Key Topic: Developing a Corrective Action Plan

A Corrective Action Plan (CAP) is typically formulated shortly after the audit. Companies handle development of these plans in different ways: some develop CAPs themselves based on audit findings; some require the supplier to draft its own CAP for review and approval by the company; some require the vendor or agency to draft a CAP for its supplier. In some cases, auditors develop the CAP, but this approach raises concerns because it may present a conflict of interest. In any worker-driven social compliance system, workers and unions are integral to and must remain at the center of developing and implementing remediation and, therefore, any corrective action plan. Freedom of association and collective bargaining rights are essential to ensuring child labor, forced labor, human trafficking, and other labor rights violations do not occur in the workplace.  

The easiest way to prevent the need for a corrective action plan (CAP) from occurring in the first place is to ensure the work environment and context are not amenable to freedom of association and collective bargaining-related restrictions. 

A CAP should include:

• All audit findings.
• The specific action(s) required to remedy each finding, including assistance for individual victims; new written policies or procedures; training for managers, staff, and employees; and other actions.
• Who is responsible for each action. 
• How each action will be verified and confirmed, such as record review, employee interviews, establish new “check” mechanisms to detect forced labor in the workplace, or other means. 
• The deadline or milestones for completing each action, which normally should be as expeditious as possible. 
• Potential consequences if actions are not taken.
• Training for all management on the issue of forced labor and the code of conduct’s forced labor requirements. 
• A statement outlining what actions the company will take if this violation is repeated, such as temporary suspension of orders or cancellation of future orders. 
• How the submitter of the complaint—and possibly other stakeholders—will expect to know how the issue was handled. 

The Fair Labor Association (FLA) publishes reports on all factory assessments it conducts for member companies under the FLA Workplace Code of Conduct. These reports detail the violations found in the factory, the corrective action steps recommended, and progress to date.  

Once a CAP is in place, oversight and follow-up must be based on clear communication with the supplier.  

CAPs should include incentives for suppliers—such as a price premium, purchase guarantees and/or access to financing that reward compliance. If remediation and engagement efforts have failed to achieve the desired results, companies should consider ending their sourcing relationship with the supplier. 

In cases in which the audit uncovers state-sponsored forced labor—for example in Xinjiang, China—remediation measures and corrective action may be limited to terminating the relationship with the supplier. For example, importers may develop zero-tolerance policies where any confirmed instances of forced labor by suppliers may result in termination of the business relationship. When ending a business relationship, it is also recommended that the importer mitigate impacts on the workers, where possible, such as by communicating and engaging with the supplier and workers on the decision and timeline for disengagement.