Beginning in 2025, California employers must disclose child labor findings of labor law compliance audits

California’s AB 3234, which requires California employers to publicly disclose child labor findings and certain other information regarding voluntary labor compliance audits, will go into effect on January 1, 2025.

The statute provides no lookback period for in-scope audits, nor does it specify whether it applies retrospectively or prospectively – and, as such, there is a presumption against its retroactive application.

Below, we look at key aspects of the statute and outline next steps for businesses.

Audits requiring disclosure

AB 3234, which amends California’s Labor Code, requires an employer to disclose on its website certain results of voluntary audits it has conducted, “whether the audit is conducted in part, or in whole, to determine if child labor is involved in the employer’s operations or practices.”

Specifically, an employer that has conducted any voluntary, nongovernmental assessment to evaluate whether its operations or practices comply with state and federal labor laws, including wage and hour laws, health and safety regulations, and child labor restrictions, must publish on its website a report noting the timing of the audit and any child labor findings of the audit, along with copies of the employer’s child labor policies, if any. This requirement applies whether the audit relates in part or in whole to child labor.

Although the statute’s focus is on child labor, there is an open question as to whether it requires an employer to disclose certain details – but not all findings – regarding any voluntary labor compliance audit it conducts.

The statute is limited, however, to state and federal labor law audits. Assessments that relate purely to compliance with foreign or international law, or an assessment of a facility’s performance against voluntary standards, are therefore beyond the scope of AB 3234.

This suggests that audits of a company’s foreign supply chain would not require disclosure. For example, although the federal Tariff Act prohibits importing merchandise made by forced or indentured child labor, these restrictions are not part of federal labor law, which is the black-letter scope of AB 3234.

Still, a California employer’s audits of its US supply chain may be in scope, to the extent they relate to state and federal labor law obligations.

Companies are encouraged to monitor enforcement by the Division of Labor Standards Enforcement within California’s Department of Industrial Relations once the statute takes effect to better understand how the agency interprets AB 3234’s disclosure requirements.

What the disclosure must include

For any voluntary audit related to US labor law compliance, the reporting employer must post a clear and conspicuous link (as defined by the statute) on its website to a report detailing:

• Timing of the audit: The year, month, day, and time the audit was conducted, and whether it was conducted during a day shift or night shift.
  
  
• Child labor findings, if any:
  
  
  • Whether the employer did or did not engage in, or support the use of, child labor, meaning work “by a child in violation of state or federal law.”
    
    
  • Whether the employer exposed children to any workplace situations that were hazardous or unsafe to their physical and mental health and development.
    
    
  • Whether children worked within or outside regular school hours, or during night hours, for the employer.
    
    
• Company policies: A copy of any written policies and procedures regarding child employees.
  
  
• Competence disclaimer: A statement that the auditing company is not a government agency and is not authorized to verify compliance with state and federal labor laws or other health and safety regulations.

Next steps for businesses

California employers are encouraged to assess their existing audit programs, child labor policies, and child labor disclosures in preparation for AB 3234’s entry into force.

• Past audits: Review the scope and findings of recent labor compliance audits to help inform expectations regarding information that may be subject to disclosure, identify areas of concern or improvement, and reduce risk related to potential disclosures.
  
  
• Future audits: Review existing audit programs, including audits planned for 2025. When a covered audit is conducted, the employer is encouraged to work with counsel to determine the appropriate strategy to disclose relevant audit findings.
  
  
• Child labor policies: Assess and consider updating current policies related to child labor that may be subject to disclosure.
  
  
• Disclosure: Prepare and publish a disclosure statement when an in-scope voluntary labor compliance audit is conducted.
  
  
• Related reporting: Assess how AB 3234 interacts with reporting and compliance obligations under other child labor, forced labor, modern slavery, or human trafficking laws, including California’s Transparency in Supply Chains Act and laws in other jurisdictions.

Finally, given the upcoming presidential administration transition, there may be changes at the federal level that will affect how federal labor law is enforced, which could impact the scope of disclosures required under AB 3234. Companies are encouraged to follow relevant federal policy developments closely to stay abreast of changes that may affect obligations under this and other statutes.

For more information about AB 3234 or how companies can prepare for compliance, please contact any of the authors or your DLA Piper relationship attorney.