had a policy prohibiting government employees and contractor personnel from engaging in trafficking persons. The efficacy of this policy was strengthened in 2015 when the Federal Acquisition Regulation (FAR) rule, entitled “Ending Trafficking in Persons,” implemented trafficking-related prohibitions for federal contractors and subcontractors.
The FAR requires contractors and subcontractors to notify government procurement personnel whenever they receive credible information of human trafficking or violations of the prohibited practices associated with trafficking, and puts parties on notice that federal agencies may impose remedies, up to and including suspension and debarment, for failure to comply with the requirements.
The regulations apply to all contracts and prohibit contractors and subcontractors from engaging in prohibited practices including:
- Engaging in severe forms of trafficking persons.
- Procuring commercial sex acts during the performance of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to his or her identity or immigration documents.
- Using misleading or fraudulent recruitment practices.
- Using recruiters that do not comply with local labor laws.
- Charging employees recruitment fees.
- Failing to provide return transportation for employees upon the end of the contract.
- Providing or arranging housing that fails to meet the host country housing and safety standards.
- If required by law or contract, failing to provide an employment contract in writing.
The FAR also requires that U.S. government contracting personnel check the Department of Labor’s “List of Goods Produced by Forced or Indentured Child Labor” when issuing a solicitation for supplies. If the product appears on the list, the contractor is required to certify that it will not supply any end product from countries (subject to certain exceptions) that appear on the list; or to certify that it has made a good faith effort to determine whether forced or indentured labor was used to mine, produce, or manufacture any end product to be furnished under the contract.
If U.S. government personnel have reason to believe that forced or indentured child labor was used to produce an end product, they are required to contact the agency Inspector General, the Attorney General, or the Secretary of the Treasury. Noncompliance with this regulation can lead to termination of the contract, suspension of the contractor, or debarment for up to three years.
Supporters of this bill highlight that since new anti-trafficking measures in federal procurement have been enacted over the previous decade, there were over 180 investigations related to forced labor in federal contracts initiated to better protect workers. Overall, contractors took curative actions to prevent trafficking and protect workers as a result of those investigations. The federal protections resulted in one terminated federal contract over eight years. In the other 179 investigations, terminations were not mentioned, and less severe penalties were imposed, such as cure notices and/or termination of personnel.
Expanding Human Trafficking Protections. This bill, for contracts entered into or renewed after January 1, 2026, expands existing certification requirements for public contracts by requiring that contractors certify, to the existing prohibitions as well as expanding upon existing human trafficking protections. Specifically, the bill identifies severe forms of trafficking in persons, using misleading recruitment practices, charging recruitment fees, and failing to meet safety standards in housing or employment contracts. These new additions broaden the scope of labor abuses covered under law.
This new certification must be more comprehensive, affirming adherence not only to the prohibition of sweatshop labor but also to a detailed series of standards, as specified, aimed at eliminating trafficking and ensuring the fair treatment of workers. A notable aspect of this bill is the introduction of specific requirements for the treatment of workers, including prohibitions against confiscating identity documents and failing to provide or pay for return transportation at the end of employment under certain conditions.
Additionally, this bill requires contractors to implement and maintain a compliance plan to prevent and detect prohibited activities. The plan is required to outline procedures to prevent prohibited labor practices and includes requirements to monitor and remedy any such practices by subcontractors or agents. Contractors must provide annual certifications to the contracting officer, attesting to their compliance with these plans. The plan must be posted at the workplace.
This bill requires contractors to take appropriate remedial and referral actions if abuses are known, and expands the list of sanctions for noncompliance including measures such as the termination of subcontractors, suspension of contract payments, and loss of award fees. Upon receipt of credible information regarding a violation, the contracting officer is required to promptly notify the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense.
Back to the Future. This bill is substantially similar to SB 1157 (Hurtado, 2024) of last year that would have revises existing contracting requirements to require compliance with specified human trafficking prohibitions; requires contractors and subcontractors to certify that contracts comply with specified provisions of law under the penalty of perjury, as specified; requires posted compliance plans, as specified; includes due diligence and annual reporting requirements; and specifies required actions for noncompliance violations, as specified. That bill was held on the Senate Appropriations Committee Suspense File.
Prior/Related Legislation
SB 1157 (Hurtado, 2024) would have revised existing contracting requirements to require compliance with specified human trafficking prohibitions; required contractors and subcontractors to certify that contracts comply with specified provisions of law under the penalty of perjury, as specified; required posted compliance plans, as specified; included due diligence and annual reporting requirements; and specified required actions for noncompliance violations, as specified. (Held in the Senate Appropriations Committee Suspense File)
AB 964 (Ortega, 2023) would have, revised the current contracting requirements for any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to also require a contractor to certify, under penalty of perjury, that the contract complies with specified requirements relating to human trafficking, including certain prohibitions on contractors, contractor employees, subcontractors, subcontractor employees, and their agents. (Held on the Assembly Appropriations Committee Suspense File)
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT:
Sunita Jain Anti-Trafficking Initiative (Source)
Asian Americans Advancing Justice-southern California
Bet Tzedek Legal Services
Board of Supervisors for the City and County of San Francisco
California Federation of Labor Unions, AFL-CIO
California Nurses Association
California Women's Law Center
Center for Human Rights and Constitutional Law
Central Valley Justice Coalition
Coalition to Abolish Slavery and Trafficking
Earthworks
Ethix Merch
GAIA
International Corporate Accountability Roundtable
International Institute of Los Angeles
Investor Advocates for Social Justice
Jobs to Move America
LA Raza Centro Legal
National Council of Jewish Women- San Francisco Bay Area Section
Praeveni U.S. INC.
Public Citizen, INC
Reach
San Francisco Safehouse
Santa Barbara Women's Political Committee
Sierra Club California
The Women's Employment Rights Clinic (WERC) At GGU
UFCW - Western States Council
Verité
Waymakers
Women's Transitional Living Center, INC.
Worksafe
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: In support of the bill, the Sunita Jain Anti-Trafficking Initiative writes that, “AB 381 is not only good policy—it is also a cost-efficient measure with far-reaching implications for preventing human trafficking, both within California’s supply chains and globally, given the immense size and influence of California’s economy. The evidence supporting this legislation is rooted in publicly available data and findings from federal procurement experts, as well as reports like the Department of State’s Trafficking in Persons Report (TIP Report), published annually.”
