Slave-Free Business Certification Act of 2020

II 116TH CONGRESS 2D SESSION S. 4241 To require certain businesses to disclose the use of forced labor in their direct supply chain, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 21, 2020 Mr. HAWLEY introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To require certain businesses to disclose the use of forced labor in their direct supply chain, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Slave-Free Business 4 Certification Act of 2020’’. 5 SEC. 2. REQUIRED REPORTING ON USE OF FORCED LABOR 6 FROM COVERED BUSINESS ENTITIES. 7 (a) DEFINITIONS.—In this section: 8 (1) COVERED BUSINESS ENTITY.—The term 9 ‘‘covered business entity’’ means any issuer, as that 10 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4241 IS term is defined in section 2(a) of the Securities Act 1 of 1933 (15 U.S.C. 77b(a)), that has annual, world- 2 wide gross receipts that exceed $500,000,000. 3 (2) FORCED LABOR.—The term ‘‘forced labor’’ 4 means any labor practice or human trafficking activ- 5 ity in violation of national and international stand- 6 ards, including— 7 (A) International Labor Organization Con- 8 vention No. 182; 9 (B) the Trafficking Victims Protection Act 10 of 2000 (22 U.S.C. 7101 et seq.); and 11 (C) any act that would violate the criminal 12 provisions related to slavery and human traf- 13 ficking under chapter 77 of title 18, United 14 States Code, if the act had been committed 15 within the jurisdiction of the United States. 16 (3) GROSS RECEIPTS.—The term ‘‘gross re- 17 ceipts’’— 18 (A) means the gross amount, including 19 cash and the fair market value of other prop- 20 erty or services received, gained in a transaction 21 that produces business income from— 22 (i) the sale or exchange of property; 23 (ii) the performance of services; or 24 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4241 IS (iii) the use of property or capital; 1 and 2 (B) does not include— 3 (i) repayment, maturity, or redemp- 4 tion of the principal of a— 5 (I) loan; 6 (II) bond; 7 (III) mutual fund; 8 (IV) certificate of deposit; or 9 (V) similar marketable instru- 10 ment; 11 (ii) proceeds from— 12 (I) the issuance of a company’s 13 own stock; or 14 (II) the sale of treasury stock; 15 (iii) amounts received as the result of 16 litigation, including damages; 17 (iv) property acquired by an agent on 18 behalf of another party; 19 (v) Federal, State, or local tax re- 20 funds or other tax benefit recoveries; 21 (vi) certain contributions to capital; 22 (vii) income from discharge of indebt- 23 edness; or 24 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4241 IS (viii) amounts realized from exchanges 1 of inventory that are not recognized under 2 the Internal Revenue Code of 1986. 3 (4) ON-SITE SERVICE.—The term ‘‘on-site serv- 4 ice’’ means any service work provided on the site of 5 a covered business entity, including food service 6 work and catering services. 7 (5) ON-SITE SERVICE PROVIDER.—The term 8 ‘‘on-site service provider’’ means any entity that pro- 9 vides workers who perform, collectively, a total of 10 not less than 30 hours per week of on-site services 11 for a covered business entity. 12 (6) SECRETARY.—The term ‘‘Secretary’’ means 13 the Secretary of Labor. 14 (b) AUDIT AND REPORTING REQUIREMENTS.— 15 (1) IN GENERAL.—Not later than 1 year after 16 the date of enactment of this Act, and every year 17 thereafter, each covered business entity shall— 18 (A) conduct an audit of its supply chain, 19 pursuant to the requirements of section 3, to 20 investigate the presence or use of forced labor 21 by the covered business entity or its suppliers, 22 including by direct suppliers, secondary sup- 23 pliers, and on-site service providers of the cov- 24 ered business entity; 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4241 IS (B) submit a report to the Secretary con- 1 taining the information described in paragraph 2 (2) on the results of such audit and efforts of 3 the covered business entity to eradicate forced 4 labor from the supply chain and on-site services 5 of the covered business entity; and 6 (C)(i) publish the report described in sub- 7 paragraph (B) on the public website of the cov- 8 ered business entity, and provide a conspicuous 9 and easily understood link on the homepage of 10 the website that leads to the report; or 11 (ii) in the case of a covered business entity 12 that does not have a public website, provide the 13 report in written form to any consumer of the 14 covered business entity not later than 30 days 15 after the consumer submits a request for the 16 report. 