Tom Plotkin, special counsel with Covington & Burling LLP, outlines the challenges that companies face in complying with a wide range of laws and regulations, old and new, prohibiting the use of forced labor in supply chains.

Supply chains by their nature are extremely complex, and it isn’t easy to acquire visibility through the many tiers of suppliers, to determine whether they’re employing forced labor. In addition, there are multiple aspects of responsible sourcing to be considered, including working conditions, environmental impact and community concerns. The biggest issue when it comes to compliance, says Plotkin, is scaling a solution in accordance with the size of the problem.

Businesses struggle to amass and make sense of the necessary information. But ignorance of the problem is no excuse. “At the end of the day,” Plotkin says, “companies are going to have to answer to what’s in their supply chains, regardless of whether they caught it or not.” It’s a matter of “known, or should have known.”

Actual legal exposure for instances of forced labor depends on the laws of each country, but companies should for the most part expect to be exposed to liability when they run afoul of local regulations, Plotkin says.

In the U.S., he says, the “most pressing” issue is bans on the importation of goods produced with forced labor. Laws have been on the books for many years, Plotkin notes, “but only recently have ramped up in terms of enforcement.” U.S. Customs and Border Protection has the power to stop goods from entering the country, with the burden of proving compliance with anti-slavery laws resting on the importer. 

Additional laws, such as the Trafficking Victims Protection Reauthorization Act, create liability for companies that benefit “financially or otherwise” from knowingly utilizing forced labor. Both criminal and civil penalties are a possibility, Plotkin says.