There has been recent legislative and regulatory surges towards the prevention and prohibition of forced labor and human trafficking that may impact your business wherever you operate. In rural towns, affluent suburbs and cities across the country, human trafficking exists under our noses.  Shockingly, this labor practice is not limited to our nation’s border states or even brothels and back alleys.  Unemployment, extensive highways and poverty can make any town a destination place for foreign victims, as well as a recruiting zone. In today’s inter-connected marketplace, businesses of all sizes need to be cognizant of their business partners’ practices in areas that were perhaps once viewed as outside the normal scope of business.

Nearly all states have passed anti-human trafficking laws in one form or another. To highlight one business-related example, California’s Transparency in Supply Chains Act imposes on every retail seller and manufacturer operating in California with annual worldwide revenues of $100 million or more, a duty to disclose, audit and evaluate their anti-trafficking efforts relating to their overseas supply chains. Businesses can expect to see this type of increased governmental regulation requiring companies to responsibly manage their supply chains.

The federal government has also gotten involved. On January 29, 2015, the Federal Acquisition Regulation (FAR) Council published its long-awaited “Final Rule” strengthening United States policy prohibiting human trafficking, which applies to solicitations for or modifications made to federal contracts or subcontracts on or after March 2, 2015.  The FAR is applicable to all federal contractors and subcontractors regardless of size.  This Final Rule imple­ments Executive Order 13627 (September 25, 2012) and Title XVII of the National Defense Authorization Act of 2013.  For all federal contracts, the Final Rule prohibits certain practices beyond actual human or sex trafficking, such as:

  • Destroying, confiscating, concealing or denying access to an employee's identification or immigration documents
  • Using fraudulent or misleading practices during employee recruitment
  • Charging recruitment fees from employees
  • Failing to provide in writing, in a language the employee understands, any employment contracts, recruitment agreements or other work documents that are required by contract or law  

In addition, federal contractors and subcontractors performing certain overseas contracts for services or supplies exceeding $500,000 must maintain detailed compliance plans and publish such plans at their workplace and on their website.  For these contractors and subcontractors, annual certifications and violation-reporting mechanisms are also required and penalties are imposed for non-compliance. (These additional requirements do not apply to contracts for solely commercially available, off-the-shelf items).

In sum, from hotels to conventions to your neighborhood restaurant or salon, large and small employers and staffing companies, particularly federal contractors and sub-contractors, must have a general awareness that forced labor exists underfoot and must be aware of the current regulatory surge to eradicate it. Today, businesses need to understand their labor and product supply chains, which can also be important when dealing with one’s business partners, suppliers and/or tenants.  Ice Miller LLP attorneys can help your business navigate this complex array of new federal and state laws and compliance issues.