17 (2) REQUIRED REPORT CONTENTS.—Each re- 18 port required under paragraph (1)(B) shall contain, 19 at a minimum— 20 (A) a disclosure of the covered business en- 21 tity’s policies to prevent the use of forced labor 22 by the covered business entity, its direct sup- 23 pliers, and its on-site service providers; 24 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4241 IS (B) a disclosure of what policies or proce- 1 dures, if any, the covered business entity uses— 2 (i) for the verification of product sup- 3 ply chains and on-site service provider 4 practices to evaluate and address risks of 5 forced labor and whether the verification 6 was conducted by a third party; 7 (ii) to require direct suppliers and on- 8 site service providers to provide written 9 certification that materials incorporated 10 into the product supplied or on-site serv- 11 ices, respectively, comply with the laws re- 12 garding forced labor of each country in 13 which the supplier or on-site service pro- 14 vider is engaged in business; 15 (iii) to maintain internal account- 16 ability standards and procedures for em- 17 ployees or contractors of the covered busi- 18 ness entity failing to meet requirements re- 19 garding forced labor; and 20 (iv) to provide training on recognizing 21 and preventing forced labor, particularly 22 with respect to mitigating risks within the 23 supply chains of products and on-site serv- 24 ices of the covered business entity, to em- 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4241 IS ployees, including management personnel, 1 of the covered business entity who have di- 2 rect responsibility for supply chain man- 3 agement or on-site services; 4 (C) a description of the findings of each 5 audit required under paragraph (1)(A), includ- 6 ing the details of any instances of found or sus- 7 pected forced labor; and 8 (D) a written certification, signed by the 9 chief executive officer of the covered business 10 entity, that— 11 (i) the covered business entity has 12 complied with the requirements of this Act 13 and exercised due diligence in order to 14 eradicate forced labor from the supply 15 chain and on-site services of the covered 16 business entity; 17 (ii) to the best of the chief executive 18 officer’s knowledge, the covered business 19 entity has found no instances of the use of 20 forced labor by the covered business entity 21 or has disclosed every known instance of 22 the use of forced labor; and 23 (iii) the chief executive officer and any 24 other officers submitting the report or cer- 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4241 IS tification understand that section 1001 of 1 title 18, United States Code (popularly 2 known as the ‘‘False Statements Act’’), 3 applies to the information contained in the 4 report submitted to the Secretary. 5 (c) REPORT OF VIOLATIONS TO CONGRESS.—Each 6 year, the Secretary shall prepare and submit a report to 7 Congress regarding the covered business entities that— 8 (1) have failed to conduct audits required under 9 this Act for the preceding year or have been adju- 10 dicated in violation of any other provision of this 11 Act; or 12 (2) have been found to have used forced labor, 13 including the use of forced labor in their supply 14 chain or by their on-site service providers. 15 SEC. 3. AUDIT REQUIREMENTS. 16 (a) IN GENERAL.—Each audit conducted under sec- 17 tion 2(b)(1)(A) shall meet the following requirements: 18 (1) WORKER INTERVIEWS.—The auditor 19 shall— 20 (A) select a cross-section of workers to 21 interview that represents the full diversity of 22 the workplace, and includes, if applicable, men 23 and women, migrant workers and local workers, 24 workers on different shifts, workers performing 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4241 IS different tasks, and members of various produc- 1 tion teams; 2 (B) if individuals under the age of 18 are 3 employed at the facility of the direct supplier or 4 on-site service provider, interview a representa- 5 tive group using age-sensitive interview tech- 6 niques; 7 (C) conduct interviews— 8 (i) on-site and, particularly in cases 9 where there are indications of egregious 10 violations about which employees may hesi- 11 tate to discuss at work, off-site of the facil- 12 ity and during non-work hours; and 13 (ii) individually or in groups (except 14 for purposes