Further, “[f]orced labor has infiltrated virtually every industry, tainting supply chains and the products they create. According to the Bureau of International Labor Affairs (ILAB), at least 204 categories of goods from 82 countries sold in the United States are produced using forced labor—a significant increase from 155 categories across 78 countries reported in 2022. This alarming rise underscores the urgent need for stronger regulations to combat this growing crisis.”
DUAL-REFERRAL: Senate Committee on Governmental Organization and Senate Committee on Labor, Public Employment & Retirement
ASSEMBLY THIRD READING
ATR Bill Id:AB 381
Author:(Stefani)
As Amended Ver:May 23, 2025
Majority vote
SUMMARY
Provides for a contract entered into or renewed on or after January 1, 2026, revises specified state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards; also creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified, and expands the list of potential sanctions for violations of these provisions.
Major Provisions
1) Provides for a contract entered into or renewed on or after January 1, 2026, revise specified contracting requirements to also require a contractor to certify that the contract complies with specified requirements relating to human trafficking, including certain prohibitions on contractors, contractor employees, subcontractors, subcontractor employees, and their agents.
2) Expands existing state contracting requirements for: (a) procurement or laundering of apparel, garments, or corresponding accessories, or (b) procurement of non-public works related equipment, materials, or supplies, to additionally require a contractor to certify the contract complies with specified requirements against human trafficking. The contractor must exercise due diligence to ensure subcontractors also comply with these requirements.
3) Requires a contractor to provide the contracting officer with certification that a compliance plan to prevent prohibited activities, including procedures to monitor, detect, and terminate a subcontractor in violation, has been implemented.
4) Revises the definition of forced labor to mean knowingly providing or obtaining labor or services of a person by, among other things, threats of serious harm to, or physical restraint against, that person or another person.
4) Provides, for a contract entered into or renewed on or after January 1, 2026, authorize additional sanctions, including, among others, requiring a contractor to remove a contractor employee from the performance of the contract, requiring the contractor to terminate a subcontractor, and suspending contract payments until the contractor has taken appropriate remedial action. The bill would also specify that these requirements govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
5) States for a contract entered into or renewed on or after January 1, 2026, authorize the administrative law judge to additionally consider mitigating factors and aggravating factors, as specified.
6) Provides, for a contract entered into or renewed on or after January 1, 2026, authorize the state agency to limit its investigation to credible information.
COMMENTS
Background.
The U.S. Department of State's 2024 Trafficking in Persons Report states that an estimated 27 million people worldwide are exploited for labor, services, and commercial sex.
Under current law, state contractor awardees must certify that no apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state pursuant to the contract have been laundered or produced in whole or in part by, or with the benefit of, sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. (Public Contract Code Section 6108(a)(1).) This bill requires a second, more detailed certification against forced labor.
Additionally, the state's Sweatfree Code of Conduct requires that all state contractors and subcontractors certify under penalty of perjury that they, among other things, do not use any form of forced labor, as well as comply with all applicable state and federal laws. (Public Contract Code Section 6108(g).)
In 2012, President Obama signed Executive Order (EO) 13627 directing the administration to adopt regulations strengthening the federal government's zero-tolerance policy on human trafficking by federal contractors and subcontractors in solicitations, contracts, and subcontracts for supplies and services. The EO was ultimately codified in Title 48, Code of Federal Regulations, Subpart 22.17 – Combatting Trafficking in Persons. This bill adds similar provisions to state law, prescribing specific anti-trafficking certification requirements more akin to regulation than statute.
In 2020 the Little Hoover Commission (LHC) released three reports reviewing the state's response to labor trafficking. Among the issues identified were the absence of an aggressive state response and a focus on sex trafficking. While the focus on sex trafficking, particularly among minors, is important, relatively few resources are devoted to labor trafficking. The LHC believes California must take stronger actions to detect this crime, help victims, and prosecute perpetrators. The LHC found that while several state agencies play a role in combatting human trafficking, there is no coordinated strategy to target the crime statewide.
In 2024, the Legislature passed and governor signed AB 1888, which created, upon appropriation by the Legislature, the Labor Trafficking Unit within the DOJ to receive labor trafficking reports from law enforcement agencies and other entities, and refer these reports to appropriate agencies for investigation, prosecution, or other remedies. The Legislature has yet to appropriate funds to stand up this office.
The intent of AB 381 is to strengthen efforts to combat human trafficking by ensuring that public funds are not awarded to contractors involved in severe forms of trafficking. The bill aims to protect workers by mandating that contractors, subcontractors, and their agents certify they are not engaging in prohibited actions relating to human trafficking and have implemented a compliance plan.
According to the Author
This bill strengthens California's procurement policies by aligning them with federal standards, requiring companies to take proactive steps to prevent trafficking and forced labor in their supply chains. This legislation uses our economic strength to protect the most vulnerable, reinforcing our commitment to human rights and ensuring taxpayer dollars do not support exploitation.
Arguments in Support
This bill is sponsored by the Sunita Jain Anti-Trafficking Initiative and supported by various civil rights and workers' rights groups. The sponsor of this measure, states that "California, with its nearly $300 billion budget, is uniquely positioned to lead the fight against forced labor, human trafficking, and child labor. By updating its government procurement policies, the state can ensure that goods purchased by its agencies are free from exploitation. Public procurement accounts for 13–20% of global GDP, and from 2022-23 alone, California spent $18.98 billion on contracts and purchases. California's immense purchasing power provides an unparalleled opportunity to set global standards, compelling companies to scrutinize their supply chains and eliminate exploitative practices. Businesses, both within the United States and abroad, should not have to compete with unethical producers who undermine working families through the use of forced and trafficked labor."
Arguments in Opposition
None on file
FISCAL COMMENTS
According to the Assembly Committee on Appropriations Committee analysis: 1) Costs of approximately $510,000 each year for the first two years, and $340,000 annually thereafter, to the Department of General Services (DGS) for two permanent positions and one limited-term position to update the State Contract Manual and related documents, address potential increases in contract disputes and lawsuits due to suspended payments and contract cancellations, develop new procurement training content, and perform other contract enforcement and compliance workload (General Fund).
2) Costs of an unknown, but potentially significant, amount across state agencies to implement new contracting practices. More significantly, the added administrative burden on contractors and subcontractors may result in various state agencies paying more for specified goods (General Fund or special fund).
