California law already requires hotels to provide training to their staff on how to recognize human trafficking and how to report suspected trafficking to either law enforcement or the National Human Trafficking Hotline. Effective January 1, 2023, Assembly Bill (“AB”) 1788, codified as section 52.65 of the Civil Code, creates new civil liability for hotels for the failure of supervisory employees to report sex trafficking activity. 

Specifically, a hotel is liable under AB 1788 if sex trafficking activity occurred in the hotel and a supervisory employee of the hotel either knew of the activity or acted in reckless disregard of the activity, and the supervisory employee of the hotel failed to inform law enforcement or a victim service organization within 24 hours. Additionally, a hotel is liable if an employee of the hotel (regardless of whether that employee is a supervisor) was acting within the scope of employment and knowingly benefited, financially or by receiving anything of value, by participating in a venture that the employee knew of, or acted in reckless disregard of, the activity constituting sex trafficking within the hotel.

Hotels are defined under AB 1788 as a motel or any other operator that offers and accepts payment for rooms and is required to provide human trafficking training pursuant to section 12950.3 of the Government Code.

A “supervisory employee” is defined as any individual, regardless of job title, who “(a) holds authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them, or to adjust their grievances, or effectively to recommend this action, if, in connection with the foregoing, the exercise of this authority is not of a merely routine or clerical nature, but requires the use of independent judgment and (b) holds responsibility for duties that are not substantially similar to those of their subordinates.”

Claims under this section may only be brought by city and district attorneys. The prosecuting attorney can seek civil penalties of up to $1,000 for the first violation in a calendar year, $3,000 for a second violation, and $5,000 for the third and any subsequent violations. However, a court has the discretion to increase the amount of a civil penalty to $10,000 for a fourth or subsequent violation.  In exercising its discretion, the court must consider a number of factors, including the defendant’s culpability, the relationship between the harm and the penalty, the penalties imposed for similar conduct in similar statutes, and the defendant’s ability to pay. Only the hotel employer and not hotel employees are liable for civil penalties under AB 1788.