of subparagraph (B)); 15 (D) use audit tools to ensure that each 16 worker is asked a comprehensive set of ques- 17 tions; 18 (E) collect from interviewed workers copies 19 of the workers’ pay stubs, in order to compare 20 the pay stubs with payment records provided by 21 the direct supplier; 22 (F) ensure that all worker responses are 23 confidential and are never shared with manage- 24 ment; and 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 4241 IS (G) interview a representative of the labor 1 organization or other worker representative or- 2 ganization that represents workers at the facil- 3 ity or, if no such organization is present, at- 4 tempt to interview a representative from a local 5 worker advocacy group. 6 (2) MANAGEMENT INTERVIEWS.—The auditor 7 shall— 8 (A) interview a cross-section of the man- 9 agement of the supplier, including human re- 10 sources personnel, production supervisors, and 11 others; and 12 (B) use audit tools to ensure that man- 13 agers are asked a comprehensive set of ques- 14 tions. 15 (3) DOCUMENTATION REVIEW.—The auditor 16 shall— 17 (A) conduct a documentation review to 18 provide tangible proof of compliance and to cor- 19 roborate or find discrepancies in the informa- 20 tion gathered through the worker and manage- 21 ment interviews; and 22 (B) review, at a minimum, the following 23 types of documents: 24 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 4241 IS (i) Age verification procedures and 1 documents. 2 (ii) A master list of juvenile workers. 3 (iii) Selection and recruitment proce- 4 dures. 5 (iv) Contracts with labor brokers, if 6 any. 7 (v) Worker contracts and employment 8 agreements. 9 (vi) Introduction program materials. 10 (vii) Personnel files. 11 (viii) Employee communication and 12 training plans, including certifications pro- 13 vided to workers including skills training, 14 worker preparedness, government certifi- 15 cation programs, and systems or policy ori- 16 entations. 17 (ix) Collective bargaining agreements, 18 including collective bargaining representa- 19 tive certification, descriptions of the role of 20 the labor organization, and minutes of the 21 labor organization’s meetings. 22 (x) Contracts with any security agen- 23 cy, and descriptions of the scope of respon- 24 sibilities of the security agency. 25 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 4241 IS (xi) Payroll and time records. 1 (xii) Production capacity reports. 2 (xiii) Written human resources poli- 3 cies and procedures. 4 (xiv) Occupational health and safety 5 plans and records including legal permits, 6 maintenance and monitoring records, in- 7 jury and accident reports, investigation 8 procedures, chemical inventories, personal 9 protective equipment inventories, training 10 certificates, and evacuation plans. 11 (xv) Disciplinary notices. 12 (xvi) Grievance reports. 13 (xvii) Performance evaluations. 14 (xviii) Promotion or merit increase 15 records. 16 (xix) Dismissal and suspension 17 records of workers. 18 (xx) Records of employees who have 19 resigned. 20 (xxi) Worker pay stubs. 21 (4) CLOSING MEETING WITH MANAGEMENT.— 22 The auditor shall hold a closing meeting with the 23 management of the covered business entity to— 24 VerDate Sep 11 2014 21:45 Aug 03, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4241.IS S4241 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 4241 IS (A) report violations and nonconformities 1 found in the facility; and 2 (B) determine the steps forward to address 3 and remediate any problems. 4 (5) REPORT PREPARATION.—The auditor shall 5 prepare a full report of the audit, which shall in- 6 clude— 7 (A) a disclosure of the direct supplier’s or 8 on-site service provider’s— 9 (i) documented processes and proce- 10 dures that relate to eradicating forced 11 labor; and 12 (ii) documented risk assessment and 13 prioritization policies as such policies relate 14 to eradicating forced labor; 15 (B) a description of the worker interviews, 16 manager interviews, and documentation review 17 required under paragraphs (1), (2), and (3); 18 (C) a description of all violations or sus- 19 pected violations by the direct supplier of any 20 forced labor laws of the United States or, if ap- 21 plicable, the laws of another country as de- 22 scribed in section 2(b)(2)(B)(ii); and 23 (D) for each violation described in sub- 24 paragraph (C), a description o [Text truncated for display. 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