California Imposes Mandatory Disclosure Law for Voluntary Child Labor Audits
California recently imposed new mandatory disclosure requirements related to social compliance audits.
On September 22, 2024, California Governor Gavin Newsom signed A.B. 3234 into law. The bill adds new, specific—and mandatory—disclosure requirements related to social compliance audits to the California Labor Code.
Under the new law, an employer who has conducted "a social compliance audit" to "determine if child labor is involved in its operations or practices" is required to "post a clear and conspicuous link on its internet website to a report detailing the findings." The law defines "child labor" as "any work performed by a child in violation of state or federal law" and defines a "social compliance audit" as a "voluntary" "inspection or assessment" to evaluate compliance with "state and federal labor laws." Thus, beginning January 1, 2025, if an employer chooses to audit its compliance with child labor laws, the employer must publicly report the results of that audit on its website.
The law also sets forth certain topics that employers' reports must include. In addition to stating whether it was found to "engage in, or support the use of, child labor," an employer's public postings must include the date and time of the audit, whether it was conducted during a day or night shift, a copy of the employer's written policies and procedures on child labor, whether the employer exposed children to hazardous or unsafe workplaces, whether children worked during school or night hours, and a statement that the "auditing company" is not a government agency and is not authorized to verify compliance with state or federal labor laws or other health and safety regulations.
As the new law goes into effect, there are several considerations employers should keep in mind. First, it is not clear how the law's mandatory disclosure requirement will interact with privileged compliance audits conducted by or through legal counsel. Second, determining what qualifies as a "social compliance audit" aimed at child labor issues may prove challenging in real world applications. Finally, the law does not make clear whether the disclosure obligation is limited to findings related to the United States only, or whether companies must also disclose the results for their entire supply chain, including abroad. Employers should evaluate their compliance assessment practices to ensure that they understand the full scope of their new reporting obligations.
