Scourge of Human Trafficking: Enforcement and Litigation Trends

Forced labor is rampant around the globe. It poses serious, sometimes unfathomable threats to the victims and their families. It also happens to be very bad for business. In fact, high-profile labor trafficking carries the same risks to operations as do natural disasters, extreme weather or cybercrime, aid Kelly Heinrich, co-founder the Global Freedom Center.

Companies that do not actively combat trafficking in the far reaches of their organization face civil, criminal and administrative action and accompanying penalties, and, perhaps most critically, untold harm to their reputation. Many companies have stepped up their responsibility in this area, crafting and enforcing policies that expose and prevent trafficking.

A panel of experts gathered in June of this year for a nationally distributed LexisNexis^® CLE Webinar to outline the status of government enforcement of the Trafficking Victims Protection Act and other acts and what companies are doing to keep their records clean.

The Statistics

No matter what type of trafficking is at issue, at its heart, it is about exploitation, said Heinrich. It is the use of force, fraud or coercion to compel someone to work or to perform a commercial sex act. An estimated 21 to 30 million people worldwide are subjected to some kind of trafficking, she said. Most people think of sex trafficking, but she said about 78 percent of the problem is labor trafficking. Of the victims of labor trafficking, 44 percent are women and 56 percent are men.

The U.S. Department of Labor provides a list of goods known to be made with forced or child labor—134 goods from 74 countries. Victims harvest raw materials or manufacturing products with those materials. But Heinrich said a good deal of forced labor is evident in service industries, especially in the United States. Jobs in construction, nursing homes, landscaping and janitorial are among the most common, and they take place in the communities where we live and work, she said.

Workers are physically forced into jobs or are made promises that are never kept. Their fear, threats to themselves and their families and their financial situations make it impossible to escape or leave their employer.

“We think of trafficking as a supply chain in Malaysia, or we think of it as a supply chain in Vietnam,” said Martina Vandenberg, founder and president of the Human Trafficking Pro Bono Legal Center. “But actually, we need to start having a different picture in our mind, a different image. It’s  not just a brothel; it’s not just children walking on the streets in the red light district in Mumbai. It’s actually trafficking that’s taking place, literally, right under our noses.”

What It Means for Business

The potential for American companies to be involved in human trafficking is enormous, given the size of companies’ supply chains. Heinrich said Walmart has 60,000 suppliers, Nike 900 and Apple 200. Couple that demand with increased migration for work, and you have a recipe for exploitation.

In response, companies are committing to corporate social responsibility and generating change based on ethical forcing, Heinrich said. They are adhering to human rights guidelines, conducting impact assessments, ongoing policy development and risk mitigation. All of this has resulted in a broad general awareness, greater media exposure and more research.

“It’s really become a leading human rights issue, and it’s both outraged and inspired many to activism,” Heinrich said.

Additionally, the government requires zero tolerance by federal contractors under the Federal Acquisition Regulation (FAR), and California has its Transparency in Supply Chains Act, or SB-657, that requires a public disclosure for retailers and manufacturers with revenue over $100 million annually.

The threats to businesses include costly supply chain disruption if a supplier is found to be trafficking, federal contract termination and debarment, civil litigation concerns, contract and tort claims and penalties under the Fair Labor Standards Act and Foreign Corrupt Practices Act. Not to mention the reputational harm.

“Consumers impart responsibility to the brand when something goes wrong, and we’ve seen this in numerous, numerous cases, regardless of whether the brand supplier was first, second or third tier in the supply chain,” Heinrich said.

Vandenberg noted that, in many cases, the government lists in the perpetrator’s indictment the companies where a forced labor worker performed a job. The chain retailer stores or five-star hotel chains are appearing in indictments and press releases.

Verité is an organization that conducts supply chain audits and is used by the State Department, Vandenberg said. The Humanity United Know The Chain posts whether a company has a policy about supply chain transparency, and whether or not there is actual scrutiny of it.

Heinrich said companies seek her counsel when they want to strengthen their policies, training and understanding of the risks and risk mitigation. Other companies come when they have had an incident and need to conduct damage control and work on future preventive strategies.

“Either way, anti-trafficking is a matter of integration, she said. “It’s weaving it into existing policies, assessments and initiatives,” she said.

