Legal Compliance

Under the UN Guiding Principles on Business and Human Rights, business enterprises are responsible for respecting human rights, including avoiding causing or contributing to adverse human rights impacts through their own activities. Laws and regulations concerning responsible business conduct and human rights encompass diverse and evolving approaches. Some examples of laws and regulations follow; contact the entities that enforce them for the most up-to-date information.

 

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Discover Some Examples of Laws and Regulations

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Tariff Act of 1930 (United States)

Goods “mined, produced, or manufactured wholly or in part” by convict, forced, or indentured labor are prohibited from entering the United States under the Tariff Act of 1930. Any person may report to CBP that merchandise produced by forced labor is being or is likely to be imported into the United States. If the information reasonably, but not necessarily conclusively, indicates that goods made, either wholly or in part, by forced labor are being or are likely to be imported, CBP will issue a withhold release order (WRO) to prevent the goods from entering the United States. While the goods are being detained, the manufacturer has the option to re-export the goods or provide evidence to CBP demonstrating that the goods were not produced by forced labor. If CBP determines that there is conclusive evidence of forced labor, it will publish a formal finding in the Federal Register and Customs Bulletin and seize the goods.

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Executive Order 13126: Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor and Its Implementing Regulations (United States)

Executive Order 13126: Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, and its implementing regulations, signed in 1999, requires USDOL to publish a List of Products Produced by Forced or Indentured Child Labor and their countries of origin. This list is intended to ensure that U.S. federal agencies do not procure goods made by forced or indentured child labor. Under U.S. procurement regulations, federal contractors who supply products on the list must certify to the U.S. government contracting agency that they have made a good faith effort to determine whether forced or indentured child labor was used to produce the items supplied.

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Dodd-Frank Wall Street Reform and Consumer Protection Act (United States) 

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), passed in 2010, directed the U.S. Securities and Exchange Commission (SEC) to issue regulations requiring companies that manufacture products report on “conflict minerals” in corporate supply chains. Congress enacted Section 1502 because of concerns that the exploitation and trade of conflict minerals by armed groups helps finance conflict in the Democratic Republic of the Congo (DRC) and contributes to an emergency humanitarian crisis in the region. The law requires that all companies that submit SEC filings must disclose annually whether products they manufacture contain tin, tantalum, tungsten, or gold (together considered “conflict minerals” under the provision) from the DRC or an adjoining country, and, if so, whether these conflict minerals finance or benefit armed groups in and near the DRC.

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California Transparency in Supply Chains Act (United States)

The California Transparency in Supply Chains Act requires mid-sized and large retailers and manufacturing companies having worldwide annual revenues of $100 million or more to report on specific actions taken to eradicate slavery and human trafficking in their supply chains. A company must disclose to what extent it: (1) engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery; (2) conducts audits of suppliers; (3) requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the countries in which they are doing business; (4) maintains accountability standards and procedures for employees or contractors that fail to meet company standards regarding slavery and human trafficking; and (5) provides employee and management training on slavery and human trafficking.  The chief goal of this legislation is to ensure that companies provide consumers with information that enables them to understand which companies manage their supply chains responsibly.

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European Union (EU) Non-Financial Reporting Directive (2014/95/EU)

EU Directive 2014/95/EU requires public interest companies with at least 500 employees to publish reports on policies they implement on environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, and diversity on company boards. In June 2017, the European Commission published guidelines to help companies disclose environmental and social information and give companies flexibility on how they report under the Directive. More information can be found on the European Commission’s website.

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Executive Order 13627: Strengthening Protections Against Trafficking in Persons in Federal Contracts and Implementing Federal Acquisition Regulations (United States)

The Federal Acquisition Regulation Rule Combating Trafficking in Persons, in effect as of March 2, 2015, implements anti-trafficking safeguards in Executive Order 13627: Strengthening Protections Against Trafficking in Persons in Federal Contracts and Title XVII of the National Defense Authorization Act for Fiscal Year 2013: Ending Trafficking in Government Contracting. The rule strengthens the existing prohibition against human trafficking in government contracts by expressly prohibiting federal contractors, contractor employees, subcontractors, and subcontractor employees from engaging in specific types of trafficking-related activities. Such activities include destroying and confiscating identity documents, using misleading recruitment practices, failing to provide return transportation costs upon the end of employment in most situations, failing to provide an employment contract in writing, providing housing that fails to meet standards, and charging employees recruitment fees. Contractors are required to take appropriate action against employees, agents, and subcontractors who violate the prohibitions, and they must inform their employees of the prohibited activities and associated consequences. In addition, where contracts that exceed $500,000 are performed outside the United States, contractors must develop a compliance plan with an employee-awareness program, a process for employees to report violations, a housing plan, and a wage and hour plan. Such contractors must certify annually that they are implementing their plans and that neither they nor their subcontractors have engaged in the prohibited practices, or if violations are found in their supply chain, that they have taken appropriate remedial and referral actions.

