California continued its commitment to combatting human trafficking, as Governor Jerry Brown recently signed seven new anti-trafficking laws during the 2014 legislative session.

While the majority of these laws focus on criminal activity (for example, increasing criminal penalties and expanding the reach of law enforcement in cases of trafficking), SB 477 adds to California legislation addressing human trafficking in California supply chains. California hosts approximately 130,000 temporary foreign workers annually, about 14% of the nationwide total.

Effective July 1, 2016 SB 477, or the California Foreign Labor Recruitment Law, requires contractors who hire foreign labor to register with the California Labor Commissioner and contains protections for foreign workers.

The bill’s author, Darrell Steinberg, stated that it is designed to aid “foreign workers who obtain visas and are recruited by foreign labor contractors to work here, only to become victims of abusive working conditions.” The bill is similar to last year’s SB 516, which the Governor vetoed in part over concerns that the law also covered businesses that hired foreign employees directly. SB 477 addresses this concern by covering only the actions of the foreign labor contractors.

New requirements seek to eliminate abuse and exploitation in California

SB 477 defines “foreign labor contracting” as a domestic or foreign labor firm’s “recruiting or soliciting for compensation a foreign worker who resides outside of the United States in furtherance of that worker’s employment in California,” including when that recruiting or soliciting occurs “wholly outside the United States.” Foreign labor contractors must register with the Labor Commissioner and deposit a surety bond to ensure the state can collect any damages or penalties assessed.

SB 477 also contains protections against intimidation, discrimination, and other exploitation of foreign workers. The law requires contractors to disclose all terms and conditions of employment in writing, and contractors cannot change these without 48 hours’ notice and express consent from workers. The law also forbids contractors from assessing worker recruitment fees or any other expenses that are not customary in the industry, and it limits housing payments to market rates. Contractors also may not require foreign workers to pay any of these costs or expenses prior to actually starting work.

Although SB 477 primarily focuses on foreign labor contractors, it puts teeth into the law by prohibiting California manufacturers, distributors, and private labelers from knowingly using an unregistered foreign labor contractor. It also requires businesses to disclose to the Labor Commissioner the identities of the employees obtained through a registered foreign contractor, and the business must consent to California jurisdiction in the event of a lawsuit regarding the contractor. SB 477 incentivizes compliance by exempting a person who uses a registered foreign contractor from liability for any act or omission committed by the foreign labor contractor.

More burdens on California businesses

It remains to be seen whether the state will actively enforce SB 477, or just count on California businesses to attain “soft” compliance. California businesses that use contractors to obtain foreign workers either will have to make sure their current foreign labor contractors register and comply with the law, or will have to shift operations to contractors that have already registered with the state.

This is reminiscent of many other California laws that aim to reach the conduct of foreign entities by shifting the burden of prospective compliance to California businesses, such as the California Rigid Plastic Packaging Containers regulations and the California Appliance Efficiency Program. If they don’t take compliance measures, California businesses risk a public relations nightmare if their foreign labor contractors violate SB 477.