• U.S. law creates corporate liability for entities, such as hotels, casinos and restaurants, that benefit from human trafficking if they know or “should have known” about such exploitation.
  • Appropriate anti-human trafficking compliance is paramount to avoid potential liability based on employees’ knowledge of trafficking occurring in connection with a company’s business.
  • Companies should consider incorporating anti-human trafficking compliance policies and procedures as well as proactively conducting employee trainings on how to identify and report signs of human trafficking.

Earlier this year, “Jane Doe,” a teenage girl who was lured into the sordid underworld of sex trafficking in Texas, sued several multinational hotel chains, as well as truck stop operators and a website known to advertise commercial sex, accusing them of profiting from illegal exploitation of a minor and seeking over $1 million in damages as well as attorney’s fees. While Jane Doe filed her claims under Texas law, the relevant state statute mirrors similar provisions in the Victims of Trafficking and Violence Protection Act (TVPA), a federal law that creates significant corporate liability for entities, including hotels, casinos and restaurants, that benefit from human trafficking if they know or “should have known” about the exploitation.

Jane Doe’s Human Trafficking Lawsuit

According to Jane Doe, right before her sixteenth birthday, she was forced into human trafficking and sexually exploited at various major-brand hotels in Texas. In particular, Jane Doe’s court filings indicate that, while a minor, she was instructed to rent out a room, or have her exploiters rent out a room, at numerous hotels without providing any identification to hotel management. Once a room was rented, continues Jane Doe’s complaint, “numerous Johns would come and go from the hotel room” sexually abusing her in exchange for a fee.

Jane Doe alleges that despite the constant flow of male customers, who were not hotel guests, hotel management and staff failed to take steps to alert the authorities, or otherwise prevent sexual exploitation of minors at their properties. This failure, argues Jane Doe, led to her continued sexual exploitation while hotel management “turned a blind eye to the plague of human trafficking and the sexual exploitation of minors at their locations.”

Corporate Liability for Human Trafficking

Jane Doe’s complaint alleges that the internationally known hotel chains violated Texas Civil Practice and Remedies Code (Texas Code) § 98.002. This section of the Texas Code creates liability for individuals or entities that intentionally or knowingly benefit from participating in a human trafficking venture for damages arising from such trafficking. In particular, Jane Doe argues that by renting out rooms where individuals criminally exploited her, the hotel chains received payments (i.e., a benefit) from her exploitation in violation of Texas Code § 98.002.

As previously noted, this section of the Texas Code generally tracks the TVPA, a federal law that grants a private right of action to a victim of human trafficking. Enacted in 2000 and subsequently revised in 2003, 2005, 2008 and 2013, the TVPA is intended to combat trafficking in persons, especially into the sex trade, slavery and involuntary servitude. While trafficking victims have generally invoked the TVPA to seek damages from their traffickers, the statute also provides a cause of action to bring claims against third parties such as hotels, casinos and other businesses in the hospitality industry. Indeed, under the TVPA, a victim may bring an action against “whoever knowingly benefits . . . from participation in a venture that person knew or should have known has engaged in” trafficking (emphasis added). Notably, the TVPA specifically allows courts to award damages as well as attorney’s fees to the victim and, at least in the Ninth and Tenth Circuits, punitive damages. Because such horrific crimes generally have significant and lifelong effects on their victims, defendants in TVPA actions are likely to face damages in the millions of dollars, not to mention significant public relations costs and remediation expenses.

Thus, for instance, a multinational hotel chain that rented out a room in one of its U.S. properties where a trafficked person was exploited may be exposed to corporate liability if hotel management should have known that its property was being used to perpetrate sexual exploitation or trafficking of minors. Further, as an employee’s knowledge may generally be imputed to its employer, it may be established that a hotel “should have known” of such terrible crimes where hotel receptionists, concierges, cleaning personnel or room service staff members may have witnessed signs of potential exploitation such as control or force, flow of numerous men to visit a female guest or a guest that pays in cash and refuses to show an ID.

Not Limited to Hotels and Sex Trafficking

Importantly, liability under the TVPA is not limited to sex trafficking in hotels. As noted above, a victim may bring an action against “whoeverknowingly benefits from participation in a venture that person should have known has engaged in human trafficking. In fact, Jane Doe is also suing a website for receiving advertising fees in exchange for posting illicit activities as well as companies operating truck stops at where she alleges she was exploited.

Any range of businesses may similarly come in contact with sex trafficking victims or benefit from their exploitation, including casinos, restaurants, bars, nightclubs, concert and sports venues, banks, advertisers and transportation companies. Liability can also be tied to other forms of human trafficking such as forced labor. Thus, for instance, companies involved in labor-intense industries, especially those that rely on third parties to provide inexpensive labor, also face potential liability. Construction, agricultural, mining, forestry, fishing, and manufacturing companies, among others, should particularly take note.

Anti-Human Trafficking Compliance

As companies may be exposed to significant corporate liability if they “should have known” that trafficking was occurring in connection with their business, it is paramount that they implement effective anti-human trafficking compliance programs. Indeed, it may be deemed that a business “should have known” of the trafficking if its employees witnessed signs of exploitation and either did not recognize them as such or failed to notify management, thereby allowing their company to “benefit” unwittingly from the crime. A system of anti-human trafficking compliance would effectively address these concerns by establishing internal policies and procedures to identify instances of exploitation promptly and, one might hope, even prevent the crime.

In sum, to avoid liability and unintentionally contributing to human trafficking while mitigating TVPA’s potentially significant impact on corporate assets and operations, companies should consider incorporating anti-human trafficking compliance into their own compliance framework. Doing so is particularly critical for companies operating in the hospitality business or other high-risk industries noted above that might benefit from human trafficking. In addition, companies should proactively conduct employee training on how to identify signs of human trafficking, perform an internal review of existing policies and procedures to identify areas that may be subject to exploitation by traffickers (and make needed corrections) and assess their prospective suppliers’ and contractors’ labor practices.

Human trafficking is a horrific form of modern-day slavery, a multi-billion dollar criminal industry where traffickers use force, fraud or coercion to control their victims. Proactively engaging in anti-human trafficking compliance is thus necessary from both corporate social responsibility and risk management perspectives. Indeed, not only is it an effective way to play a significant role in the fight against exploitation, but it also reduces business risk by mitigating a company’s exposure to potential corporate liability.