New Human Trafficking Laws And US Government Initiatives Make Anti-Trafficking A Compliance Priority For Businesses In 2013

In the wake of National Slavery and Human Trafficking Prevention Month in January 20131 and recent legal measures aimed at eradicating human trafficking, companies should take steps to ensure their operations and supply chains are free of forced labor and other severe forms of trafficking. The US government estimates that as many as 27 million persons globally2 are victims of trafficking in persons, involving the use of force, fraud, or coercion to obtain labor or commercial sex acts.3 Companies associated with human trafficking not only face serious legal and enforcement risks,4 but also risk severely tarnishing their brands in the eyes of consumers, investors, employees, and other stakeholders. Forced labor can occur in any industry. Those relying on overseas, migrant, or low-wage workers - such as mining, construction, agriculture, manufacturing, textiles, and hospitality - are most at risk.5 Several recent initiatives have tightened anti-trafficking legal requirements for government contractors, but also provide useful guidance for all businesses seeking to root out modern day slavery from their supply chains. This advisory surveys recent developments in this area and outlines steps companies can take to update their ethics and compliance programs to address trafficking-related risks.

1. RECENT ANTI-TRAFFICKING DEVELOPMENTS FOR BUSINESSES

   1. Trafficking Victims Protection Reauthorization Act of 2013

      On February 12, 2013, the US Senate approved the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2013 as an amendment to the Violence Against Women Reauthorization Act of 2013.6 The TVPRA of 2013 would reauthorize appropriations from 2014-2017 for various programs designed to assist victims of trafficking, impose additional reporting and accountability measures on government agencies involved in anti-trafficking programs, and enhance anti-trafficking measures in existing laws. Among other measures, the TVPRA of 2013 directs various US government agencies to establish partnerships with private entities, including corporations, to ensure that US citizens do not use materials produced with the use of trafficked labor and that private entities do not contribute to trafficking in persons involving sexual exploitation.7 It also would amend the Racketeer Influenced and Corrupt Organizations Act (RICO), which already includes peonage, slavery, and trafficking in persons as predicate offenses,8 to also include fraud in foreign labor contracting as a predicate offense for RICO violations.9 The US House of Representatives will now consider the bill.

   2. Heightened Requirements and Sanctions for Government Contractors

      Federal government contractors have long been prohibited from engaging in human trafficking. The Trafficking Victims Protection Act of 2000 (TVPA) and subsequent reauthorizations, for example, prohibited contractors, subcontractors, and their employees from engaging in severe forms of trafficking, procuring a commercial sex act, or using forced labor in the performance of a US government contract or subcontract. Since 2006, the Federal Acquisition Regulation (FAR)10 has restated this prohibition, and also required contractors to immediately inform their contracting officer if they receive "[a]ny information...from any source (including host country law enforcement) that alleges a Contractor employee, subcontractor, or subcontractor employee has engaged in" severe forms of trafficking, procuring a commercial sex act, or using forced labor in the performance of a contract. The FAR otherwise provided little specific guidance for contractors seeking to comply with these requirements. A recent executive order and an amendment to the Fiscal Year 2013 National Defense Authorization Act (NDAA) aim to both strengthen protections against trafficking in persons in federal contracts and add certain compliance requirements to the existing regulatory landscape.

      Executive Order "Strengthening Protections Against Trafficking In Persons In Federal Contracts"

      On September 25, 2012, President Obama issued an executive order, "Strengthening Protections Against Trafficking In Persons In Federal Contracts,"11 to help ensure that US government contracts are performed free of trafficking and forced labor. Reminding the business community that the US government is "the largest single purchaser of goods and services in the world," the Order aims to provide those that contract with the US government with tools to enforce existing anti-trafficking policy and further clarify the steps that federal contractors and subcontractors must take to fully comply with anti-trafficking requirements. The Order calls for steps to be taken in early 2013 to amend the FAR to prohibit a list of specific trafficking-related activities, including charging recruitment fees to employees; denying employees access to their passports, drivers' licenses, and other identification documents; and using misleading recruitment practices such as materially misrepresenting the amount of wages, living conditions, and the work location. Further, in contracts performed outside the United States, contractors and subcontractors with overseas projects must pay return transportation costs at the end of employment for third-country nationals who travelled for the purpose of working on the contract, unless certain very limited exceptions apply.

      The regulations implementing the Order will also require that federal contractors and subcontractors agree in their contracts to allow for anti-trafficking compliance audits and investigations. Supplementing contractors' duty under existing statutes and regulations to report suspected human trafficking to contracting officials, the Order requires contracting officers that "become aware of" any trafficking-related activity to notify the agency's inspector general, the official responsible for suspension or debarment actions, and if necessary, law enforcement.

      The implementing regulations also will require, for all US government contracts with work performed overseas exceeding $500,000, that each contractor and subcontractor maintain a compliance plan that includes, among other things, a program to make employees aware of the contractor's or subcontractor's anti-trafficking policy and the consequences for violating the policy, mechanisms for reporting violations, a recruitment plan that deters trafficking-related activities, a housing plan in compliance with host country safety standards (if applicable), and methods to prevent subcontractors from engaging in trafficking in persons and trafficking-related activities. These contractors and subcontractors will be required to certify that the compliance plan is in place. They must also certify that neither the contractors nor their subcontractors have, to the best of their knowledge, engaged in trafficking-related activities and that, if abuses...