This year, the federal government focused its attention on eliminating U.S. government dollars from supporting human trafficking. The federal government manifested this focus through the enactment of aggressive compliance requirements for federal grantees and contractors. The year began with the implementation of expansive Federal Acquisition Regulation (FAR) provisions for federal contractors. Although the FAR requirements are not applicable to federal grantees, they are based on the Trafficking Victims Protection Act (TVPA) of 2000, 22 U.S.C. §§ 7101 et seq., which mandates that federal agencies require federal grantees and contractors to combat human trafficking behavior in federal grantees and contractors alike.
The federal government's mission to combat human trafficking was further highlighted in September 2015, when U.S. Attorney General Loretta Lynch announced that more than $44 million in U.S. Department of Justice (DOJ) grant funding had been awarded to combat human trafficking throughout the United States, presumably in accordance with 22 U.S.C. § 7105(b)(2). These grants included more than $22.7 million to support 16 anti-human trafficking task forces across the country, more than $8.1 million to 12 victim service organizations to provide comprehensive services to human trafficking victims, and an additional $5.6 million to provide specialized services to human trafficking victims.
While OMB's Uniform Guidance has not been updated for grantees in the same manner as the FAR for contractors, nonprofits should be mindful of the inclusion of the TVPA or implementing grant provisions that implement the TVPA. Particularly, the TVPA requires that federal agencies that administer grants terminate them or take other remedial action if the grantee or subgrantee, or any of their contractors or agents, engages in:
- Severe forms of trafficking in persons;
- The procurement of a commercial sex act during the period of time that the grant is in effect;
- The use of forced labor in the performance of the grant; or
- Acts that directly support or advance trafficking in persons, including:
- Destroying or otherwise denying an employee access to that employee's identity or immigration documents;
- Failing to provide or pay for return transportation costs to an employee from a country outside the United States to the country from which the employee was recruited upon the end of employment if requested by the employee;
- Soliciting a person or offering employment by means of materially false or fraudulent pretenses, representations, or promises;
- Charging recruited employees unreasonable placement or recruitment fees or recruitment fees that violate the laws of the country from which an employee is recruited; or
- Providing or arranging housing that fails to meet the host country's housing and safety standards.
22 U.S.C. § 7104g. Grantees who provide services under a grant outside the United States that exceeds $500,000 have an additional requirement. Each such grantee must certify to the grant officer prior to receiving the award, and on an annual basis thereafter, that, after conducting due diligence:
- The grantee has implemented a plan to prevent the activities listed above and is in compliance with that plan;
- The grantee has implemented procedures to prevent the activities listed above and to monitor, detect, and terminate any employee or subgrantee who engages in any of the activities; and
- To the best of the grantee's knowledge, neither the recipient nor any of its subgrantees or agents is engaged in any of the activities.
22 U.S.C. § 7104a. Although the regulations can be complex, a grantee must "immediately" inform the Inspector General of the agency awarding the grant "of any information it receives from any sources that alleges credible information" that the grantee, subgrantee, or any of their agents engaged in any prohibited activities and must fully cooperate with federal agency audits, investigations, or corrective actions.
22 U.S.C. § 7104c. Given the severity of the requirements in an often under-staffed compliance office, and potentially distant subawardees and contractors, nonprofit grantees should consider taking the following actions:
- Establish and communicate reporting mechanisms. The law explicitly emphasizes the need for "immediate" action. Therefore, nonprofit grantees should establish and broadly communicate clear lines of reporting within their organizations and from all tiers of subawardees. The person to receive such reports should be available at all times to receive the report and have immediate access to the decision-makers or be deputized to make the call to the Inspector General, if appropriate.
- Identify vulnerable areas and work to mitigate risk. Nonprofits should engage in and document a deliberate strategy to assess where the nonprofit believes it is most at-risk. For example, grantees that subaward and/or contract overseas must consider how to vet such subawardees and subcontractors. This can vary greatly depending on a great many factors, including, but not limited to, the country where work is performed, the industry, the nature of the work, the size of the organization, the known practices of the organization, etc.
- Train employees and subcontractors. Nonprofits must give particular attention to scheduled training that sufficiently educates their employees and agents of warning signs and what to do if a warning sign arises. All sizes of nonprofits can look to the resources provided by the federal government to help educate their employees, including:
- The U.S. Department of State's Office to Monitor and Combat Trafficking in Persons interactive video on "Human Trafficking Awareness Training."
- The U.S. Department of Labor's Office of Child Labor, Forced Labor, and Human Trafficking Toolkit for Responsible Businesses.
For nonprofits with a workforce where English is not a primary language, the nonprofit must communicate its training in accessible languages, and nonprofits with workforces that do not routinely access a computer must consider additional methods of making these workers aware of their obligations under the law (some of whom may be at the front lines of identifying issues). For any compliance program, nonprofits must make the punishment for violations by subgrantees, contractors, agents, and employees clear and well-known.
- Consider Plan B if termination is necessary. In many industries and places in the world, only a handful of subcontractors or subrecipients are available to perform. Consider how your organization would respond to the need to terminate a key employee, subrecipient, contractor, or agent, and consider diversifying supply lines.
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While the federal government has taken significant steps to curtail the involvement of U.S. funds in human trafficking, nonprofits should be mindful of these new human trafficking requirements and can and should take steps to avoid entanglement in prohibited activity. Moreover, it will be vital for nonprofits to appropriately respond in the event credible information arises regarding potentially prohibited conduct; indeed, the failure to do so could result in civil and/or criminal sanctions, and even suspension or debarment.