Generally, contractors are likely to attempt to recover the increased cost of preparing a more complicated bid through their bid prices. The new requirement may also deter some contractors from bidding on state contracts. Businesses that regularly bid on state contracts are more likely to comply and try to pass along costs to the state, but new entrants and less frequent bidders are more likely to be deterred from the process. In cases where a foregone contractor would have been the low bidder, the state will pay more, and remaining contractors may face less competitive pressure when bidding on contracts, thus increasing contract costs. Additionally, to the extent this bill slows down the contract and procurement process, thereby jeopardizing time sensitive funding sources or the use of low dollar expeditious acquisition methods, there may be a corresponding fiscal impact to state agencies' procurement activities.
VOTES
ASM GOVERNMENTAL ORGANIZATION: 21-0-1
YES: Blanca Rubio, Davies, Alvarez, Berman, Bryan, DeMaio, Dixon, Fong, Gabriel, Gipson, McKinnor, Nguyen, Pacheco, Ramos, Michelle Rodriguez, Sanchez, Solache, Soria, Ta, Valencia, Wallis
ABS, ABST OR NV: Carrillo
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Ortega, Flora, Chen, Elhawary, Kalra, Lee, Ward
ASM APPROPRIATIONS: 11-0-4
YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache
ABS, ABST OR NV: Sanchez, Dixon, Ta, Tangipa
UPDATED
VERSION: May 23, 2025
CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0000893
Date of Hearing: May 7, 2025
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 381
Author:(Stefani) – As Introduced Ver:February 3, 2025
Policy Committee: | Governmental Organization | Vote: | 21 - 0 |
Labor and Employment | 7 - 0 | ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill requires certain contractors to certify, under penalty of perjury, to a state agency that the contract being entered into complies with certain requirements to combat human trafficking.
Specifically, this bill:
- Expands existing state contracting requirements for: (a) procurement or laundering of apparel, garments, or corresponding accessories, or (b) procurement of non-public works related equipment, materials, or supplies, to additionally require a contractor to certify the contract complies with specified requirements against human trafficking. The contractor must exercise due diligence to ensure subcontractors also comply with these requirements.
- Requires a contractor to provide the contracting officer with certification that a compliance plan to prevent prohibited activities, including procedures to monitor, detect, and terminate a subcontractor in violation, has been implemented.
- Authorizes sanctions against a contractor that violates the above-described requirements, including suspension of contract payments and loss of award fee.
FISCAL EFFECT:
- Costs of an unknown amount, likely in the hundreds of thousands of dollars in the first years but less in subsequent years, to the Department of General Services (DGS) to update the State Contract Manual and related documents, address potential increases in contract disputes and lawsuits due to suspended payments and contract cancellations, develop new procurement training content, and perform other contract enforcement and compliance workload (General Fund).
- Costs of an unknown, but potentially significant, amount across state agencies to implement new contracting practices. More significantly, the added administrative burden on contractors and subcontractors may result in various state agencies paying more for specified goods (General Fund or special fund).
Generally, contractors are likely to attempt to recover the increased cost of preparing a more complicated bid through their bid prices. The new requirement may also deter some contractors from bidding on state contracts. Businesses that regularly bid on state contracts are more likely to comply and try to pass along costs to the state, but new entrants and less frequent bidders are more likely to be deterred from the process. In cases where a foregone contractor would have been the low bidder, the state will pay more, and remaining contractors may face less competitive pressure when bidding on contracts, thus increasing contract costs. Additionally, to the extent this bill slows down the contract and procurement process, thereby jeopardizing time sensitive funding sources or the use of low dollar expeditious acquisition methods, there may be a corresponding fiscal impact to state agencies’ procurement activities.
COMMENTS:
- Purpose. According to the author:
This bill strengthens California’s procurement policies by aligning them with federal standards, requiring companies to take proactive steps to prevent trafficking and forced labor in their supply chains. This legislation uses our economic strength to protect the most vulnerable, reinforcing our commitment to human rights and ensuring taxpayer dollars do not support exploitation.
This bill is sponsored by the Sunita Jain Anti-Trafficking Initiative and supported by various civil rights and workers’ rights groups.
- Certification Against Human Trafficking. Existing state law requires a contractor to certify that procured apparel, garments, corresponding accessories, equipment, materials, or supplies are not laundered or 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. This bill requires a second, more detailed certification against forced labor.
In 2012, President Obama signed Executive Order (EO) 13627 directing the administration to adopt regulations strengthening the federal government’s zero-tolerance policy on human trafficking by federal contractors and subcontractors in solicitations, contracts, and subcontracts for supplies and services. The EO was ultimately codified in Title 48, Code of Federal Regulations, Subpart 22.17 – Combatting Trafficking in Persons. This bill adds similar provisions to state law, prescribing specific anti-trafficking certification requirements more akin to regulation than statute.
- Prior Legislation. AB 1888 (Arambula), Chapter 614, Statutes of 2024, established, upon appropriation, the Labor Trafficking Unit within the Department of Justice to receive labor trafficking reports from law enforcement agencies and other entities and refer these reports to appropriate agencies for investigation, prosecution, or other remedies.
SB 1157 (Hurtado), of the 2023-24 Legislative Session, was substantially similar to this bill. SB 1157 was held on the Senate Appropriations Committee’s suspense file.
AB 964 (Ortega), of the 2023-24 Legislative Session, was substantially similar to this bill. AB 964 was held on this committee’s suspense file.
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: April 23, 2025
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Liz Ortega, Chair
ABPCA Bill Id:AB 381 (
Author:Stefani) – As Introduced Ver:February 3, 2025
SUBJECT: State contracts: certification process: forced labor and human trafficking
SUMMARY: Revises existing state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards; also creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified, and expands the list of potential sanctions for violations of these provisions. Specifically, this bill:
- Requires every contractor working with a state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to certify that the contract, among other things, complies with the requirement that contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
- Engaging in severe forms of trafficking in persons during the performance period of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority.
- Using misleading or fraudulent practices during the recruitment or hiring of employees, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations regarding the key terms and conditions of employment, as specified.
- Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
- Charging employees or potential employees recruitment fees.
- Failing to provide or pay for the cost of required return transportation upon the end of employment, as specified.
- Providing or arranging housing that fails to meet the housing and safety standards of the country where the work is performed.
- If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing, as specified.
- Requires contractors and subcontractors to notify employees of the prohibited activities described above and the actions that may be taken against them for violations.
- Provides that the contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract described above if that contractor has failed to certify compliance, as specified.
- Requires a contractor to exercise due diligence in ensuring that its subcontractors comply with the provisions in 1) above.