Model Policies Tool

To aid businesses in their anti-trafficking efforts, the American Bar Association has crafted a detailed guide that contains model principles and model polices. More than 50 leading business, academic and government experts spent 18 months on the project, with a mission of addressing the staggering labor trafficking problem, said E. Christopher Johnson Jr., retired vice president and general counsel of General Motors North America and co-founder of the Center for Justice, Rights, and Dignity.

The first of the principles, and the policies that expand on them, asks suppliers and their companies to adopt a policy prohibiting the use of labor trafficking and child labor, to not knowingly tolerate any labor trafficking and child labor in its operations, and to comply with laws regarding labor trafficking and child labor in the country or countries in which the business has operations.

A very important goal of the ABA was to encourage companies to conduct risk assessment and then design appropriate remedial efforts, Johnson said. This is the second principle. Companies with thousands of suppliers, even hundreds of thousands of them, need to prioritize, he said. Concentrate efforts on the places that have the biggest risk. Consider the type of business being conducted, where it is conducted, the history of labor trafficking or child labor in the industry or sector, the operating context, the products and services involved, and any other factors that the business or supplier deems reasonable.

“That is going to help companies really focus their assets,” he said.

For the third principle, the business supplier should train relevant employees, engage in continuous improvement and maintain effective communications, Johnson said. Then finally, the business or supplier will devise a remediation policy and plan that address remediation for labor trafficking or child labor in its operations.

“If you find a problem, you need to fix it,” he said. “The business has to consult with its relevant stakeholders and devise a remediation policy that addresses remediation for individual victims, where the business itself caused the labor trafficking or child labor, or remediation in broader patterns of noncompliance within the policy.”

FCPA and Human Trafficking

Companies can combine anti-trafficking efforts with their Foreign Corrupt Practices Act policy. Many of the problems of the two issues are intermingled. If, for example a Malaysian labor broker attempts to bring foreign workers into the country to perform work for the ascending company and pays bribes to government officials to facilitate that, you have an FCPA problem and a labor-trafficking problem, he said.

“The ABA model principles fall into a lot of the things that people should do in the FCPA area: conduct risk assessment, monitor, inspect, train, communicate, and then remediate,” Johnson said.

Vandenberg said one of the trends has been an uptick in prosecutions under the FCPA related to human trafficking.

The Criminal Component

FBI Agent Mia Winkley said federal agencies, working with international governments and law enforcement, pursue more and more criminal cases of human trafficking every year. In 2009, the FBI had 167 pending trafficking cases. As of fiscal year 2012, it had 459. Investigations since 2009 have resulted in 480 arrests, 336 informations  or indictments filed, and 258 convictions.

She said one of the purposes for doing this is to seize the economic resources of the criminal enterprise, either through forfeiture or through restitution for victims. In fact, Vandenberg said, under the Trafficking Victims Protection Reauthorization Act, restitution for the victims is mandatory.

The FBI also works with human trafficking victims to buy some of their rights and to ensure they receive help addressing their short-term needs such as legal and reparations service, immigration relief, housing, employment, education, job training and childcare.

Additionally, the FBI works with the Department of Homeland Security to train U.S. embassy staff around the globe to recognize potential victims who apply for visas.

In the civil arena, the Trafficking Victims Protection Reauthorization Act allows victims to file actions against not only the perpetrator, but anyone who knowingly benefits financially or by receiving anything of value from participation in the venture, Vandenberg said. In the past, those actions had to be filed under the very difficult RICO  provisions. A trafficking survivor can bring a case whether or not there’s an investigation and whether or not there is a federal criminal case. The act even allows for recovery of punitive damages, and the statute of limitations is 10 years, unlike three for a RICO case.

Vandenberg said that many cases are now being federally litigated on conduct that occurred abroad. Another provision allows similar actions against a U.S. government employee, any dependent of a U.S. government employee, a U.S. government contractor, or any dependent of a U.S. government contractor.

“These cases, in a sense, the test cases, are the new frontier for where the federal government may actually go in increasing the jurisdictional reach of the Trafficking Victims Protection Act,” Vandenberg said.

The views and opinions expressed in this article are those of the individual sources referenced and do not reflect the views, opinions or policies of the organizations the sources represent.