February 6, 2015

Final Anti-Human Trafficking Regulations Mean Stricter Requirements for Government Contractors and Subcontractors

Arnold & Porter Advisory

On January 29, 2015, the Federal Acquisition Regulation (FAR) Council published a final rule imposing significant responsibility on contractors and subcontractors to act affirmatively to prevent human trafficking and forced labor.1  The Department of Defense (DoD) simultaneously published a final rule amending the Defense Acquisition Regulations System (DFARS) to further implement DoD's anti-trafficking policy and supplement government-wide changes.

This rule implements Executive Order 13627, "Strengthening Protections Against Trafficking in Persons in Federal Contracts,"2 and the 2013 National Defense Authorization Act, "Ending Trafficking in Government Contracting,"3 significantly augmenting existing human trafficking-related prohibitions for Federal contractors and subcontractors.  The FAR rule will take effect on March 2, 2015 and apply to all new contracts and future orders under existing indefinite-delivery/indefinite quantity (ID/IQ) contracts.

The FAR rule will have far-reaching consequences for federal contractors and subcontractors both in the U.S. and abroad.  Contractors or subcontractors must ensure that they and their subcontractors and recruiting agents do not engage in a wide range of trafficking-related activities, such as providing misleading information about work conditions, requiring employees to pay recruitment fees, confiscating employees' identity papers, or failing to pay return transportation costs for employees brought to a locale to work on a government contract.  These requirements will apply to a broad range of government contractors, including, for example, a subcontractor that supplies food services for the military mission in Afghanistan, a security contractor that provides security personnel for embassies in Asia, or a contractor that performs construction work on a military base.4  Additionally, for the first time, contractors and subcontractors with larger, overseas contracts must develop and maintain detailed anti-trafficking compliance programs and provide annual certifications of their anti-trafficking efforts.

New Obligations Under the Final Rule Applicable to All Federal Contracts 

The FAR rule strengthens the U.S. government's existing zero-tolerance policy on trafficking in persons outlined in the Trafficking Victims Protection Act (TVPA).5  Current U.S. law already prohibits all contractors and their employees from engaging in "severe forms of trafficking in persons," procuring commercial sex, or using forced labor during the performance of the contract.  The FAR rule establishes significantly more specific prohibitions and requirements with which federal contractors and subcontractors must comply.

Specifically, the FAR rule revises federal contracting regulations to prohibit all contractors, subcontractors, and employees from engaging in a broad range of trafficking-related activities including:

  1. Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee's identity documents, such as passports or driver's licenses;
  2. Using misleading or fraudulent recruitment practices during the recruitment of employees such as failing to disclose basic information or making material misrepresentations regarding the key terms and conditions of employment, including wages and fringe benefits, the location of work, living conditions and housing, any significant costs to be charged to the employee, and, if applicable, the hazardous nature of the work;
  3. Using recruiters that do not comply with local labor laws, and charging "recruitment fees" to employees;
  4. Providing or arranging housing that fails to meet the host country and safety standards;
  5. Failing to provide a written employment contract, recruitment agreement, or similar work paper, if required by law or contract, in the employee's native language at least five days before the employee parts from his or her country of origin; and
  6. Failing to provide or reimburse return transportation costs upon the end of employment for employees who were brought into a country for the purpose of working on a U.S. government contract or subcontract.


The final FAR rule requires contractors to notify (i) the agency Inspector General, (ii) the agency official responsible for suspension and debarment actions, and (iii) law enforcement, if appropriate, if contractors become aware of credible violations.  The FAR rule also requires contracting officers to include in the Federal Awardee Performance and Integrity Information System (FAPIIS) any allegations substantiated in an administrative proceeding regarding a contractor's violation of the prohibitions in the Executive Order or TVPA.  All such information posted in FAPIIS will presumptively be publicly available.

Detailed Compliance Plans and Annual Certifications Required for Larger Contractors and Subcontractors 

Under the FAR rule, federal contractors and subcontractors with contracts or subcontracts performed abroad involving services or supplies exceeding US$500,000 will be required to implement appropriate compliance plans targeting trafficking activities, complete a compliance certification prior to accepting an award, and publish such plans at their respective workplaces and on their websites. Such plans must include at a minimum:

  1. An employee awareness program about the government's zero-tolerance policy with regard to human trafficking, the trafficking-related activities in which the contractor is prohibiting from engaging, and the actions that will be taken against employees for violations;
  2. A process for employees to report trafficking violations without fear of retaliation, including through a hotline number and e-mail address;
  3. Recruitment and wage plan that only permits the use of recruitment companies with trained employees, prohibits charging "recruitment fees" to the employee, and ensures that wages meet applicable host country legal requirements or explains any variance;
  4. A housing plan (if the contractor provides or arranges housing) that ensures compliance with applicable host country legal requirements; and
  5. Procedures to prevent agents and subcontractors at any tier and at any dollar amount from engaging in trafficking in persons, and to monitor, detect, and terminate any agents, subcontractors or subcontractor employees that have engaged in such activities.

The FAR rule contains a significant exception: while the general anti-human trafficking obligations apply to all government contracts, the compliance plan requirement does not apply to contracts and subcontracts for commercially available off-the-shelf items (COTS).  Accordingly, companies that hold supply contracts for commercial items that are sold in substantial quantities in the commercial marketplace are not subject to the above-referenced compliance plan requirements.

