E-Commerce Compliance Series (III): California Proposition 65 — A Practical Q&A for Cross-Border Sellers

In California supermarkets, you may have noticed the ubiquitous yellow triangular labels reading "WARNING," following you from the back of one package to the next. For long-time California residents this is simply part of life; for cross-border sellers it is not merely a label but the concrete expression of California's Proposition 65.

Prop 65 matters to every cross-border company because its reach is not limited by where the company sits: once your product enters circulation in California — through FBA warehousing, interstate logistics, or direct online shipment — it falls within the statute's territorial scope regardless of where your operating entity is established. Major platforms have also built Prop 65 into system-level automated review, so that once a listing keyword triggers a compliance audit, a product lacking both chemical test reports and a compliant warning label faces immediate delisting and claims.

Based on California's official guidance and our practice experience, the following Q&A addresses the points that arise most often.

Frequently Asked Questions

Q: What is Proposition 65, legally speaking?

A: Its full name is the Safe Drinking Water and Toxic Enforcement Act of 1986 — a right-to-know statute enacted by California ballot initiative. Its premise is that the public has a right to know whether it is being exposed to chemicals that may cause cancer or reproductive harm. The statute contains two core prohibitions. First, no failure to warn: before knowingly and intentionally exposing an individual to a listed chemical, a clear and reasonable warning must be given — which for cross-border sellers means a digital warning on the listing detail page and a physical warning on the product packaging. Second, no discharge into water sources: businesses may not discharge such chemicals into drinking water sources or onto land where they may pass into drinking water. In short, any product sold in California containing a listed chemical carries a mandatory warning obligation.

Q: Which chemicals are regulated?

A: The core standard is a list maintained and updated by the state — the Governor is required to update it at least annually. The list is maintained by the Office of Environmental Health Hazard Assessment (OEHHA) and contains more than 900 substances known to cause cancer or reproductive toxicity. Once a chemical is listed, businesses generally have a 12-month grace period to implement warnings; for the discharge prohibition the period is 20 months. Sellers should monitor these developments to screen product risk.

Q: How do I assess scientifically whether a product triggers the warning duty?

A: For listed chemicals, Prop 65 establishes safe harbor levels as the basis for exemption — No Significant Risk Levels (NSRLs) for carcinogens and Maximum Allowable Dose Levels (MADLs) for reproductive toxicants. Where exposure remains below those thresholds, the warning requirement does not apply. But in litigation, the burden of proving that exposure stays below the threshold rests entirely on the business. This is not simple content testing but an expensive and complex toxicological assessment, usually requiring experienced experts for testing and argument. The challenge does not end there: plaintiffs' firms typically contest every detail of a defendant's exposure assessment, manufacturing issues of fact and turning the case into a high-intensity battle of experts requiring protracted litigation and cross-examination. The safe harbor defense therefore presents a very high and costly evidentiary threshold — a burden that often leads companies with strong defenses, knowing their exposure is below the limit, to settle and pay anyway. In practice, companies commonly commission third-party testing in advance. Based on the results, a manufacturer or seller faces a clear commercial choice: reformulate to remove the restricted substance entirely, or affix a Prop 65 warning prominently on the product or packaging to discharge the disclosure obligation and hedge the litigation risk.

Q: What is a "clear and reasonable warning," and what changed for the short-form warning?

A: Where a product's listed substance exceeds the threshold, a clear and reasonable warning must be given. Businesses may use the officially pre-approved warning formats; accurate use of those formats creates a presumption that the warning is clear and reasonable. For years the short-form warning — occupying little packaging space and requiring no disclosure of the specific chemical — was the preferred route. Under amendments OEHHA formally adopted in late 2024, that convenience has been substantially narrowed: a short-form warning must now name at least one specific chemical corresponding to the relevant endpoint (cancer and/or reproductive toxicity). The practice of avoiding precise chemical identification through vague drafting is therefore at an end. Recognizing the real cost of supply chain adjustment and packaging changeover, OEHHA allowed a three-year transition: until January 1, 2028, businesses may continue using the older short-form warning without a chemical name, and products manufactured and labeled before that date may be sold indefinitely. We recommend that sellers assess their product composition and begin label updates early, using the current standard wording — for consumer products:

• For cancer risk: "Can expose you to [name of chemical], a carcinogen. See www.P65Warnings.ca.gov"
• For reproductive risk: "Can expose you to [name of chemical], a reproductive toxicant. See www.P65Warnings.ca.gov"

Q: Do businesses with fewer than 10 employees really have an exemption?

A: Businesses with fewer than ten employees are exempt as a matter of law, but in practice that exemption carries complications. First, "employee" under California law reaches well beyond ordinary commercial usage — independent contractors and external collaborators are readily recharacterized as employees in the current California environment. Second, even where a cross-border seller itself qualifies, risk may still transfer invisibly through indemnification provisions in the distribution chain. Retailers (Amazon, Walmart, large chains) sell directly to the public and typically have far more than ten employees, making them high-risk defendants. Once a retailer is drawn into litigation over your product, it will invoke the indemnity provisions in the purchase agreement to require the upstream supplier to bear the full cost of defense and damages. Relying on the headcount exemption alone is therefore generally unrealistic.