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Modern Slavery Act (United Kingdom)

The UK Modern Slavery Act, in effect as of October 29, 2015, contains transparency in supply chains provisions that require all companies turning over at least £36 million annually and which conduct business in the United Kingdom to disclose the measures they are taking to combat slavery and human trafficking. The law does not specify what types of measures companies should disclose nor does it have any requirements regarding how much detail companies should provide. A company may comply by noting in its statement that it has not taken any steps to combat slavery or human trafficking. The statement must be published on the company’s website in a prominent place. There are no penalties for non-compliance. The UK Modern Slavery Act also creates minimum sentences for slavery crimes, introduces a defense for victims of slavery and trafficking, and grants the Secretary of State for the Home Department additional authority related to addressing slavery, among other enforcement-related measures.

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The Trade Facilitation and Trade Enforcement Act of 2015 (United States)

In effect as of March 2016, the Trade Facilitation and Trade Enforcement Act of 2015 strengthened an existing prohibition on the importation of goods made by forced labor by eliminating a long-standing loophole. All goods “mined, produced, or manufactured wholly or in part” by convict, forced, or indentured labor had long been prohibited from entering the United States under the Tariff Act of 1930, except for when the U.S.-produced supply of the goods was not sufficient to meet U.S. demand for the goods, known as the “consumptive demand” exception in Section 910. This exception has now been repealed, allowing Customs and Border Protection (CBP) to prevent products made with forced labor from entering the United States regardless of U.S. demand. Any person may report to CBP information showing that merchandise produced by forced labor is being or is likely to be imported into the United States. If the information reasonably, but not necessarily conclusively, indicates that the goods covered were made, either wholly or in part, by forced labor, CBP will issue a withhold release order (WRO) to prevent the goods from entering the United States. While the goods are being detained, the manufacturer has the option to re-export the goods or provide evidence to CBP demonstrating that the goods were not produced by forced labor. If CBP determines that there is conclusive evidence of forced labor, it will publish a formal finding in the Federal Register and Customs Bulletin and seize the goods.

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Corporate Duty of Vigilance Law (France)

The French Corporate Duty of Vigilance Law, amended on March 28, 2017, requires large corporations with 5,000 or more employees headquartered in France and foreign corporations with 10,000 or more employees doing business in France to create and implement a vigilance plan. The plan should identify risks and prevent violations of human rights such as child labor, forced labor, and human trafficking resulting from the activities of parent companies, subsidiaries, and any subcontractors used by the parent company or subsidiaries. Vigilance plans must include: (1) procedures to identify risks; (2) methods to regularly monitor subsidiaries and subcontractors; (3) adequate approaches to mitigate risks and prevent serious harm; (4) a method to report risks; and (5) a method to monitor the efficacy of preventative measures. Victims or other affected parties may inform the courts of a company’s failure to have a plan or implement a plan, and the company may be ordered to implement a plan and compensate as a breach of a duty of care victims who suffered because of its noncompliance.

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Modern Slavery Act (Australia)

On January 1, 2019, Australia’s Modern Slavery Act 2018 came into force. The act requires entities based in or operating in Australia, which have an annual consolidated revenue of more than AUD $100 million, to report on the risks of modern slavery in their operations and supply chains and the actions taken to address those risks in a modern slavery statement. The statement must also describe any risks of modern slavery in the supply chain of the reporting entity (and its owned and controlled entities), as well as the steps the entity has taken to respond to the risks identified, including due diligence and remediation processes. The Government of Australia has also released Guidance for Reporting Entities to explain in plain language what entities need to do to comply with the act.

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Supply Chain Due Diligence Act (Germany)

In June 2021, the German Parliament adopted a new law on human rights in supply chains (Lieferkettensorgfaltspflichtengesetz), which entered into force on January 1, 2023. Under the Supply Chain Due Diligence Act, companies are obligated to identify and assess human rights and environmental risks and establish an adequate and effective risk management system, including by publishing an annual report outlining steps to identify and address risks. The risks that companies must address include forced labor, child labor, discrimination, violations of freedom of association, unethical employment, unsafe working conditions, and environmental degradation. The act applies to companies with their head office, principal place of business, administrative headquarters, domestic branch, or registered office in Germany and employing more than 3,000 employees (employing more than 1,000 employees beginning in 2024). Companies not in compliance with the act face penalties up to €8,000,000, or up to 2 percent of global revenue, as well as exclusion from the public tender process in Germany for a period of up to 3 years.

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Norwegian Transparency Act (Norway)

Adopted in June 2021, and in force as of July 1, 2022, the Norwegian Transparency Act (Åpenhetsloven) requires large companies selling products and services in Norway and large companies based in Norway providing goods or services outside the country to undertake human rights due diligence in alignment with the OECD Guidelines for Multinational Enterprises. Large companies are those that meet two of three criteria: (1) sales revenue of at least NOK 70 million; (2) a balance sheet total of at least NOK 35 million; and/or (3) an average number of 50 full-time employees in a financial year or equivalent hours. The act requires such companies to publish—annually and upon request—due diligence strategies and communicate human rights due diligence procedures, risks, activities, and findings.

