If you’ve seen a “WARNING: This product contains a chemical known to the State of California to cause cancer” label on a product, or a similar sign in a business, you’ve seen a warning mandated by California’s Proposition 65 law.  Those warnings are about to get more specific and even more prevalent, and are about to go digital. Most companies doing business in California are working hard to be prepared for the changes to Prop 65 that will apply as of August 30, 2018.  Some companies still may not be aware of the changes and what they mean for their supply chain, as well as for their potential exposure to class action lawsuits and other legal trouble if they are not ready in time.

Here’s the background on what’s happening with Proposition 65, and why companies affected by it should move quickly to finish (or start) implementing processes and steps to ensure compliance.

 

What is Proposition 65?

Proposition 65, also known as the California Safe Drinking Water and Toxic Enforcement Act or “Prop 65,” is a “right to know” statute enacted by California voters in 1986.  Under Prop 65, businesses with 10 or more employees must in most cases provide “clear and reasonable” warnings before “knowingly and intentionally” exposing Californians to certain chemicals that cause cancer, birth defects, or other reproductive harm.  The warnings apply to exposure in products they purchase, whether used in their homes or in workplaces, as well as to environmental and occupational exposure.  Prop 65 is administered by the Office of Environmental Health Hazard Assessment (OEHHA), part of the California Environmental Protection Agency (CalEPA).

There are over 900 chemicals for which Prop 65 warnings are required, maintained on a list administered by the State of California (the “Prop 65 list”) which is updated annually. If a product contains or is made using, or an environment or occupation could expose Californians to, one or more chemicals on the Prop 65 list, and the exposure is not low enough that it does not pose a significant risk of cancer, birth defects, or other reproductive harm, a Prop 65 warning is required for that product, environment, or workplace.

While any “clear and reasonable” warning can satisfy the Prop 65 requirements, a business creating its own warnings runs a risk that they are determined to not be “clear” and/or “reasonable” and therefore deficient under Prop 65.  Fortunately, the State of California has promulgated “safe harbor” warnings that most companies use to satisfy their Prop 65 compliance requirements instead of developing their own warnings.

 

So what’s changed in Prop 65?

Under the current law, “clear and reasonable” Proposition 65 warnings are required for consumer products and environmental/occupational exposure to listed chemicals, and certain “safe harbor” warnings have been made available for use. The revisions to the law becoming effective August 30, 2018 (and applicable to products manufactured or refurbished on or after August 30, 2018) make a number of important changes and updates, including:

• New and more detailed content and format requirements which replace the somewhat generic current Proposition 65 safe harbor warnings.
• While the existing law tries to minimize the impact of the law to retailers, the changes clarify that manufacturers, producers, packagers, importers, suppliers, and distributors can either provide the required warning on the product via a label, or annually notify the downstream retailer of the warning requirements and provide all necessary warning materials and language to that retailer, shifting the burden to provide the warning to the seller and giving the upstream supply chain partner an affirmative defense if the retailer fails to provide the warning.
• The new law contains more explicit transmission and placement requirements for consumer product, environmental, and occupational warnings.
• As the existing law was written in the 1980s, it does not contain specific requirements for online sales.  The new law imposes specific Internet and catalog disclosure requirements. For internet sales, the warning must be displayed in-line (or via specific hyperlink) on the product display page or otherwise prominently displayed prior to completing the purchase.  For catalog purchases, the warning must be included in a manner that clearly associates it with the item being purchased.  This is likely the most significant change, and the one that exposes online sellers to the most legal risk under Prop 65.

 

What are the new content and format warning requirements? 

The revised regulations require different warnings based on the types of listed chemicals, number of listed chemicals, and method of transmission and placement. These include specialized safe harbor warnings for certain exposures, products, and places (from alcoholic beverages, to furniture, to amusement parks, to designated smoking areas, to restaurants, to hotels),

All new warnings require the word “WARNING” in bold capital letters, as well as a specific exclamation symbol (except for food labels) which is at least as big as the font used for the “WARNING” text.  Here is an example of a generic Prop 65 safe harbor warning for consumer products:

 

Why it compliance important?

Manufacturers, distributors, and retailers in the entire supply chain are potentially liable for failure to comply with the compliance requirements under Proposition 65. Prop 65 is enforceable not just by the California Attorney General, but by private parties such as consumer advocacy groups and “bounty hunters,” which has given rise to a cottage industry of parties suing companies for Prop 65 compliance violations. Penalties for violations can be as high as $2,500 per violation per day. Any time there is a change in regulatory requirements such as this, it opens the door for private party bounty hunters to file class action suits against companies slow to comply with the new requirements.

 

Do Prop 65 warnings apply just to electronics?

