Guest Blog: ULC's work on Coercive Labor Practices in Supply Chains, Part 3

            Welcome to the 3^rd in a series of 5 guest blogs discussing the work that I have done as a reporter for the ULC study committee on coercive labor practices in supply chains. In this blog, I want to provide a deeper dive into another regulatory options the study committee is reviewing: the use of labor procurement laws.

More after the jump…

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Labor procurement laws is another option that the study committee is examining. This framework is particularly beneficial for workers who enter the U.S. under guest visa programs. There has been evidence to suggest that foreign labor contractors (FLCs) will often bring workers to the United States under false pretenses, while also charging them exorbitant fees to secure these workers access to the US job market.  According to the Coalition to abolish Slavery and Trafficking (CAST), this often results in workers being placed into a debt bondage system, where substantially all of their wages go toward payment of the FLC.  A legal framework that focuses on labor procurement could regulate those who work as FLCs – those who are involved in recruiting foreign nationals to come and work in the United States – in a myriad of ways.

1. Potential Legal Frameworks

            A recent report commissioned by the ILO determined that there “were three basic models of statutory regulation” in this area.  They include:

• Outright prohibition. Under this model, all private contractors would be banned. Instead, a government run entity would be in charge of job placement and matching.

• Under a licensing approach, the report notes that FLCs would have to meet certain standards in order to obtain a license to work in this area. As part of this regulatory regime, FLCs could be required to undergo audits, as well as show “documented proof of the agency’s financial, professional and marketing capability.”

• Under this approach, the report states that “private labour recruiters and employment agencies are registered in the same way as any other industrial or commercial business and are subject to controls, just like other businesses.”

            Legislation currently enacted in California seems to be an amalgamation of the second and third model discussed in the ILO report.

California:

 

            Because California is the leading destination state for foreign workers, efforts have been underway to legislate FLCs within that state.  For instance, SB477 currently requires certain labor recruiters to register with California’s Department of Labor.  Other highlights of the law include:

• Requiring all California employers to only use registered FLCs;
• Requiring that all terms of employment be disclosed to recruited workers in their native language;
• Imposing penalties for failing to comply.

            The law specifically does not apply to any California employer that recruits foreign employees directly (instead of relying on FLCs). In addition, the law as written only applies to non-agricultural visas, which subsequently has been shown to be a very small subset of all foreign workers coming into California, thus rendering the bill largely ineffective.

            Nonetheless, other states are also beginning to examine this issue. For instance, during its 2018 legislative session, the Maryland legislature reviewed a similar law.  As CAST notes:

HB 1493 (SB 526) – Regulation of Farm Labor Contractors and Foreign Labor Contractors … required a foreign labor contractor (FLC) to be licensed by the Commissioner of Labor and Industry before the individual may perform foreign labor contracting services in the State. Fundamentally, the bill brings transparency to the recruitment of foreign workers, levels the playing field for workers and ethical employers, and combats human trafficking. It was never taken up for a vote in either the House Economic Matters Committee or the Senate Finance Committee. This is the second year, in a row, that this bill has been introduced.

Other Approaches:

            Although not explicitly mentioned in the ILO report (or followed by the California legislation) one potential approach could be to enact legislation that, in part, focuses on the worst abuses in labor procurement. So, for instance, since exorbitant fees are responsible for the system of debt peonage, CAST notes that one potential legislative approach could be to ban FLCs collecting foreign fees from workers.

2. Potential Shortfalls

            As with the disclosure approach (discussed in last week’s blog), there are some potential limitations to this framework. For instance, unlike disclosure and due diligence laws, which could potentially address all forced labor (including both foreign and domestic workers) the current models for labor procurement laws focuses on foreign workers only – specifically, these laws only address those workers who have been exploited through a guest worker visa program or other foreign recruitment programs.  As such, U.S. victims of coercive labor practices in a corporation’s supply chain would still remain largely unprotected under this framework.

            In addition, this approach only addresses one aspect of the coercive labor practices – that of foreign workers entering the U.S.  As such, without also addressing other issues in the supply chain (for instance the procurement of goods & services, which I’ll discuss next week) a uniform state law that only takes this approach runs the risk of being incomplete.

Conclusion

One final note: the two initiatives discussed to date focus on the government as regulator.  Next week, I’ll turn to a different way that the government can help reduce coercive labor practices – by leveraging its power as a purchaser. 

Don’t forget:  The work of the study committee is currently underway and is expected to continue until December 2020.  Any interested parties are able to participate as observers.  To be added to the committee as an observer please contact Leang Sou ([email protected]) at the ULC.  Also, keep in mind that the work being done at this stage is to determine the feasibility of a uniform law on the issue.  Comments that provides suggestions on what specific language this proposed uniform law should contain, are premature.