How does Proposition 65 affect your California business?
As a company doing business or selling products into California, you juggle a number of responsibilities every day. Failing to stay up to date with ever-changing local and state regulations can expose your business to penalties and fines, even civil lawsuits. Complying with Proposition 65, a California law that imposes requirements regarding chemical exposure and warnings about that exposure from property or products, is an important aspect of doing business successfully in the state.
What is Proposition 65?
The intent of Proposition 65 - officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986 - is two-fold - to:
- Prevent pollution of the state's drinking water sources from "chemicals known to the State of California to cause cancer and birth defects or other reproductive harm"
- Inform California consumers of the presence of these chemicals exceeding specified threshold exposure amounts by requiring businesses to provide warnings regarding possible exposure from products or property that contain them
When does my business need to provide a Proposition 65 warning?
The state maintains an ever-expanding list of the substances and the threshold amounts that trigger this warning requirement. Currently, more than 800 substances are on the list, and it is up to each business owner to review the list periodically to ensure compliance.
If you have fewer than 10 employees, your business may be exempt from the warning requirement. Additionally, if your company is able to prove that the amount of the chemical on your property or in your products is very low - below the specified exposure level - a warning may not be required.
How can this law affect my business?
A violation of Proposition 65 can mean financial disaster. Failure to comply with California's warning requirements may result in fines of up to $2,500 per day, per violation.
It is your responsibility as a business owner to ascertain whether your products or property contains any of the itemized chemicals, no matter the source. For example, if your business purchases products for resale, you must check each component for the presence of chemicals contained on the state-maintained list. Even if the level of a listed chemical appears to be below the statutory threshold exposure levels, because the amount of exposure related to use of a product is always debatable, the mere presence of any listed chemical should be a reason for concern.
Anyone, including private citizens, public health advocates and environmental groups, may file lawsuits against businesses for alleged violations. These individuals have an incentive to sue your company since they receive a portion of the fines collected if you do not prevail. Several individuals and law firms have made it their business to aggressively seek out businesses for the sole purpose of prosecuting Proposition 65 claims. Even if it is later determined that you are in compliance, defending your business from a legal attack may be quite costly. Frivolous Prop 65 lawsuits cost California businesses millions of dollars each year, according to a recent article in The Orange County Register.
What do I need to do when my business receives a Notice of Violation?
Before a Proposition 65 lawsuit can be filed, the claimant must serve a 60-day notice on the business. This notice gives a business a 60-day period to cure any problem by providing a statutory compliant warning or making the product or property comply with the statute, but time is of the essence. Failure to respond to a 60-day notice will inevitably result in a lawsuit.
If you are the target of a lawsuit or receive a 60-day violation notice, the lawyers at Yoka & Smith, LLP, can provide your business with experienced environmental and chemical defense assistance. Our attorneys can also help you assess your company's current level of risk and help it comply with this constantly changing area of law.
What does the future hold?
Early in 2015, the Office of Environmental Health Hazard Assessment (OEHHA) published plans to add additional requirements, making compliance even more complicated for business entities. The California Chamber of Commerce and a coalition of more than 170 organizations are opposing the OEHHA's proposal. A final decision is not forthcoming until January of 2016. Until that time, additional chemicals are added to the list, keeping California businesses on their toes.
You have too much to lose. Seek legal guidance in order to keep your business running smoothly.