The latest Obama Administration move to raise workforce standards and protections for federal contractor employees will tighten restrictions on reliance on human trafficking and forced labor. Contractors will be required to enforce compliance among subcontractors—a tough challenge in a global supply chain, attorneys say. The rules stem from 2012 and 2013 “zero tolerance” provisions, but final regs, published in late January, are set to take effect on March 2.
The rules, which apply to new and existing federal and military contracts and task orders with no size limits, bar contractors and subs “from charging employees recruitment fees or using misleading or fraudulent recruitment practices,” says a White House spokeswoman.
Also, for the first time, firms with non-U.S. contracts worth more than $500,000 must develop and maintain detailed compliance plans prior to accepting contract awards, and certify annually that “to the best of their knowledge” they and their supply-chain members meet requirements, she adds.
T. Markus Funk, partner at Denver law firm PerkinsCoie, says the rules “are intended to put direct pressure on the 300,000 or so direct suppliers to the U.S. government, as well as on the hundreds of thousands of sub-suppliers, to vet their supply chains.”
Under its requirements, all contractors must disclose working conditions to employees, are barred from confiscating passports or other immigration documents, must ensure that workers aren’t being charged recruitment fees and must provide non-nationals with return transportation, attorneys say. Many firms also will have to display the rules at workplaces and on websites, the government says.
“With today’s far-flung supply chains, and increasing numbers of businesses obtaining their goods from ‘high-risk’ countries such as China and India, there truly are few (if any) companies who can afford to take these groundbreaking regulations lightly,” says Funk. He says violators could face contract termination or debarment, or even criminal prosecution under the False Claims Act, and expects agency inspector generals “to take the lead” in enforcement. According to Funk, forced labor in the private economy is estimated to generate as much as $150 billion in illegal revenue each year.
Only firms supplying what is considered a “commercially available off-the-shelf” item, or COTS, can claim compliance exemptions, says Jennifer Plitsch, a partner in the Washington, D.C.-based government contracts practice at law firm Covington & Burling.
While the final rule no longer requires employers to interview suspected human trafficking victims, attorneys concede that compliance remains “a very difficult assignment for any company with an even moderately complex supply chain,” says Funk.
Plitsch told a legal publication that prime contractor monitoring is challenged by well-concealed trafficking activity along the chain, while other employment-law experts point to gray areas in supply-chain responsibility for compliance costs.
“At this point we are still reviewing the final rule to determine its ultimate impact on our members and the industry more broadly,” says a spokesman for the Associated General Contractors.