- Requires a contractor, before a contract or subcontract is awarded, to provide or obtain from the proposed subcontractor and then provide to the contracting officer a certification that states both of the following: the contractor and/or subcontractor has implemented a compliance plan, as specified; and the contractor and/or subcontractor has conducted due diligence, as specified.
- Requires the compliance plan to comply with all of the following criteria:
- The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, as specified.
- The compliance plan shall include, at minimum, all of the following:
- An awareness program to inform employees about the prohibited activities described above and the actions that will be taken against them for violations.
- A process for employees to report activity inconsistent with the above provisions, as specified.
- A recruitment and wage plan, as specified.
- If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
- Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described above and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
- Requires a contractor and subcontractor to comply with all of the following:
- Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described above and the individuals responsible for the conduct.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section and other anti-human trafficking laws.
- Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
- Not prevent or hinder an employee from cooperating fully with government authorities.
- Requires contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this bill.
- Provides that the contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, Department of Industrial Relations (DIR), or the Department of Justice (DOJ) to determine the contractor’s compliance with the requirements under this bill.
- Provides that any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions when entering into a contract pursuant to the above, may, in addition to existing sanctions, have any or all of the following sanctions applied:
- The contractor may be required to remove a contractor employee from the performance of the contract.
- The contractor may be required to terminate a subcontractor.
- Contract payments may be suspended until the contractor has taken appropriate remedial action.
- If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
- The state may decline to exercise available options under the contract.
- The contractor may be subject to suspension or debarment.
- Provides that if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates specified provisions of the Penal Code, the federal Trafficking Victims Protection Act of 2000, Federal Executive Order 13627, or this bill the contractor must, among other things,
- Notify its employees and agents of the prohibited activities described above, and the actions that will be taken for violations of this bill, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
- Inform the contracting officer and all appropriate state agencies with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity and the individuals responsible for the conduct, as specified.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance, as specified.
- Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, as specified and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
- Post the minimum requirements of the compliance plan, as specified.
- Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
- Authorizes an administrative law judge, during a hearing requested by a contractor on the imposition of sanctions, to consider both mitigating and aggravating factors, as specified.
- Requires a contracting officer, upon receipt of credible information regarding a violation described above, to promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense. The contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
- Defines “severe forms of trafficking in persons” as either of the following:
- Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
- The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
- Specifies that requirements set forth in this bill shall govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
- Includes various other definitions, as specified.
- Makes technical and conforming changes.
EXISTING LAW:
- Assures, under the California Occupational Safety and Health Act, safe and healthful working conditions for all California workers by authorizing the enforcement of effective standards, assisting and encouraging employers to maintain safe and healthful working conditions, and by providing for research, information, education, training, and enforcement in the field of occupational safety and health. Labor Code § 6300.
- Requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of forced labor, as specified. Public Contract Code § 6108.
- Specifies that a contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the DIR, or the DOJ to determine the contractor’s compliance, as specified. Public Contract Code § 6108(a)).
- Authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions including, among others, voiding the contract under which the items were laundered or provided at the option of the state agency and removing the contractor from the bidder’s list for a period not to exceed 360 days. Public Contract Code § 6108(b).
- Requires the DIR to establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts, as specified. Public Contract Code § 6108(f).
- Specifies that any person who certifies as true any material matter pursuant to the above provisions that he or she knows to be false is guilty of a misdemeanor. Public Contract Code § 6108(h).
- Requires employers to establish, implement, and maintain an effective Injury and Illness Prevention Program (IIPP) that must include, among other things, a system for identifying and evaluating workplace hazards. Labor Code § 6401.7.
- Requires employers, as specified, to establish, implement, and maintain an effective workplace violence prevention plan that includes, among other elements, requirements to maintain incident logs, provide specified trainings, and conduct periodic reviews of the plan. Labor Code § 6401.9.
FISCAL EFFECT: Unknown
COMMENTS: The U.S. Department of State’s 2024 Trafficking in Persons Report states that an estimated 27 million people worldwide are exploited for labor, services, and commercial sex.[1]
Current state contracting regulations related to forced labor:
Under current law, state contractor awardees must certify that no apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state pursuant to the contract have been laundered or produced in whole or in part by, or with the benefit of, sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. (Public Contract Code Section 6108(a)(1).)
Additionally, the state’s Sweatfree Code of Conduct requires that all state contractors and subcontractors certify under penalty of perjury that they, among other things, do not use any form of forced labor, as well as comply with all applicable state and federal laws. (Public Contract Code Section 6108(g).)
Labor Trafficking Unit:
In 2024, the Legislature passed and governor signed AB 1888, which created, upon appropriation by the Legislature, the Labor Trafficking Unit within the DOJ to receive labor trafficking reports from law enforcement agencies and other entities, and refer these reports to appropriate agencies for investigation, prosecution, or other remedies. The Legislature has yet to appropriate funds to stand up this office.
Author’s statements:
According to the author, "Forced labor and human trafficking remain pervasive in global supply chains, with millions of workers trapped in exploitative conditions. As the world’s fifth-largest economy, California has the power and the responsibility to lead in the fight against human trafficking. By ensuring that no taxpayer money contributes to forced labor, we take a stand for human dignity and justice—not just here in California, but across the globe. Every dollar our state spends should uphold our values, not enable exploitation. AB 381 strengthens California’s procurement policies by aligning them with federal standards, requiring companies to take proactive steps to prevent trafficking and forced labor in their supply chains. This legislation uses our economic strength to protect the most vulnerable, reinforcing our commitment to human rights and ensuring taxpayer dollars do not support exploitation."
The author adds that the bill assists underserved and marginalized communities in the following ways:
- “Protecting Vulnerable Workers: AB 381 ensures that California’s public procurement policies are updated to prevent human trafficking and forced labor. This directly benefits underserved and marginalized workers, who are disproportionately affected by exploitative practices in global supply chains and locally in California.
- Clear Guidance for Equity: The bill provides clear definitions of human trafficking and forced labor, along with specific guidance for government contractors and subcontractors. By mandating compliance plans and outlining procedures to address trafficking, it creates a framework that prioritizes the rights and dignity of workers, particularly those from marginalized backgrounds.
- Leveraging Economic Power for Justice: California spends billions annually on procurement. AB 381 uses this economic influence to demand ethical practices, ensuring that taxpayer dollars do not contribute to exploitation. This approach uplifts communities by holding businesses accountable and fostering fair labor practices.
