The law requires hosting companies to review and report child pornography. They have legal immunity to do so. Every company performs content reviews and makes reports. Nothing you post on the Internet goes without a review.
The problem is that there is such an avalanche of information that law enforcement has a tough time picking who to prosecute. Law enforcement desires getting the top dogs where law enforcement resources go the furthest.
However, due to new technological capabilities, local law enforcement is getting in on the act of prosecuting.
In 18 states, any adult is considered a mandated reporter for child abuse. As completely expected, California is not one of those states.
If there is such a law as you mentioned, it seems they are certainly guilty if there are underage images.