Do you know what lurks in your supply chain? Would you sign a certification subject to the penalties of perjury stating there is no human-trafficking-related activity anywhere in your company’s supply chain? For all federal contractors, the answer must already be “yes.” But new bills pending before Congress will bring these requirements to other U.S. employers. 
Federal contractors already covered
The U.S. government recently enacted regulations implementing the mandates of Executive Order 13627, titled Strengthening Protections Against Trafficking in Persons in Federal Contracts. As of March 2, 2015, federal contractors are subject to heightened definitions of human-trafficking-related activities, which are prohibited both in the United States and abroad.
All federal contractors must have in place anti-human-trafficking policies, internal reporting and investigation procedures, and mandatory reporting and cooperation requirements. In addition, certain federal contractors are required to certify that they have performed a due diligence review of all employees, subcontractors, subcontractor employees, and their agents to ensure that human-trafficking-related activities aren’t occurring anywhere in the supply chain for work performed outside the United States.
Enforcement beyond federal contractors
The next frontier in U.S. enforcement efforts will be expanding these requirements beyond federal contractors. Currently pending before Congress are companion bills in the Senate (introduced by Senator Richard Blumenthal (D-Connecticut)) and the House (introduced by Representative Carolyn Maloney (D-New York)), both titled the Business Supply Chain Transparency and Slavery Act of 2015. These bills propose to modify the Securities Exchange Act of 1934 to require mandatory disclosure requirements for “covered issuers,” which includes those that have annual worldwide global receipts in excess of $100 million.
Under these bills, such companies would be required to make public disclosures to the Securities and Exchange Commission (SEC) identifying:
- The company’s policies to identify and eliminate risks of forced labor, slavery, human trafficking, child labor, and commercial sex acts with minors (collectively, “human trafficking”);
- Detailed information on all efforts conducted by the company to evaluate and address human trafficking in the supply chain;
- Facts regarding whether the company requires its subcontractors and suppliers to attest that there is no human trafficking in the manufacturing of their products;
- Detailed information regarding internal accountability standards, supply chain management, procurement systems, and reporting procedures;
- The nature and extent of internal training provided to employees and management personnel, including labor recruitment practices; and
- A detailed description of remedial efforts taken in the event human trafficking was identified in the supply chain.
Next steps: Take this quiz
Is your business in compliance? Answer the following questions to find out:
- Does your company have a policy prohibiting human trafficking by your employees and subcontractors?
- Does your company have internal reporting and investigation procedures for reporting human trafficking violations?
- Do your subcontracts contain provisions prohibiting subcontractors, their employees, and their agents from engaging in human-trafficking-related activities?
- Can you identify each of the subcontractors in your supply chain, including the subcontractors’ subcontractors?
- Do you know enough about your supply chain to certify that none of your subcontractors, their employees or agents, or the employees and agents of the subcontractors’ subcontractors is engaging in any human-trafficking-related activity?
- And, most important, would you sign such a certification under penalty of perjury?
If you’re a federal contractor and answered “no” to any of the above, immediate action is required to bring your company into compliance with the regulations already in place for federal contractors.
Elizabeth B. Bradley is an attorney with Fortney & Scott, LLC, in Washington, D.C. She may be contacted at ebradley@fortneyscott.com.
