In the wake of the recent negative publicity deluge, including a segment on a national newsmagazine show, alleging labor violations including the use of child labor, safety violations and unfair pay practices, Apple released a third-party report detailing problems and proposed solutions at one of its largest suppliers.  This follows the January 1, 2012 effective date of the landmark California Supply Chain Transparency Act (the Act).

As noted in Perkins Coie's March 12, 2012 Update, the Act imposes various explicit supply chain-related disclosure requirements on certain retailers and manufacturers having annual global receipts in excess of $100 million.  The California Franchise Tax Board estimates that some 3,200 multinational companies fall under the California Act's broad reach.

Apple's report, combined with its prior disclosures on child labor and other labor issues, underscores the importance not only of (1) proactively managing supply chain labor practices but also of (2) responding promptly, decisively and publicly to supply chain transparency problems when they arise.

Depending on the organization, a sound supply chain due diligence program tailored to avoid potentially devastating legal/consumer/shareholder consequences might include:

• A comprehensive Risk Profile
• Review of existing supply chain policies, due diligence materials, annual certifications and trainings
• Remote and/or onsite audits of compliance with existing policies
• Implementation of remediation and/or verification plans to correct deficiencies

Who Can Help?

Contact counsel for advice on the broad range of sophisticated compliance issues implicated by the growing focus on supply chain due diligence. You can find additional information on our website under Investigations & White Collar Defense.

© 2012 Perkins Coie LLP