What's Happening?
California Governor Gavin Newsom signed Assembly Bill 2599, a new law that mandates large companies operating in California to conduct a records search for specified slavery-related conduct that occurred before the Thirteenth Amendment. This legislation,
the first of its kind in the United States, requires covered entities to submit an affidavit of their findings to the California Civil Rights Department, which will then be made public. Companies subject to AB 2599 must have been in existence on or before December 31, 1964 (or have a predecessor from that period), do business in California, and have annual worldwide gross receipts exceeding $100 million. The records search must cover any involvement in buying, selling, using enslaved persons as collateral, providing loans for their purchase, or insuring such transactions. Ropes & Gray LLP has issued a memorandum detailing the requirements of this new law.
Why It's Important?
AB 2599 represents a significant step in addressing historical corporate complicity in slavery, shifting the focus from modern slavery disclosures to pre-Thirteenth Amendment practices. This law could have profound implications for numerous long-standing U.S. corporations, particularly those in industries identified as having profited from slavery, such as insurance, banking, tobacco, cotton, sugar, railroads, and shipping. The public disclosure of these affidavits will bring to light historical connections to slavery, potentially impacting corporate reputations and fostering public discourse on reparations and historical justice. Companies will need to undertake extensive historical research, which could be a substantial undertaking, especially for those with complex corporate histories and numerous related entities. The law also sets a precedent for other states or even the federal government to consider similar legislation, potentially leading to a broader re-examination of corporate historical responsibilities.
What's Next?
The implementation of AB 2599 will involve several key steps. The California Civil Rights Department is tasked with creating a public digital platform to host the affidavits and related records. This platform will disaggregate data by company industry, provide multi-year reviews, and estimate the value and profit gained from slavery-related transactions. Affidavits are tentatively due by January 15, 2029, for covered entities doing business in California as of January 1, 2028, though this deadline is contingent on the funding and development of the digital platform. Companies seeking contracts with California state agencies for at least $100,000 will be required to certify their compliance with AB 2599 by submitting an affidavit. While the records search and affidavit submission are generally a one-time requirement, companies must submit updated affidavits if new reportable information is discovered. The California Civil Rights Department also has the authority to adopt regulations to further interpret and implement the law.
Beyond the Headlines
Beyond the immediate compliance requirements, AB 2599 delves into the ethical and moral dimensions of corporate history. By mandating a public accounting of past involvement in slavery, the law challenges corporations to confront their historical legacies and the systemic injustices from which they may have benefited. This initiative could spark broader conversations about corporate social responsibility, historical accountability, and the role of businesses in addressing past harms. The public availability of this data could also empower advocacy groups and researchers to further investigate corporate ties to slavery, potentially leading to calls for restorative justice or other forms of redress. The law's focus on pre-Thirteenth Amendment slavery distinguishes it from existing modern slavery disclosure laws, signaling a deeper engagement with the historical roots of racial inequality and economic disparity in the United States.