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Uyghur Forced Labor Prevention Act (United States)

On December 23, 2021, President Biden signed into law the Uyghur Forced Labor Prevention Act (UFLPA). The UFLPA aims to address the plight of Uyghurs and other persecuted minority groups in China’s Xinjiang Uyghur Autonomous Region (the “XUAR”). A key feature of the UFLPA is the creation of a rebuttable presumption that all goods manufactured even partially in the XUAR, and goods made as part of labor transfer schemes from Xinjiang to elsewhere in China, are products of forced labor and, therefore, not entitled to entry at U.S. ports. The UFLPA also builds on the 2020 Uyghur Human Rights Policy Act by expanding that act’s authorization of sanctions to cover foreign individuals responsible for human rights abuses related to forced labor. The UFLPA requires a strategy that includes: (1) guidance for importers; (2) a list of entities that work with the XUAR government to recruit, transport, or receive forced labor from XUAR; and (3) a list of entities that participate in “poverty alleviation” and “pairing-assistance” programs in XUAR.

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2022 Corporate Sustainability Reporting Directive (European Union)

The EU's 2022 Corporate Sustainability Reporting Directive (Directive (EU) 2018/1999) requires large companies with more than 500 employees operating in the EU to annually disclose information related to their environmental and social impact in accordance with Articles 8 and 9. This includes reporting on their strategy for respecting human rights (Article 9.2a), and measures taken to combat corruption and bribery (Article 9.2b). This Directive seeks to promote greater transparency and accountability by companies, in line with Articles 2 and 3, and provides stakeholders with the information they need to make informed decisions. By fulfilling their obligations under the Directive, companies can demonstrate their commitment to worker-driven social compliance and sustainable business practices. Note that under European law, a Directive is a legislative act that serves as a goalpost for all EU countries. However, individual countries must devise their own laws that meet obligations under the directive. As a result, it is unlikely that EU countries would enact this legislation for several more years. 
 
In July 2021, leading up to the 2022 Corporate Sustainability Reporting Directive, the EU released new horizontal guidance to help companies combat forced labor in global supply chains. The European Commission and the European External Action Service published this guidance to enhance companies’ capacity to eradicate forced labor from their value chains by providing concrete, practical advice on how to identify, prevent, mitigate, and address risk.  On June 1st, 2023, the EU Parliament approved their negotiating position on the EU Corporate Sustainability Due Diligence Directive, and negotiations with member states and the Commission on the final text of the legislation will be underway. 

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Bill S-211 Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (Canada)

Canada’s Bill S-211 will go into effect on January 1, 2024. The act, which excludes SMEs, requires big companies to file their first reports with the government and publish publicly by the end of May 2024 if they are listed on a Canadian Stock Exchange (e.g., there are four main ones including the Toronto Stock Exchange (TSX)), have a place of business in Canada, do business in Canada, or have assets in Canada and meet at least two of the following conditions:

  • Have C$20 million or more in assets,
  • Generate at least C$40 million in revenue,
  • Employ an average of at least 250 employees,
  • As otherwise prescribed by regulations, which have yet to be enacted.

An entity or individual that fails to submit a satisfactory annual report or make it public, obstructs a designated official, or fails to comply with an order from the Minister is guilty of a summary offence and liable to a fine of up to C$250,000. Every director or officer who directed, authorized, assented to, acquiesced, or participated in any of these offences will also be personally liable for the offence. Bill S-211 expands the scope of offences by amending the prohibition in the Customs Tariff to include the term "child labor" and a new definition of "forced labor." These definitions incorporate and go beyond the definitions of those terms found in the Forced Labor Convention, 1930 and Worst Forms of Child Labor Convention, 1999. Among other things, Bill S-211 defines child labor as including any labor that interferes with a child’s schooling or is mentally, physically, socially, or morally dangerous to them. 

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Deforestation-Free Products Regulation (European Union)

In May 2023, the EU Council adopted a comprehensive regulation on deforestation, emphasizing the significance of labor rights within targeted commodity supply chains. The regulation aims to prevent deforestation and forest degradation while prioritizing fair and decent working conditions. The regulation mandates that companies registered in EU member states ensure that seven agricultural commodities—cattle, cocoa, coffee, oil palm, rubber, soy, and wood—have not been produced on land deforested after December 31, 2020.

Companies must conduct due diligence to ensure their supply chains are free from deforestation. To address labor rights concerns, companies are required to assess and mitigate potential negative social impacts resulting from their activities. The regulation emphasizes the prevention of labor rights violations, including child and forced labor, and encourages collaboration with workers' representatives and trade unions to effectively address challenges.

By integrating labor rights considerations, the EU deforestation regulation underscores the commitment to prevent social injustices and promote sustainable development. It holds companies accountable for their impact on labor rights, protecting vulnerable workers and promoting fair trade practices. Responsible business conduct is incentivized through rewards for companies that demonstrate adherence to labor rights standards. Capacity-building initiatives and guidance provide support to companies, especially SMEs, in understanding and addressing labor rights issues.