- Addressing Systemic Inequities: By aligning state policies with federal standards and adopting proactive measures, AB 381 tackles systemic inequities that allow trafficking and forced labor to persist. This benefits communities that have historically been overlooked or exploited in labor markets.
- Global and Local Impact: While the bill addresses global supply chain issues, it also has a direct impact on California’s workforce, ensuring that local workers, including immigrants and low-income individuals, are protected from exploitation.”
Arguments in Support
The Sunita Jain Anti-Trafficking Initiative at Loyola Law School, sponsor of this measure, states that “California, with its nearly $300 billion budget, is uniquely positioned to lead the fight against forced labor, human trafficking, and child labor. By updating its government procurement policies, the state can ensure that goods purchased by its agencies are free from exploitation. Public procurement accounts for 13–20% of global GDP, and from 2022-23 alone, California spent $18.98 billion on contracts and purchases. California’s immense purchasing power provides an unparalleled opportunity to set global standards, compelling companies to scrutinize their supply chains and eliminate exploitative practices. Businesses, both within the United States and abroad, should not have to compete with unethical producers who undermine working families through the use of forced and trafficked labor.”
Arguments in Opposition
None on file.
Prior and Related Legislation
AB 1888 (Arambula) Chapter 614, Statutes of 2024 establishes, upon appropriation by the Legislature, the Labor Trafficking Unit within the DOJ to receive labor trafficking reports from law enforcement agencies and other entities and refer these reports to appropriate agencies for investigation, prosecution, or other remedies.
SB 1157 (Hurtado) of 2024 was nearly identical to this bill. Held in the Senate Appropriations Committee.
AB 964 (Ortega) of 2023 was nearly identical to this bill. Held in the Assembly Appropriations Committee.
AB 1820 (Arambula) of 2022 would have established the Labor Trafficking Unit within the DLSE to coordinate with the Labor Enforcement Task Force, the Criminal Investigation Unit, the DOJ, and the Civil Rights Department (CRD) to investigate and prosecute complaints alleging labor trafficking, and report specified data. Vetoed by Governor Newsom.
AB 235 (Rubio) of 2023 would have established the Labor Trafficking Unit within the CRD and required the Labor Trafficking Unit to coordinate with the Labor Enforcement Task Force, the DOJ, and the DLSE to take steps to prevent labor trafficking, receive and investigate complaints alleging labor trafficking, and report specified data. Died in the Assembly Appropriations Committee.
AB 380 (Arambula) of 2023 would have established the Labor Trafficking Unit within the DLSE to receive and investigate complaints alleging labor trafficking and take steps to prevent labor trafficking. Died in the Senate Appropriations Committee.
SB 657 (Steinberg), Chapter 556, Statutes of 2010 enacted the California Transparency in Supply Chains Act to provide consumers with new and easily accessible information made available by specified large retailers and manufacturers about these businesses’ voluntary efforts to try to eradicate slavery and human trafficking that could inadvertently be in their product supply chains.
SB 1231 (Corbett) of 2010 would have made various substantive and clarifying changes to existing provisions of the Public Contract Code related to “sweatfree” procurement policy and code of conduct. Vetoed by Governor Schwarzenegger.
SB 578 (Alcaron), Chapter 711, Statutes of 2003 enacted non-sweatshop labor guidelines to state procurement policies that ensure that goods and services purchased by the State be produced in workplaces that adhere to minimum standards for protecting workers.
SB 1888 (Hayden), Chapter 891, Statutes of 2000 extended the existing law prohibiting state agencies from procuring foreign goods made by forced labor, convict labor, of indentured labor to include goods made by abusive forms of child labor or exploitation of children in sweatshop labor.
AB 2457 (Figueroa), Chapter 1149, Statutes of 1996 required every contract entered into by a state agency for the procurement of equipment, materials or supplies to specify that no foreign-made equipment, materials or supplies furnished to the state may be produced by forced labor, convict labor or indentured labor under penal sanction.
REGISTERED SUPPORT / OPPOSITION:
Support
Loyola Law School, the Sunita Jain Anti-Trafficking Initiative (Sponsor)
Asian Americans Advancing Justice-Southern California
Bet Tzedek Legal Services
Board of Supervisors for The City and County of San Francisco
California Women's Law Center
Center for Human Rights and Constitutional Law
Central Valley Justice Coalition
Coalition to Abolish Slavery and Trafficking
Earthworks
Ethix Merch
Gaia
International Corporate Accountability Roundtable
International Institute of Los Angeles
Investor Advocates for Social Justice
Jobs to Move America
La Raza Centro Legal
National Council of Jewish Women-San Francisco Bay Area Section
National Domestic Workers Alliance
Praeveni U.S. Inc.
Public Citizen, Inc
Reach
San Francisco Safehouse
Santa Barbara Women's Political Committee
Sierra Club California
The Women's Employment Rights Clinic At GGU
Verité
Waymakers
Women's Transitional Living Center, Inc.
Worksafe
Opposition
None on file.
Analysis Prepared by: Erin Hickey / L. & E. /
US Department of State. (2024) “Trafficking in Persons Report 2024.” https://www.state.gov/wp-content/uploads/2025/02/TIP-Report-2024_Introduction_V10_508-accessible_2.13.2025.pdf) ↑
Date of Hearing: April 2, 2025
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Blanca Rubio, Chair
ABPCA Bill Id:AB 381 (
Author:Stefani) – As Introduced Ver:February 3, 2025
SUBJECT: State contracts: certification process: forced labor and human trafficking
SUMMARY: This bill would revise existing state contracting requirements to require contractors and subcontractors to certify that contracts comply with specified human trafficking prohibitions and a detailed series of labor standards. Additionally, the bill creates a new requirement for contractors and subcontractors to develop and implement compliance plans, as specified, and expands the list of potential sanctions for violations of these provisions. Specifically, this bill:
1) Requires every contractor working with a state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to certify that the contract, among other things, complies with the requirement that contractors, contractor employees, subcontractors, subcontractor employees, and their agents are prohibited from all of the following:
- Engaging in severe forms of trafficking in persons during the performance period of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents, regardless of the issuing authority.
- Using misleading or fraudulent practices during the recruitment or hiring of employees, including failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations regarding the key terms and conditions of employment, as specified.
- Using recruiters that do not comply with state labor laws and the laws of the country that the recruiting takes place.
- Charging employees or potential employees recruitment fees.
- Failing to provide or pay for the cost of required return transportation upon the end of employment, as specified.
