U.S. Government Requires Companies to Comply with Stringent New Regulations

In a sweeping move this month, the federal government now requires all companies with a government contract to comply immediately with newly-enacted human trafficking regulations. On March 2, 2015, the federal government officially converted its expectation to a mandate. Now, any entity doing business with the federal government must comply with the new regulations to ensure that it has a supply chain free of any association with human trafficking. Companies with government contracts for supplies or services obtained outside the United States with a value exceeding $500,000 (other than for commercially available off-the-shelf items) are additionally mandated to have tailored compliance programs to prevent and detect prohibited activities, and to provide certification of their compliance to the federal government.

The new 2015 mandates come from the just-released Federal Acquisition Regulation provisions that stem from the September 25, 2012 Executive Order 13627, “Strengthening Protections Against Trafficking in Persons in Federal Contracts.” There is no grace period and companies are expected to be in compliance immediately.

The federal government is not messing around. Failure to comply with the new regulations will result in an array of possible consequences, including:

  • Loss of government contracts
  • Civil and criminal exposure
  • Class action liability
  • Whistleblower claims
  • False claims act liability
  • Consumer complaints and boycotts
  • Negative publicity and pressure from advocacy groups

After I prosecuted countless human trafficking cases with the U.S. Department of Justice, it was clear that the $32 billion dollar illegal human trafficking industry is more expansive than the law enforcement resources the government has to address it. The federal government’s latest approach – to require the private sector to step up and take responsibility – may actually begin to make a new dent in the problem. The mandatory compliance programs have the potential to make a meaningful difference in the horrific problem of the sale of human beings in both forced labor and commercial sex trafficking.

This is not the first human trafficking law in place that could impact companies. For some time now, a few companies have taken a proactive approach against human trafficking pursuant to the Trafficking Victims Protection Act (initially enacted in 2000 and amended several times since then). They did so to accept their part in corporate responsibility, as well as protect themselves from liability under the federal statute. But even for most of these companies that were ahead of the curve, the new regulations demand more as they expand legal obligations and mandate compliance. Further, the stringent requirements also create fertile ground for whistleblowers and False Claims Act cases.

The new regulations will impact over 300,000 contractors nationwide and countless subcontractors. Companies and prime contractors are now on the hook to take responsibility for their subcontractors and independent agents. The era of getting by without knowledge of how, or by what means, subcontractors obtain labor is over. For some companies, this will be viewed as a welcome opportunity to highlight what they are already doing to address this rapidly growing problem. For others, the issue of human trafficking is a foreign one (or one that has just been ignored) and the burden to comply will be heavy.

Husch Blackwell is the only firm in the nation to offer tailored human trafficking government compliance programs. We develop corporate policies, handle required certifications, provide training, and conduct audits for companies to aid them in complying with new government regulations.

In addition to providing human trafficking compliance programs, we are also the first law firm in the country to offer pro bono legal services to all victims of human trafficking referred by any law enforcement agency, healthcare provider, or partnering nonprofit organization. Through the firm’s Human Trafficking Legal Clinic, launched in 2013, our attorneys represent all types of human trafficking victims: international and domestic, adults and minor victims of both commercial sex and forced labor trafficking.

The federal government has drawn a new line. All companies that do business with the federal government are now required to take the issue seriously and rid their supply chain of any taint of the problem. The good news: traffickers are about to hit obstacles that they have never encountered before. The attack on the human trafficking problem will no longer fall solely on the back of victims and law enforcement investigative agencies. The private sector now must do its part to stop the epidemic or face the consequences.