Human Trafficking Rule Clarification: US Government Contractors Face Broad Prohibitions on Employee Paid “Recruitment Fees”

The latest regulatory action by the Obama administration to address human trafficking in contractor supply chains occurred on May 11, 2016 when the Federal Acquisition Regulation (FAR) Council published a proposed definition of prohibited “recruitment fees.”  The proposed definition would supplement the recently revised FAR Combating Trafficking in Persons regulations, and define “recruitment fees” for purposes of the prohibition on US government contractors and subcontractors charging employees recruitment fees in FAR subpart 22.17 and the associated clause at FAR 52.222–50.  The proposed definition is taken largely from an earlier draft definition released with the FAR Council’s Jan. 28, 2015 final rule on Combating Trafficking in Persons. The proposed definition is drafted very broadly and includes virtually any cost associated with “soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, testing, training, providing new-hire orientation, recommending, or placing employees or potential employees.”  It goes on to include a laundry list of additional circumstances and types of costs that may not be passed on to employees or potential employees. The announcement of the proposed definition notes that the FAR Council struggled to balance the interest in “providing a comprehensive definition of the term to maximize worker protections, and of ensuring that the definition does not elicit unintended consequences that interfere with contractor business operations.”  Comments submitted in response to the earlier draft definition advocated for both expansion and narrowing of the rule.  Therefore, the new proposed definition asks for additional comments on both whether the definition is broad enough and whether it can be narrowed based on the skill level and location of the job to be performed.  Comments are due to the FAR Secretariat by July 11, 2016. Mike Navarre, Of Counsel in Steptoe’s Washington office, authored this post.  He is a member of Steptoe’s Government Contracts group and Business and Human Rights practice area.