New Compliance Obligations Regarding Human Trafficking

Although the final FAR provisions largely track the proposed rule,⁴ they also include several important additions and clarifications. The revised FAR requirements will take effect March 2, 2015. The final DFARS rule is unchanged from the proposed rule⁵ and became effective January 29, 2015. Importantly, the DFARS rule includes a new contractor representation.

New FAR Requirements

The stated purpose of the new regulation is to create a stronger framework for compliance by imposing additional requirements for awareness, compliance, and enforcement. To this end, in addition to conduct prohibited under the current regulation,⁶ the revised regulation applies to a broader range of procurement actions⁷ and prohibits Federal contractors, subcontractors,⁸ and their employees and agents from:

• Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity or immigration documents;
• Using misleading or fraudulent recruitment practices during the recruitment of employees or offering of employment (e.g., failing to disclose basic information, in a language accessible to the employee, about material misrepresentations regarding the key terms and conditions);
• Using recruiters that do not comply with local labor laws of the country in which the recruiting takes place;
• Charging employees recruitment fees;
• Providing or arranging housing that fails to meet the host country housing and safety standards; and
• Failing to provide an employment contract, recruitment agreement, or other required work document in writing and in a language that the employee understands at least five days prior to the employee relocating if a contract is required by law or contract.

The regulations also require Federal contractors to:

• Provide, or pay for the cost of (except in limited circumstances), return transportation upon the end of employment for an employee who is not a national of the country where the work was performed and who was brought into that country for the purpose of working on a US Government contract, subcontract, or portions of such contracts;
• Notify its employees and agents regarding the above listed prohibitions and any actions to be taken against them for violations of this conduct;
• Protect employees suspected of being victims of or witnesses to prohibited activities prior to returning to the country from which the employee was recruited, and not prevent or hinder the ability of these employees from cooperating fully with Government authorities; and
• Cooperate with any Government investigations and audits relating to the policy against human trafficking.

Compliance Program

Importantly, contractors and subcontractors are now required to implement a compliance program for contracts i) where all or a portion of the contract is for goods acquired or services performed outside the US exceeding $500,000; and ii) the contract is for other-than commercially available off-the-shelf (COTS) items. The regulations recognize that the program should reflect the size and the nature of the work to be performed and the risk that the contract will involve services and supplies susceptible to trafficking in persons. They also require that the program must, at a minimum, contain:

• An awareness program informing employees about the US Government’s zero-tolerance policy prohibiting human trafficking and trafficking-related activities, that such conduct is prohibited by the contractor, and the consequences should employees violate this prohibition;
• A reporting process for employees by which employees may report, without fear of retaliation, possible violations of the policy prohibiting trafficking in persons, including a means to make available to all employees the hotline phone number of the Global Human Trafficking hotline at 1-844-888-FREE and its e-mail address at help@befree.org.
• A recruiting and wage plan that i) permits only the use of recruiting companies with trained employees; ii) prohibits charging employees recruitment fees; and iii) ensures that wages meet applicable host-country requirements or explains any variance;
• A housing plan that meets the host-country housing and safety standards if the contractor intends to provide or arrange housing; and
• Procedures preventing agents and subcontractors at any tier, and at any dollar value, from engaging in trafficking in persons monitoring subcontractor and agent compliance therewith, and requiring the termination of any agents, subcontractors, or subcontractor employees that have engaged in prohibited activities.

The relevant provisions of the compliance plan must, with limited exceptions, be posted at the beginning of contract performance at the workplace and on the contractor’s website. If posting is impracticable, the contractor must provide the relevant contents of the compliance plan to each worker in writing.

Certification

For contracts requiring a compliance program, the regulations further require that before the contract is awarded, and annually thereafter, the awardee must certify that:

• It has implemented a compliance plan and procedures to i) prevent any prohibited activities; and (ii) monitor, detect, and terminate the contract with a subcontractor or agent engaging in prohibited activities; and
• After having conducted due diligence that i) to the best of the contractor’s knowledge and belief, neither it nor any of its agents, subcontractors, or their agents has engaged in any prohibited activities relating to trafficking in persons; or ii) if abuses have been found, the contractor or subcontractor has taken the appropriate remedial and referral actions.

Contractors required to provide the certification at the time of the award must obtain such certifications from proposed subcontractors both at the time of the award and annually.

Disclosure Obligation

Importantly, the regulations include a self-disclosure obligation. That is, a contractor must “immediately” inform the contracting officer and the inspector general of any “credible information” alleging a contractor employee, subcontractor employee, or their agent has engaged in conduct that violates the policy against human trafficking, together with any action that the contractor has taken regarding such action. In addition, the regulations require the Contracting Officer to notify the Inspector General, the agency debarring and suspending official, and, if appropriate, law enforcement of credible contractor violations. The regulations provide that the contractor shall be provided an opportunity to respond to the Inspector General’s report relating to violations of the trafficking provisions in an administrative proceeding prior to making a final determination.

DFARS Requirements

The DFARS amended requirements include posting of new human trafficking hotline posters; ensuring employee awareness of certain rights, including the new human trafficking requirements; and, importantly, execution of a new representation. Specifically, a contractor must represent that it i) has hiring and subcontracting policies to protect the rights of its employees and the rights of subcontractor employees; ii) will comply with those policies in the performance of the contract; and iii) has notified its employees and subcontractors of the responsibility to report trafficking violations at any tier, as well as the whistleblower protections.

Government Remedies and FAPIIS Reporting

The US Government has a broad range of remedies available for violation of the human trafficking prohibitions. These include removal of employees from the contract; termination of a subcontractor; suspension of contract payments; loss of award fee; declination of exercising available options under the contract; termination for default, and suspension or debarment. The Government may consider, as a mitigating factor, whether or not the contractor had a compliance plan or awareness program at the time of the violation, was in compliance with the plan at the time of the violation, and took remedial actions for the violations. An aggravating factor would be if the contractor failed to abate an alleged violation or enforce the requirements to do so when directed by the contracting officer.

The new regulations also require contracting officers to include any violations of the human trafficking requirements in the Federal Awardee Performance and Integrity Information System (FAPIIS). Violations of the subcontractor will be posted to the record of the prime contractor. While the prime contractor will have an opportunity to comment on such allegations, such allegations may of course impact the contractor’s ability to win new federal contracts.