Legal Compliance

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.

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.

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.

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.

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.

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.

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. 

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.