United States: Anti-Trafficking Regulations Impose New Obligations On All Federal Contractors

Amendments to the Federal Acquisition Regulation (FAR) aimed at eliminating substandard labor conditions within government contractors' supply chains went into effect on March 2, 2015.  Under the amended regulations, new solicitations will impose requirements on all government contractors and subcontractors as part of an effort to curb human trafficking.  Contractors that provide supplies acquired abroad or perform services outside the United States are subject to additional requirements, including implementing compliance plans and completing compliance certification.  For all contractors, noncompliance with the new regulations could result in financial penalties, termination for default, or suspension or debarment. 

The amendments follow the January 29, 2015 publication of a final rule implementing Executive Order 13627, entitled "Strengthening Protections Against Trafficking in Persons in Federal Contracts," and title XVII of the National Defense Authorization Act of 2013, entitled "Ending Trafficking in Government Contracting."  Human trafficking is defined as the use of force, fraud, or coercion for the purpose of obtaining labor.  According to the U.S. Department of Labor, nearly 21 million people around the world are the victims of forced labor.  

Forced labor can occur in any industry.  It is especially prevalent in industries that require low-skilled labor or jobs that are hidden from public view, including agriculture, mining, and domestic service.  The dynamics of global production have increased worker vulnerability to forced labor.  For instance, buyer pressure on suppliers to keep prices low and to complete orders quickly can lead suppliers to rely on excessively long schedules, in some cases rising to the level of forced overtime.1 Prompted by the United States' extensive diplomatic, defense, and development activities around the world, the government has sought to reduce the risk that government contractors will engage in activities that promote or allow human trafficking—such as utilizing labor recruiters who charge foreign workers placement and/or other fees.2

Requirements for All Contractors

The amendments alter FAR 22.1700 and FAR 52.222-50 to impose the following employment-related requirements on all contractors and subcontractors: 

  1. Minimum disclosures:  Contractors and subcontractors are prohibited from "[u]sing misleading or fraudulent practices during the recruitment of employees or offering of employment."  Such misleading or fraudulent practices include failing to disclose the key terms and conditions of employment—including wages, benefits, the location of work, living conditions, housing, significant costs, and hazardous working conditions—in a language the employee can understand. 
  2. Limitations on recruiters:  Contractors and subcontractors may not use recruiters who do not comply with local labor laws or who charge recruiting fees. 
  3. Return transportation:  At the end of employment, contractors and subcontractors generally must provide or reimburse the cost of return transportation for employees who are not nationals of the country where they are working and were brought to that country for the purpose of working on a U.S. government contract or subcontract. 
  4. Housing standards:  When contractors and subcontractors provide or arrange for housing for their employees, they must meet the host country's housing and safety standards. 
  5. Written agreements:  Contractors and subcontractors must provide employment contracts, recruitment agreements, and other required work documents in writing in a language the employee understands when law or contract requires them to do so.  These documents must include certain information about the employee's wages, work, and rights. 

To ensure adherence to these requirements, the amendments mandate that contractors notify their employees and agents of the government's anti-trafficking policy and the penalties for noncompliance with that policy, which include removal from the contract, reduction in benefits, and termination of employment.  The amendments also require contractors to cooperate fully with any trafficking-related investigations and notify immediately the contracting officer and appropriate agency Inspector General of any "credible information" regarding violations by an employee, subcontractor, subcontractor employee, or subcontractor agent.  The regulations define "agent" to include independent contractors. 

Compliance Plan and Certification Requirements for Certain Contractors

In addition to the requirements outlined above, contractors and subcontractors that provide supplies acquired abroad or perform services outside the United States must implement a compliance plan and complete a compliance certification prior to receiving a contract award, when the estimated value of that portion of the contract exceeds $500,000.  The compliance and certification requirements apply only to the portion of the contract that meets these criteria.  Contracts for commercially available off-the-shelf items are exempt from these additional obligations. 

Compliance plans must satisfy the following minimum requirements: 

  1. Awareness program:  Contractors and subcontractors must inform their employees about the government's policy of prohibiting trafficking-related activities, what actions are prohibited, and the penalties for violations. 
  2. Reporting process:  Contractors and subcontractors must create a process whereby employees can report, without fear of retaliation, any activities that violate the government's anti-trafficking policy. 
  3. Recruitment and wage plan:  Plans must allow only the use of recruiting companies that have trained employees, prohibit charging recruitment fees to the employee, and ensure that wages meet the host country's legal requirements.  The regulations do not specify what type of training is required. 
  4. Housing plan:  If the contractor or subcontractor provides or arranges for employees' housing, plans must ensure that the housing meets the host country's housing and safety standards. 
  5. Procedures to prevent agents and subcontractors from engaging in trafficking:  Plans must outline procedures for monitoring, detecting, and terminating any agents or subcontractor employees who engage in trafficking activities. 

Compliance plans must be "appropriate" to the size and complexity of the contract and the nature and scope of the activities to be performed for the government, including the number of foreign citizens to be employed and the risk that the contract or subcontract will involve supplies or services susceptible to trafficking.  Beyond the minimum requirements outlined above, the regulations provide no guidance to aid contractors and subcontractors in determining what qualifies as an "appropriate" compliance plan. 

Contractors and subcontractors must post the contents of their compliance plans at the workplace and on their websites by the start of contract performance.  Even when contractors and subcontractors are not required to develop compliance plans, doing so may be beneficial because, in the event of a violation, the contracting officer will consider compliance plans or awareness programs as mitigating factors when deciding what remedies are appropriate

Before a contractor receives a contract award and annually thereafter, the contractor must certify that it has implemented a compliance plan that meets the minimum requirements outlined above.  Additionally, after conducting due diligence, contractors must certify that neither the contractor nor its agents, subcontractors, or subcontractors' agents is engaged in trafficking-related activities and that the contractor has taken appropriate remedial and reporting actions if it has discovered any such activities.  Contractors, in turn, must obtain such certification from their subcontractors, including from subcontractors that provide supplies for use in the performance of the prime contract—if the subcontractors acquire those supplies abroad, the value of the supplies exceeds $500,000, and the supplies are not commercially available off-the-shelf items. 

Next Steps

The new anti-trafficking regulations apply only to new solicitations as of March 2, 2015, and indefinite-delivery/indefinite-quantity contracts if future orders are anticipated.  Contractors and subcontractors should take care to ensure they adhere to the amendments' anti-trafficking safeguards when they recruit, hire, and terminate employees.  To comply with the amendments' notification requirements, employers should update their employee handbooks to inform their employees of the government's anti-trafficking policy and the penalties for noncompliance with that policy. 

Contractors awarded contracts to provide supplies acquired abroad or perform services abroad that are valued over $500,000 must develop plans to comply with the anti-trafficking regulations and certify their compliance on an annual basis.  Even contractors that are not required to do so should consider implementing a compliance plan or awareness program to take advantage of mitigated penalties in the event that they are found to have violated the regulations. 

Contractors should exercise due diligence to uncover violations of the anti-trafficking regulations and should report any misconduct immediately.  

Footnotes

1 U.S. Dep't of Labor, Bureau of Int'l Labor Affairs, What are Child Labor and Forced Labor?

2 U.S. Gov't Accountability Office, GAO-15-102, Human Trafficking:  Oversight of Contractors' Use of Foreign Workers in High-Risk Environments Needs to Be Strengthened (Nov. 2014).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.