- Providing or arranging housing that fails to meet the housing and safety standards of the country where the work is performed.
- If required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing, as specified.
2) Requires contractors and subcontractors to notify employees of the prohibited activities described above and the actions that may be taken against them for violations.
3) Provides that the contractor is ineligible for, and shall not bid on, or submit a proposal for, a contract described above if that contractor has failed to certify compliance, as specified.
4) Requires a contractor, before a contract or subcontract is awarded, to provide or obtain from the proposed subcontractor and then provide to the contracting officer a certification that states both of the following: the contractor and/or subcontractor has implemented a compliance plan, as specified; and the contractor and/or subcontractor has conducted due diligence, as specified.
5) Requires the compliance plan to comply with all of the following criteria:
- The compliance plan shall be appropriate to the size and complexity of the contract and the nature and scope of its activities, as specified.
- The compliance plan shall include, at minimum, all of the following:
- An awareness program to inform employees about the prohibited activities described above and the actions that will be taken against them for violations.
- A process for employees to report activity inconsistent with the above provisions, as specified.
- A recruitment and wage plan, as specified.
- If the contractor or subcontractor intends to provide or arrange housing, a housing plan that ensures that the housing meets the housing and safety standards of the country where the work is performed.
- Procedures to prevent subcontractors and agents at any tier and at any dollar value from engaging in trafficking in persons, including the prohibited activities described above and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in the prohibited activities.
6) Requires a contractor and subcontractor to comply with all of the following:
- Disclose to the contracting officer and the state agency with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity described above and the individuals responsible for the conduct.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to their facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance with this section and other anti-human trafficking laws.
- Protect all employees suspected of being victims of or witnesses to prohibited activities before returning to the country from which the employee was recruited.
- Not prevent or hinder an employee from cooperating fully with government authorities.
7) Requires contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this bill.
8) Provides that the contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, DIR, or the DOJ to determine the contractor’s compliance with the requirements under this bill.
9) Provides that any contractor contracting with the state who knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions when entering into a contract pursuant to the above, may, in addition to existing sanctions, have any or all of the following sanctions applied:
- The contractor may be required to remove a contractor employee from the performance of the contract.
- The contractor may be required to terminate a subcontractor.
- Contract payments may be suspended until the contractor has taken appropriate remedial action.
- If the state determines contractor noncompliance, there may be a loss of award fee, consistent with the award fee plan, for the performance period the state determined contractor noncompliance.
- The state may decline to exercise available options under the contract.
- The contractor may be subject to suspension or debarment.
10) Provides that if a contractor, contractor employee, subcontractor, subcontractor employee, or agent violates specified provisions of the Penal Code, the federal Trafficking Victims Protection Act of 2000, Federal Executive Order 13627, or this bill the contractor must, among other things:
- Notify its employees and agents of the prohibited activities described above, and the actions that will be taken for violations of this bill, including, but not limited to, removal from the contract, reduction in benefits, or termination of employment.
- Inform the contracting officer and all appropriate state agencies with oversight information sufficient to identify the nature and extent of a violation of a prohibited activity and the individuals responsible for the conduct, as specified.
- Provide timely and complete responses to state auditors’ and investigators’ requests for documents.
- Cooperate fully in providing reasonable access to its facilities and staff, inside and outside the state, to allow contracting agencies and other responsible government agencies to conduct audits, investigations, or other actions to ascertain compliance, as specified.
- Protect all employees suspected of being victims of or witnesses to prohibited activities from retaliation from employers, as specified and shall not prevent or hinder the ability of these employees from cooperating fully with state authorities.
- Post the minimum requirements of the compliance plan, as specified.
- Within 60 days of receiving the contract, provide the compliance plan to the contracting officer.
11) Provides that when imposing the above sanctions, the contracting agency shall notify the contractor of the right to a hearing, if requested, within 15 days of the date of the notice, as specified.
12) Authorizes an administrative law judge, during a hearing requested by a contractor on the imposition of sanctions, to consider both mitigating and aggravating factors, as specified.
13) Requires a contracting officer, upon receipt of credible information regarding a violation described above, to promptly notify, in accordance with agency procedures, the state agency with oversight, the agency debarring and suspending official, and if appropriate, law enforcement officials with jurisdiction over the alleged offense. The contracting officer may direct the contractor to take specific steps to abate the alleged violation or enforce the requirements of its compliance plan.
14) Defines “severe forms of trafficking in persons” as either of the following:
- Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform that act has not attained 18 years of age.
- The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.
15) Includes various other definitions for words and terms relevant to the bill, as specified.
16) Specifies that requirements set forth in this bill shall govern contracts and subcontracts entered into by a state agency, regardless of place of performance.
17) Makes technical and conforming changes.
EXISTING LAW:
- Under the California Occupational Safety and Health Act, assures safe and healthful working conditions for all California workers by authorizing the enforcement of effective standards, assisting and encouraging employers to maintain safe and healthful working conditions, and by providing for research, information, education, training, and enforcement in the field of occupational safety and health. (Labor Code §6300)
- Requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of forced labor, as specified. (Public Contract Code §6108)
- Specifies that a contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of Industrial Relations (DIR), or the Department of Justice (DOJ) to determine the contractor’s compliance, as specified. (Public Contract Code §6108(a))
- Authorizes certain sanctions to be imposed if a contractor knew or should have known that the apparel, garments, corresponding accessories, equipment, materials, or supplies furnished to the state were laundered or produced in violation of specified conditions including, among others, voiding the contract under which the items were laundered or provided at the option of the state agency and removing the contractor from the bidder’s list for a period not to exceed 360 days. (Public Contract Code §6108(b))
- Requires DIR to establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts, as specified. (Public Contract Code §6108(f))
- Specifies that any person who certifies as true any material matter pursuant to the above provisions that he or she know to be false is guilty of a misdemeanor. (Public Contract Code §6108(h))
- Requires employers to establish, implement, and maintain an effective Injury and Illness Prevention Program (IIPP) that must include, among other things, a system for identifying and evaluating workplace hazards. (Labor Code §6401.7)
- Requires employers, as specified, to establish, implement, and maintain an effective workplace violence prevention plan that includes, among other elements, requirements to maintain incident logs, provide specified trainings, and conduct periodic reviews of the plan. (Labor Code §6401.9)
FISCAL EFFECT: This bill is keyed fiscal by Legislative Counsel.
