On February 3, 2021, U.S. Senators Josh Hawley (R-MO) and Kirsten Gillibrand (D-NY) introduced the Slave-Free Business Certification Act of 2022. The bipartisan bill would require companies that have an annual, worldwide receipts that exceeds $500 million and that are involved in the mining, production, or manufacture of goods for sale to conduct an audit of their supply chains – specifically to investigate for the presence or use of forced labor – once a year. This audit would require the covered business entity to investigate itself, its direct and indirect suppliers, secondary suppliers, and on-site service providers.
The proposed legislation also states that following the audit, companies must submit a report to the Secretary of Labor describing the following information:
- Disclosure of the company’s policies to prevent the use of forced labor in its supply chain;
- Disclosure of the policies and procedures the company uses:
- for the verification of supply chain and on-site service provider practices to evaluate risks of forced labor and if the verification comes from a third party;
- to require all types of suppliers to provide written verification that the materials sued comply with the forced labor laws of each country in the supply chain;
- to maintain internal accountability standards for employees and contractors failing to meet requirements; and
- to provide training to recognize and prevent forced labor;
- A description of the findings of each audit; and
- Written verification, signed by the CEO of the company, that:
- the business has complied with the Act’s requirements and exercised due diligence; and
- to the best of the CEO’s knowledge, the company found no instances of the use of forced labor
The report would then need to be published to the public. In addition, the proposed legislation also states that each year the Secretary of Labor will prepare and submit a report to Congress notifying Congress of which companies failed to conduct audits per the Act as well as the companies that found the use of forced labor in their supply chain. The proposed law also notes that, should a company violate the audit requirements noted above, the Secretary of Labor may assess civil damages that may not be more than $100 million. In addition, the Secretary of Labor may also assess punitive damages of no more than $500 million against any entity that is a covered business entity or direct and indirect supplier, secondary supplier, or on-site service provider if the entity willfully violates the audit requirements of the Act.
The most recent version of the proposed legislation is available here.
For more information on actions addressing human rights and forced labor abuses, contact our team and see previous posts below.
UPDATE: Uyghur Forced Labor Prevention Act Signed into Law | International Trade Law (cmtradelaw.com)
Customs and Border Protection Publishes Trade Statistics Showing Increase in Enforcement Actions and Forced Labor Detentions | International Trade Law (cmtradelaw.com)