Human resource is an integral part of the supply chain. As more people become conscious of how the products they consume come to be, the way you handle your employees can make or break your business. Supply chain laws exist to regulate all aspects of the enterprise, ranging from sourcing raw materials to delivering end products.

As an employer, you have a responsibility to adhere to supply chain ethics and standards to ensure the safety of your employees and operations. Here are four vital aspects of employment and labor laws you should understand.

1. Forced Labor

Millions of people working today for international businesses are trapped in forced labor and modern slavery, according to the International Labor Organization. Forced labor and modern slavery can exist in all stages of the supply chain in any industry, from picking raw materials to the manufacture of electronics and final delivery. In most cases, individuals trapped in forced labor are victims of human trafficking or child labor.

Given the violations of human rights in forced labor, numerous laws exist to prevent forced labor that employers should know. Note that the law requires workers to be voluntary. In the U.S., human trafficking is not only a crime, but victims are allowed to sue their traffickers. According to Section 307 of the Tariff Act of 1930, importing goods produced either wholly or partly using forced labor is illegal, including convict and child labor. Some laws require companies worth more than $100 to disclose their efforts to eliminate human trafficking and forced labor in their supply chains.

Since the law may need you to provide statements about modern slavery risks in your supply chain, you should conduct due diligence to establish whether the employees in your supply chain are victims of modern slavery. You also have the responsibility to mitigate the situation and prevent it. Always ensure that your employees willingly offer their services without coercion or manipulation.

2. Workplace Safety

The Occupational Safety and Health Act (OSHA) protects employees from unsafe working conditions. While special regulations exist for specific industries such as oil and gas, maritime, and construction, OSHA has general guidelines for all employers. Some of the requirements to ensure workplace safety include notifying employees of any harmful substances in the workplace and training them on the best way to handle the situation in case of exposure. You should also ensure employees can access emergency exits in case of tragedies like fire. They should also have the ability to use fire equipment to mitigate the situation.

If your employee files a complaint about unsafe working conditions with OSHA, you may be liable for penalties and more strict standards. Also, note that OSHA officials can conduct impromptu inspections of your workplace to ascertain its safety. In the wake of the COVID-19 pandemic, remote working has become the ideal option for most businesses trying to cut costs and safeguard employee safety from infection. However, if your employees still work from the office, it is necessary to adhere to recommended containment measures. 

The federal law does not require employers to reimburse employees business expenses due to the transition to working from home. However, states like Iowa, California, and Massachusetts have laws that require reimbursement of out-of-pocket business expenses if the government or company directs them to work remotely. You can do this by setting a flat-out fee or requiring employees to provide a business expense report with all the incurred costs for reimbursement.

Outside the U.S., the general rule is that employers reimburse employees business expenses for costs incurred when working remotely, such as phone bills, internet, and home working equipment.

3. Employee Misclassification

Employee misclassification can lead to a host of problems related to paying and working hours. As an employer, you need to classify your employees appropriately to avoid legal compensation and wage disputes, as well as fulfill your financial and legal obligations. To help you identify whether your worker is an employee or an independent, you need to consider various factors, including the following:

• The extent of control you have over the worker's activities
• The type of work they do, including whether or not they engage in work outside the company’s normal business activities.
• Whether or not the worker engages independently in the same type of work they do for the company.

According to the AB5 law passed by California, misclassified employees are eligible for overtime, minimum wage, meal breaks, reimbursement of business expenses, and unemployment insurance. They are also entitled to worker’s compensation average, paid sick leave, and family state leave. Other states like Oregon are also considering bills similar to the AB5 to deal with employee misclassification.

Other countries also have laws that regulate employer relationships with employees and independent contractors. In the United Kingdom, an independent contractor has to pay social security or tax obligations whether they would be an employee if the client were to engage the contractor directly. The company will be liable for the payments. Mexico, on the other hand, is considering limiting subcontracting services. The restriction of subcontracting services to only those related to the business aims at preventing and minimizing criminal activities.

4. Fair Treatment

Employment laws such as Title VII, Americans with Disabilities Act (ADA), and Pregnancy Disability Act (PDA) exist to protect employees against misconduct in the workplace, including harassment and discrimination. While some laws apply to companies with 15 or more employees, the minimum workforce requirement may be less depending on your state laws. As an employer, the law prohibits you from discriminating against employees based on the following protected characteristics:

• Age
• Disability
• Gender
• Marital status
• Pregnancy
• Race and ethnicity
• Religion
• Sexuality

Discrimination laws cover the entire recruitment process, ranging from hiring and promotion to training and demotion. It is your responsibility to ensure that all employees and staff members receive fair and equal treatment as their colleagues in the same classification. If an employee experiences discrimination or harassment, they have a right to file a complaint and even take legal action. Note that the law prohibits employers from retaliating against any employee who reports, or is a witness to, workplace discrimination or harassment.

When determining the number of employees in your company, the Equal Employment Opportunity Commission (EEOC) includes temporary staff and part-timers. Doing so helps identify the laws that apply to your specific business based on the size of your workforce. As an employer, you need to ensure fair treatment for the protection of your employees and the efficiency of your business supply chain.

Understanding all the relevant laws related to your workforce in the complex supply chain can be challenging. It is, therefore, necessary to consult an employment lawyer. Doing so allows you to maintain supply chain ethics, protect your employees and uphold human rights in all aspects of your supply chain.

Pamela Garcia is a content writer for HKM.