Q: How is Prop 65 enforced?

A: Enforcement is two-track: public prosecutors and private enforcers. In practice, government-initiated investigations are a small minority; the great majority of compliance challenges come from private enforcers — the "bounty hunter" mechanism — under which any private party acting in the public interest (professional plaintiffs' firms, consumer organizations) may enforce. Private plaintiffs are highly active and professional, driven by the statute's economic incentives: they may take 25% of civil penalties on judgment or settlement, and may require the defendant to bear their substantial investigation and attorney's fees in full. Before suing, a private plaintiff must serve a strict 60-day notice of violation — a statutory buffer giving the government a right of first intervention; where the government does not intervene, the private plaintiff may proceed. For cross-border sellers this means the risk comes principally from highly professionalized plaintiffs' firms that sample and test products across e-commerce platforms daily, and once a target is identified use the time and economic pressure of litigation as leverage to force a high settlement within the buffer period.

Q: What are the consequences of a violation?

A: They are systemic. First, injunctive relief: a court may order sales stopped or products delisted — for a cross-border seller, the immediate loss of the ability to operate. Once a violation enters litigation, platforms such as Amazon typically delist the listing and freeze account funds to protect themselves, and the lost expected profit from that interruption often far exceeds the penalty. Second, cumulative civil penalties: up to $2,500 per violation per day. Because the penalty accrues daily and plaintiffs typically reach back over months of sales records, the final figure is often startling. Third, professional costs: the settlement payment plus the opposing firm's investigation and attorney's fees, routinely in the tens of thousands of dollars. A defendant pays not only the penalty but the plaintiff firm's litigation cost.

Q: What compliance review process should a cross-border seller establish?

A: First, audit the supply chain to determine whether product constituents appear on the OEHHA list. Second, assess exposure — whether, in normal use, the chemical may enter the body through skin contact, inhalation, or ingestion. Third, where exposure risk exists, compare against the official safe harbor level. Where no official reference value exists, or the seller cannot itself establish that exposure is below the limit, a warning should be provided defensively.

Q: If my product meets federal standards (a CPC certificate, for example), am I exempt from the Prop 65 warning?

A: Not necessarily — and this is the most common misconception among Chinese sellers. Prop 65's warning requirement is entirely independent of federal standards. Federal standards are generally based on absolute content; Prop 65 is based on daily exposure. A product whose lead content complies with the federal standard may still violate California law if, because of how frequently it is used or how it is handled, daily lead exposure exceeds the strict 0.5 microgram threshold.

Q: Rather than labeling, can I simply reformulate?

A: Yes. Optimizing the supply chain and substituting materials to remove listed substances or reduce concentrations below the safe threshold is the best long-term route to eliminating the warning obligation entirely. Many larger brands facing sustained attention from professional plaintiffs choose reformulation first — adjusting ceramic glazes or plastic plasticizers, for example. It raises development cost in the short term but removes the underlying basis for repeated claims.

Q: I have received a 60-day notice. Can I contact the plaintiff directly?

A: We strongly advise against approaching the plaintiff informally. Plaintiffs' counsel are highly experienced, and this is not only litigation but a negotiation over money. Contacting them yourself readily exposes your position — sales figures, margins — and drives the settlement figure up substantially. The correct step is to engage experienced California defense counsel immediately.

Q: The plaintiff wants reformulation, but I only want to add a warning label. Is that acceptable?

A: Most private plaintiffs are not satisfied with a warning label and prefer to require a commitment to reduce the chemical content — that is, to reformulate. Where a company insists on labeling only, plaintiffs' counsel typically raise the settlement demand substantially, on the ground that their objective is eliminating public exposure. The company must therefore weigh paying a higher settlement to retain the formulation against paying the cost of reformulation to reduce the settlement.

Q: Will a release in a settlement protect me from a second suit?

A: It depends on which kind of settlement you sign. A court-approved consent judgment is reviewed by a judge, who confirms the penalty is reasonable and in the public interest. Its advantage is preclusive effect: once entered, other private plaintiffs may not sue again over the same product and the same chemical. Even a court-approved settlement does not entirely foreclose later intervention by the Attorney General, though that is uncommon. An out-of-court settlement — many cases settle before suit is filed, without judicial approval, typically at lower cost — has contractual effect only and will not prevent other private plaintiffs or government agencies from suing again over the same product.

Conclusion

Prop 65 obligations are not excused by where a company is registered, its scale, or its subjective awareness. Once a product enters the California market, the statutory warning duty attaches. In practice the overwhelming majority of enforcement comes from private plaintiffs rather than government regulators, which makes the risk highly latent: a product may have been selling for months or years before a single market sample triggers a chain of legal consequences.

Compliance is, in essence, risk pricing. Rather than responding to a 60-day notice with an expensive settlement, build the compliance cost into the pricing model before the product goes live. That is not only discharging a legal obligation but a precondition to operating a sustainable cross-border business.

This article addresses general legal questions only and does not constitute legal advice on any specific matter.