COMMENTS:
Purpose of the bill. According to the author’s office, "Forced labor and human trafficking remain pervasive in global supply chains, with millions of workers trapped in exploitative conditions. As the world’s fifth-largest economy, California has the power and the responsibility to lead in the fight against human trafficking. By ensuring that no taxpayer money contributes to forced labor, we take a stand for human dignity and justice—not just here in California, but across the globe. Every dollar our state spends should uphold our values, not enable exploitation. This bill strengthens California’s procurement policies by aligning them with federal standards, requiring companies to take proactive steps to prevent trafficking and forced labor in their supply chains. This legislation uses our economic strength to protect the most vulnerable, reinforcing our commitment to human rights and ensuring taxpayer dollars do not support exploitation."
What problem does this bill solve? According to information provided by the author’s office, from 2022 to 2023, the State of California spent $18.98 billion on purchasing and contracts. With nearly $20 billion in government contracts annually across approximately 4,000 agreements, California may inadvertently contract for products produced with forced or child labor, including, but not limited to garments, electronics, and agricultural goods. Unlike California, the federal government has implemented updated measures prohibiting companies contracting with government departments from engaging in human trafficking, forced labor, commercial sex, and child labor trafficking. This bill seeks to bring California in line with federal policy by mandating any company contracting with the State to adopt specific measures aimed at preventing human trafficking.
Background.
Labor Trafficking. According to the Attorney General’s Website: “Labor trafficking involves the recruitment, harboring, or transportation of a person for labor services, through the use of force, fraud, or coercion. It is modern day slavery. Labor trafficking arises in many situations, including domestic servitude, restaurant work, janitorial work, factory work, migrant agricultural work, and construction. It is often marked by unsanitary and overcrowded living and working conditions, nominal or no pay for work that is done, debt bondage, and document servitude. It occurs in homes and workplaces, and is often perpetrated by traffickers who are the same cultural origin and ethnicity as the victims, which allows the traffickers to use class hierarchy and cultural power to ensure the compliance of their victims. Labor traffickers often tell their victims that they will not be believed if they go to the authorities, that they will be deported from the United States, and that they have nowhere to run. Traffickers teach their victims to trust no one but the traffickers, so victims are often suspicious of genuine offers to help; they often expect that they will have to give something in return.” (What is Human Trafficking? State of California Department of Justice, available at: https://oag.ca.gov/human-trafficking/what-is
The intent of AB 381 is to strengthen efforts to combat human trafficking by ensuring that public funds are not awarded to contractors involved in severe forms of trafficking. The bill aims to protect workers by mandating that contractors, subcontractors, and their agents certify they are not engaging in prohibited actions relating to human trafficking and have implemented a compliance plan. Beyond the compliance plan, this certification simply requires contractors to confirm their adherence to existing laws and does not introduce new obligations beyond what is already illegal. Regardless of certification status, state contractors found violating the specified prohibitions may be subject to defined sanctions.
The bill requires the contracts to provide suitable remedies, including termination, to be imposed on contractors and subcontractors that fail to comply with the requirements of this bill.
Little Hoover Commission Report. In 2020 the Little Hoover Commission (LHC) released three reports reviewing the state’s response to labor trafficking. Among the issues identified were the absence of an aggressive state response and a focus on sex trafficking. While the focus on sex trafficking, particularly among minors, is important, relatively few resources are devoted to labor trafficking. The LHC believes California must take stronger actions to detect this crime, help victims, and prosecute perpetrators. The LHC found that while several state agencies play a role in combatting human trafficking, there is no coordinated strategy to target the crime statewide. The state’s ability to “flip the script by proactively and strategically looking for traffickers” requires the effective use of state resources. (Labor Trafficking: Strategies to Uncover this Hidden Crime, LHC (September 2020). https://lhc.ca.gov/report/uncovering-trafficking/
State Procurement and Sweatfree Code of Conduct. Existing law imposes a series of requirements on state contractors awarded state contracts for the procurement of equipment, material, supplies, and garments. It requires that all state contractors comply with a Department of Industrial Relations (DIR) contractor responsibility program, including a “Sweatfree Code of Conduct.” Although originally created for apparel and related products, the Sweatfree Code of Conduct applies to state procurement of all equipment, materials, and supplies, including vehicles and electronics.
The Sweatfree Code of Conduct has several key components aimed at promoting ethical labor practices among state contractors and subcontractors. These include:
- Prohibition of Forced Labor: Contractors must certify that they do not use any form of forced or involuntary labor.
- Fair Wages: Compliance with all applicable state and federal wage laws is required to ensure fair compensation for workers.
- Workplace Safety: Adherence to health and safety standards to protect workers from unsafe working conditions.
- Rights to Association and Assembly: Recognition and respect for workers' rights to freely associate, organize, and bargain collectively.
- Nondiscrimination: Commitment to nondiscrimination in hiring and employment practices, ensuring equal opportunities for all individuals.
These components work together to uphold human rights, promote fair treatment, and foster ethical workplace environments.
The Sweatfree Code of Conduct requires contractors and subcontractors to certify, under penalty of perjury, that they do not use forced labor and comply with laws related to wages, workplace safety, nondiscrimination, and workers' rights. The certification must affirm that none of the products supplied were made in conditions that violate those principles. Any person who certifies as true any material matter pursuant to the above requirement that they know to be false is guilty of a misdemeanor. The contracting certification requirements do not apply to credit card purchases of $2,500 or less (this exemption shall not exceed $7,500 per year for each company from which a state agency is purchasing goods).
Furthermore, existing law requires contractors to cooperate with state agencies by granting access to their records and premises for compliance checks conducted by state agencies or the Department of Industrial Relations (DIR). It also outlines penalties for contractors found in violation, which include voiding contracts, imposing fines, and disqualification from future contracts.
In cases where a contractor is found to have violated these conditions, the Sweatfree Code of Conduct outlines various sanctions including financial penalties of up to $1,000 or twenty percent of the value of the products and/or the contractor or subcontractor being barred from participating in future state contracts. Existing law grants contractors the ability to appeal sanctions, including hearings before an administrative law judge (ALJ). These sanctions are intended to serve as a deterrent against the exploitation of workers and ensure that contractors maintain high labor standards.
Contractors are required to ensure that their subcontractors are in compliance with the Sweatfree Code of Conduct, under penalty of perjury. Any person who certifies as true any material matter pursuant to the above requirements that they know to be false is guilty of a misdemeanor.
