Is There A Supply Chain Due Diligence Law In The US? – Employee Benefits & Compensation

Federal and state laws relating to supply chain due
diligence include:

• A 2010 Wall Street reform and consumer protection law requires
  SEC-listed companies to disclose whether they use ‘conflict
  minerals’ and whether these minerals originate in the
  Democratic Republic of the Congo (DRC) or an adjoining country. In
  such a case, the company must submit a ‘Conflict Minerals
  Report’ describing the measures taken to exercise due
  diligence, the description of the products and the facilities used
  to process them, the country of origin of the conflict minerals,
  and the efforts to determine the mine or location of origin with
  the greatest possible specificity.




• A California law that took effect in 2012 requires covered
  companies to disclose information regarding their efforts to
  eradicate human trafficking and slavery within their supply chains.
  The law applies to retail sellers and manufacturers that do
  business in California and have annual worldwide gross receipts
  exceeding USD 100 million. These companies must disclose the extent
  of their efforts in five areas: verification, audits,
  certification, internal accountability, and training.




• The Uyghur Forced Labor Prevention Act (UFLPA), which was
  signed into Federal law on 23 December 2021, establishes a
  rebuttable presumption that the importation of any goods mined,
  produced, or manufactured wholly or in part in China’s Xinjiang
  Uyghur Autonomous Region, or produced by certain entities, is
  prohibited. The presumption applies unless the Commissioner of U.S.
  Customs and Border Protection determines that the importer of
  record has complied with specified conditions and that the goods
  were not produced using forced labour.




• A longstanding Federal tariff act prohibits the importation of
  all goods and merchandise mined, produced, or manufactured wholly
  or in part in any foreign country by forced labour, convict labour,
  and/or indentured labour under penal sanctions, including forced
  child labour. This law is enforced by the U.S. Customs and Border
  Protection. CBP has the authority to investigate, issue orders and
  findings, and impose civil penalties against domestic companies to
  prevent merchandise produced using forced labour in the supply
  chain from being imported into the United States. https://www.cbp.gov/trade/forced-labor




• The United States-Mexico-Canada Agreement (USMCA) has fully
  enforceable labour standards, including enforcement of laws
  regarding forced labour and child labour. USMCA also includes new
  provisions that require the parties to take measures to prohibit
  the importation of goods produced by forced labour, including
  forced child labour, to address violence against workers exercising
  their labour rights, to address sex-based discrimination in the
  workplace, and to ensure that migrant workers are protected under
  labour laws.




• A 2015 Federal contracting rule strengthens the existing
  prohibition against trafficking in government contracts by
  expressly prohibiting Federal contractors, contractor employees,
  subcontractors, and subcontractor employees from engaging in
  specific types of trafficking-related activities. These 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.
  Additionally, where contracts that exceed USD 500,000 are performed
  outside the United States, contractors must develop a compliance
  plan with an employee awareness program, a process for employee
  reporting of 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 or their subcontractors have
  engaged in the prohibited practices, or that if violations are
  found in their supply chain that they have taken appropriate
  remedial and referral actions.




• A 1999 Executive Order requires the U.S. Department of Labor 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 labour. Under procurement regulations,
  federal contractors who supply products on the List must certify
  that they have made a good faith effort to determine whether forced
  or indentured child labour was used to produce the items
  supplied.

Recent proposed legislation relating to supply chain
transparency includes:

• The Slave-Free Business Certification Act of 2022, which was
  recently introduced in the U.S. Senate, would require any publicly
  traded mining or manufacturing entity with annual worldwide gross
  receipts that exceed USD 500 million to conduct an audit of its
  supply chain, to investigate the presence or use of forced labour
  by the company or its suppliers. Covered companies would be
  required to submit and publish a report containing the results of
  the audit and the company’s efforts to eradicate forced labour
  from the supply chain.




• The Corporate Governance Improvement and Investor Protection
  Act was passed by the House in June 2021 and is currently before a
  Senate This Act would require publicly traded companies to
  periodically disclose information related to (among other things)
  environmental, social, and governance performance metrics;
  expenditures for certain political activities; compensation
  information regarding executive officers and employees; tax
  jurisdiction, income, and assets of constituent entities on a
  country-by-country basis; and manufacturing activity in China’s
  Xinjiang Uyghur Autonomous Region.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.