As was the case with the recent mandatory disclosure rule,6 the FAR rule enhances the obligation of contractors to oversee the actions of their subcontractors.  Contractors and subcontractors must certify (prior to award and then annually thereafter) that they have in place an appropriate compliance plan and that, after conducting "due diligence," neither they nor any of their subcontractors have engaged in trafficking-related activities, or, if abuses have been found, the contractor or subcontractor has taken the appropriate remedial and referral actions.

New DFARS Requirements for Defense Contractors

The DFARS final rule remains unchanged from the proposed rule.7  The DoD rule adds the requirement to display hotline posters regarding human trafficking and whistleblowing for non-commercial contracts and subcontracts above a US$5 million threshold whether performed within or outside the United States.  The hotline posters must be posted prominently in common work areas, and if a substantial portion of the workforce does not speak English, then contractors must also post the notices in the language(s) spoken by a substantial portion of the workforce.

Additionally, all solicitations that exceed the simplified acquisition threshold, including contracts for acquisition of commercial items, must include a new representation that the offerors' hiring practices address Combating Trafficking in Persons (see 48 C.F.R. 252.222-7007)and that their companies are complying with these requirements. This representation adds requirements to notify employees and subcontractors regarding their obligation to report human trafficking violations and that they will be afforded whistleblower protection.

The final rule also integrates a contractor employee bill of rights and requires that employees be made aware of it, that their employers enforce it, and that it be posted in employee workspaces in English and any foreign languages spoken by a significant portion of the workforce.  Specifically, contractors must ensure that their employees are aware of their rights to:

  1. Hold their own identity or immigration documents, such as a passport or driver's license;
  2. Receive agreed upon wages on time;
  3. Take lunch and work breaks;
  4. Elect to terminate employment at any time;
  5. Identify grievances without fear of reprisal;
  6. Have a copy of their employment contract in a language they understand;
  7. Receive wages that are not below the legal in-country minimum wage;
  8. Be notified of their rights, wages, and prohibited activities prior to signing their employment contract; and
  9. If housing is provided, live in housing that meets host-country housing and safety standards.

Proposed Rulemaking on "Recruitment Fees"

While finalizing the proposed anti-human trafficking rule, the FAR Council left one issue open for public comment-the definition of "recruitment fees."  In order to comply with both the 2013 National Defense Authorization Act, which prohibits all recruitment fees, and Executive Order 13627, which only prohibits unreasonable recruitment fees, the FAR rule applies the most stringent requirement (i.e., no recruitment fees).  Consequently, additional rulemaking is necessary to define the scope of this prohibition.  The FAR Council currently is considering a new definition of "recruitment fees" to supplement the FAR rule and welcomes early public input.8   

The draft definition of "recruitment fees" is:

  1. Recruitment fees include but are not limited to the following fees, charges, or costs:
    • for soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, or placing potential employees;
    • for covering the cost, in whole or in part, of advertising;
    • for certifying labor applications;
    • for processing petitions;
    • for visas and any fee that facilitates an employee obtaining a visa such as appointment and application fees;
    • for government-mandated costs such as border crossing fees;
    • for procuring photographs and identity documentation, including any nongovernmental passport fees;
    • fees charged as a condition of access to the job opportunity, including procuring medical examinations and immunizations and obtaining background, reference and security clearance checks and examinations; and
    • for an employer's recruiters, agents or attorneys, or other notary or legal fees.
  2. Any fee, charge, or cost may be a recruitment fee regardless of whether it is deducted from wages, paid back in wage or benefit concessions, paid back as a kickback, bribe or tribute, remitted in connection with recruitment, or collected by an employer or a third party, including but not limited to agents, recruiters, staffing firms (including private employment and placement firms), subsidiaries/affiliates of the employer and any agent or employee of such entities.

Next Steps

The FAR rule imposes new and important requirements on U.S. government contractors and subcontractors.  We anticipate that there will be substantial discussion with the U.S. government and the contracting public about the application of the new FAR regulations.  Now that the final rules have been promulgated, companies must plan to implement their new responsibilities.  Companies will need to finalize and promulgate policies and procedures, train on them, and ensure that they are implemented as contemplated and consistently with the FAR requirements.

  1. Federal Acquisition Regulation, "Ending Trafficking in Persons," 80 Fed. Reg. 4967 (codified at 48 C.F.R. pts. 1, 2, 9, 12, 22, 42, and 52).

  2. Exec. Order No. 13627, 77 Fed. Reg. 60029 (Sept. 25, 2012), available here.

  3. Public Law 112-239.  Although largely similar to the Executive Order, the statute includes amendments to the U.S. Criminal Code to add criminal liability for violations of anti-trafficking requirements and prohibits all labor recruitment fees, as opposed to only unreasonable recruitment fees.

  4. For more examples of trafficking in government contracts, please click here.

  5. Victims of Trafficking and Violence Protection Act of 2000, 22 U.S.C. §§ 7101-7112 (2000).

  6. 48 C.F.R. 52.203-13 (requiring covered contractors to self-report when, among other things, it has credible evidence that a subcontractor has committed a violation of federal criminal law involving fraud, conflict of interest, bribery or gratuity violations found in 18 U.S.C., or a violation of federal civil False Claims Act).

  7. Defense Federal Acquisition Regulation Supplement, "Further Implementation of Trafficking in Persons Policy," 80 Fed. Reg. 4999 (codified at 48 C.F.R. pts. 203, 204, 212, 222, and 252).

  8. To provide input on the draft definition, please click here.


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