California AB 381

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, 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 contractor's or subcontractor's 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 bidder's list for a period not to exceed 360 days. This bill 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, 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, 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.