No. It applies to any products which contain a chemical on the Prop 65 list or which use such chemicals in the manufacture process, and to environments and workplaces which may expose people to such chemicals.  Most plasticizers are on the Prop 65 list, meaning that if your product contains plastic or is manufactured using plasticizers, there’s a good chance your company need to comply with Prop 65 warning requirements in connection with that product.  This includes plastic parts, enclosures, connectors, etc.

 

My company only sells B2B.  Does it still have to comply with the warning requirements?

Yes.  Prop 65 is designed to protect Californians from exposure to products both at home and in the workplace.  The Prop 65 warning requirements apply regardless of whether a product is sold through a B2C and or B2B transaction, and regardless of whether a person is exposed at home or at work.

 

Do the warning requirements apply to new products only, or both new and refurbished products?

It covers both.  Refurbishment is a manufacturing process, and so the warning requirements also apply to refurbished products.  For example, if your business uses refurbished products to fulfill its warranty obligations, it must comply with Prop 65 requirements for those refurbished products.

 

What does my company need to do? 

Update your Prop 65 warning signs and labels. Each company that sells products in California containing chemicals on the Proposition 65 list or manufactured using such chemicals, or which exposes Prop 65 chemicals environmentally or occupationally, must implement new Prop 65 warnings satisfying the new content and format requirements. This means working upstream in the supply chain to ensure manufacturers have properly determined if any chemicals on the Prop 65 list are used in the manufacture of products, that they are implementing the appropriate new safe harbor warnings, and that they are providing copies of warning materials for use downstream in the supply chain by online and catalog retailers.

Update your supply chain contracts.  The new law is the perfect opportunity to update your contracts with your suppliers, manufacturers, packagers, importers, suppliers, and/or distributors.  Ensure they are contractually obligated to comply with Prop 65 labeling requirements (and that they agree not to push the burden downstream), and that they will indemnify your company if they do not. If your contracts have a “compliance with laws” representation, warranty, or obligation, you can point to that language if they push back on compliance.

Ensure you are considering all sales channels.  Take time to think through all of your sales channels.  Does your company use resellers, distributors, or other sales channels?  If your company is in one of the “upstream from retailer” supply chain roles, ensure you are complying with any obligations your company has under the changes to Prop 65 to provide information to downstream retailers,

Implement Prop 65 warnings on your B2C and B2B sales websites. For products sold online, the new Prop 65 warning must be clearly and prominently displayed by the seller prior to product purchase, e.g., above the fold and easy to see and not something that someone has to search for.  There are two main ways to do this:

• The static way: Display a clear and prominent image of the Prop 65 warning on the product detail page. This requires the least work but means everyone using the online store, Californian or not, will receive the warning.  My guess is that most online retailers will opt for the static way.
• The dynamic way: Display the Prop 65 warning during the checkout process if the purchaser enters a ship-to ZIP code in California.  This limits the user experience impact to Californians, but requires coding work to dynamically display warnings based both on the ZIP code and the SKUs in the cart (the SKU will need to trigger the specific warning associated with that product or product bundle).

For product catalogs, the warning label must be clearly and conspicuously displayed in on the catalog product page.  For products we sell via phone order, if the product is being shipped to California or the purchaser resides in California, the order-taker should read the Prop 65 warning while taking the order and ensure the consumer agrees to proceed with the transaction.

Don’t forget about phone orders and warranty replacements.  The changes to the law do not specifically address phone orders or warranty replacements.  With respect to phone orders, consider how to address this. e.g., consider whether to read the warning to a phone purchaser and require them to confirm that they wish to proceed with the transaction.  With respect to warranty replacements, consider sending the Prop 65 warning for the replacement product (if manufactured or refurbished on or after August 30, 2018) with the RMA information.

 

Where can I learn more about Proposition 65?

There are some excellent online resources to help you understand your company’s requirements under Prop 65, including:

• California’s Prop 65 website at http://www.p65warnings.ca.gov, which contains a searchable Prop 65 chemicals list and FAQs on Prop 65.
• The legislative text of Prop 65.
• The Prop 65 regulations.
• The list of safe harbor warnings.
• OEHHA has a nice side-by-side comparison of the current and new versions of Prop 65.

 

Eric Lambert is counsel for the Transportation division of Trimble Inc., an geospatial solutions provider focused on transforming how work is done across multiple professions throughout the world’s largest industries. He supports the Trimble Transportation Mobility and Trimble Transportation Enterprise business units, leading providers of software and SaaS fleet mobility, communications, and data management solutions for transportation and logistics companies. He is a corporate generalist and proactive problem-solver who specializes in transactional agreements, technology/software/cloud, privacy, marketing and practical risk management. Eric is also a life-long techie, Internet junkie and avid reader of science fiction, and dabbles in a little voice-over work. Any opinions in this post are his own. This post does not constitute, nor should it be construed as, legal advice.