New Anti-Human Trafficking Rules to Come
By William M. Jack and Catlin S. Kaprove
A new presidential executive order released on Sept. 25 enhanced anti-trafficking compliance obligations covering federal contractors. “Strengthening Protections Against Trafficking in Persons In Federal Contracts” requires the government to take steps to amend the Federal Acquisition Regulation by March 25.
Human trafficking is defined as the subjection of men, women, or children to exploitative conditions, including sex trafficking or the recruitment or obtaining a person for labor using force, fraud, or coercion that effects involuntary servitude.
The FAR’s existing anti-human trafficking clause is required in all solicitations and contracts, and flowed down to all subcontractors, and bars contractors and subcontractors from engaging in trafficking in persons, procuring commercial sex acts, or using forced labor to perform a covered contract.
Contractors for some time have been required to inform employees of the government’s zero-tolerance, anti-trafficking policy and to promptly notify contracting officers of any known or suspected trafficking violations by the contractor or its subcontractors and suppliers.
A violation of these existing requirements can result in mandated removal of employees from a government contract, default termination of a subcontract, suspension of contract payments, loss of award fee, default termination of the prime contract, or suspension or debarment.
The new executive order expands the definition of prohibited trafficking to include the use of misleading or fraudulent recruitment practices in recruiting employees, for example: Failing to disclose basic information or making material misrepresentations as to key terms and conditions of employment, including wages and fringe benefits, location of work, living conditions and housing — if employer provided or arranged — any major costs to be charged to the employee, and, if applicable, the hazardous nature of the work.
They cannot charge employees recruitment fees or destroy, conceal, confiscate, or otherwise deny access by an employee to the employee’s identity documents, such as passports or drivers’ licenses.
Failing to pay return transportation costs at the end of employment for a non-national employee working away from home — with certain limited exceptions — may also be a violation.
Contractors and subcontractors will also be required to “cooperate fully in providing reasonable access” to allow agencies to conduct audits or investigations of compliance with anti-trafficking laws.
Contracting officers must notify the relevant agency’s inspector general, suspension and debarment officials, and law enforcement officials if they become aware of activities that are “inconsistent” with any applicable law or regulation governing trafficking in persons.
A new FAR clause will be incorporated into solicitations and contracts that exceed $500,000, and all contractors will be required to create and maintain an anti-trafficking compliance plan and certify (pre-award and annually thereafter) that a compliance plan is in place and that neither it nor any subcontractor has engaged in barred trafficking activities. If a violation is found, the contractor or subcontract must certify that required remedial and referral actions have occurred.
The new clause’s compliance plan and certification requirements will not apply to contracts or subcontracts for commercial- off-the-shelf items, defined as items that are sold in substantial quantities in the commercial marketplace and offered to the government in the same form in which they are sold in the commercial marketplace.
Compliance plans should be tailored to the size and complexity of the contract or subcontract and for the nature and scope of activities performed, and must be made available to the contracting officer upon request, and posted on contractor and subcontractor websites before contract performance commences.
The plan must include, at a minimum, an awareness program for employees, a process for employees to report trafficking activities, a recruitment-and-wage plan, a housing plan — if the contractor or subcontractor intends to provide or arrange housing — and procedures to prevent subcontractors at any tier from engaging in trafficking.
The executive order imposes stringent new anti-trafficking compliance requirements on contractors and subcontractors, and should be assessed before implementation begins on March 25.
Wholly apart from the stigma that will accompany any trafficking violations, law enforcement tolerance for violations in this arena will be very low — particularly for those companies that have not taken advance steps to make compliance a priority.William M. Jack and Catlin S. Kaprove are associates in Greenberg Traurig LLP’s government contracts practice group. The views expressed are solely those of the authors.