Existing Federal Contracting Requirements. The United States federal government has long had a policy prohibiting government employees and contractor personnel from engaging in trafficking persons. This policy was strengthened in 2015 when the Federal Acquisition Regulation (FAR) rule (FAR 52.222-50), entitled “Ending Trafficking in Persons” that implemented trafficking-related prohibitions for federal contractors and subcontractors, including requirements for compliance plans and certifications.
The FAR rule requires contractors and subcontractors to notify government procurement personnel whenever they receive credible information of human trafficking or violations of the prohibited practices associated with trafficking, and puts parties on notice that federal agencies may impose remedies, up to and including suspension and debarment, for failure to comply with the requirements.
The regulations apply to all contracts and prohibit contractors and subcontractors from engaging in prohibited practices including:
- Engaging in severe forms of trafficking persons.
- Procuring commercial sex acts during the performance of the contract.
- Using forced labor in the performance of the contract.
- Destroying, concealing, confiscating, or otherwise denying access by an employee to his or her identity or immigration documents.
- Using misleading or fraudulent recruitment practices.
- Using recruiters that do not comply with local labor laws.
- Charging employees recruitment fees.
- Failing to provide return transportation for employees upon the end of the contract.
- Providing or arranging housing that fails to meet the host country’s housing and safety standards.
- If required by law or contract, failing to provide an employment contract in writing.
This bill would add similar provisions to state law, prescribing specific anti-trafficking certification requirements more akin to regulation than statute.
In support. The sponsor of the measure, the Sunita Jain Anti-Trafficking Initiative writes, “California is uniquely positioned to lead the fight against forced labor, human trafficking, and child labor. By updating its government procurement policies, the state can ensure that goods purchased by its agencies are free from exploitation. Public procurement accounts for 13–20% of global GDP, and from 2022-23 alone, California spent $18.98 billion on contracts and purchases. California’s immense purchasing power provides an unparalleled opportunity to set global standards, compelling companies to scrutinize their supply chains and eliminate exploitative practices. Businesses, both within the United States and abroad, should not have to compete with unethical producers who undermine working families through the use of forced and trafficked labor.”
The sponsor further points out that “the federal government acknowledged the severity of this issue by adopting measures (FAR) to prevent human trafficking and forced labor in its procurement policies. California must now follow suit and enact similar protections at the state level—action that is long overdue. “
Supporters of the bill write that, “California has already demonstrated leadership in combating human trafficking through procurement policies adopted in 2007. However, these measures are outdated. Over the past decade, a deeper understanding of the intricate factors enabling trafficking—such as the role of subcontractors and unethical recruitment practices targeting migrant workers—has been developed. AB 381 builds upon this knowledge and provides the state with a powerful opportunity to modernize its procurement standards, ensuring goods purchased by California are free from exploitative practices.”
In opposition. None on file.
Double referral. In addition to this Committee, this bill was referred to the Assembly Committee on Labor and Employment.
Related legislation. SB 77 (Grove) of 2025. This bill would require suppliers of zero-emission vehicles (ZEVs) for the State vehicle fleet to certify to the Department of General Services (DGS) that the raw materials in the vehicles come from mining operations that are free of child labor, as specified. Additionally, this bill requires DGS to collect information from suppliers, including the location of the mines and the average hourly wage of the workers that mined the materials, and requires DGS to post that information and a list of ZEVs purchased by the State on its internet website, as specified. (Pending in the Senate Appropriations Committee)
Prior legislation. SB 1157 (Hurtado) of 2024. This bill would have revised current state contracting requirements for the procurement or laundering of garments, corresponding accessories, equipment, materials, and supplies to comply with specified human trafficking prohibitions and a detailed series of labor standards, as specified. (Held on the Senate Appropriations Committee Suspense File)
AB 964 (Ortega) of 2023. This bill would have revised the current contracting requirements for any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to also require a contractor to certify, under penalty of perjury, that the contract complies with specified requirements relating to human trafficking, including certain prohibitions on contractors, contractor employees, subcontractors, subcontractor employees, and their agents. (Held on the Assembly Appropriations Committee Suspense File)
AB 235 (Rubio) of 2023. Establishes the Labor Trafficking Unit (LTU) within the Civil Rights Department and requires the LTU to coordinate with the Labor Enforcement Task Force, the Department of Justice, and the Division of Labor Standards Enforcement. (Held on the Assembly Appropriations Committee Suspense File)
SB 657 (Steinberg), Chapter 556, Statutes of 2010. Enacted the California Transparency in Supply Chains Act to require retail sellers and manufacturers doing business in the state to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale, as specified.
SB 1231 (Corbett) of 2010. This bill would have made various changes including renaming the code of conduct to the Slave and Sweatfree Code of Conduct, mandating state procurement contracts to include certifications that products are not made with abusive labor, and increasing penalties for non-compliance, as specified. (Vetoed by Governor Schwarzenegger)
SB 578 (Alarcon), Chapter 711, Statutes of 2003. Enacted non-sweatshop labor guidelines to state procurement policies to ensure that goods and services purchased by the State of California be produced in workplaces that adhere to minimum standards for protecting workers.
SB 1888 (Hayden), Chapter 891, Statutes of 2000. Extended existing law that prohibits state agencies from procuring foreign goods made by forced labor, convict labor, or indentured labor to include goods made by abusive forms of child labor or exploitation of children in sweatshop labor.
AB 2457 (Figueroa), Chapter 1149, Statutes of 1996. Required every contract entered into by a state agency for the procurement of equipment, materials, or supplies to specify that no foreign-made equipment, materials, or supplies furnished to the state may be produced by forced labor, convict labor, or indentured labor, as specified.
REGISTERED SUPPORT / OPPOSITION:
Support
Asian Americans Advancing Justice, Southern California
Bet Tzedek Legal Services
Board of Supervisors for The City and County of San Francisco
Center for Human Rights and Constitutional Law
Central Valley Justice Coalition
Ethix Merch
International Corporate Accountability Roundtable (ICAR)
International Institute of Los Angeles
Jobs to Move America
LA Raza Centro Legal
Loyola Law School, The Sunita Jain Anti-Trafficking Initiative
National Council of Jewish Women, San Francisco Bay Area Section
Praeveni U.S., INC.
Reach
Santa Barbara Women's Political Committee
Verité
Waymakers
Women's Transitional Living Center, INC.
Worksafe
Opposition
None on file
Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531
Discussed in Hearing
46SEC
Senate Standing Committee on Appropriations
1MIN
Assembly Floor
7MIN
Assembly Standing Committee on Governmental Organization
Bill Author
Bill Co-Author(s):
