United States

08 Dec 2020
Legislation and cases

In the U.S., there have been no significant developments over the past year in the legal landscape regarding modern slavery and other social compliance issues. However, in July 2020, the US Department of the Treasury Office of Foreign Assets Control (OFAC) issued sanctions against several Chinese entities in connection with allegations of human rights abuses in Xinjiang. The primary target of the sanctions is the Xinjiang Production and Construction Corps (XPCC). Sanctions violations can result in significant civil and criminal financial penalties, as well as detentions, seizures, forfeitures and loss of government contracts.  As a result, US entities with suppliers in China have been assessing their social compliance policies and procedures, as well undertaking due diligence into their supply chains.          

The main legislative pieces targeting modern slavery in the US remain the conflict minerals disclosures required within the Dodd-Frank Act (Section 1502) and the California Transparency in Supply Chains Act, both enacted in 2010. There are also numerous requirements that impact government contractors. We are not aware of any significant enforcement action regarding these provisions, and litigation seeking to use these laws as avenues for claims have been unsuccessful to date.

Business practices

Although the US has little “hard law” regarding human trafficking, investor and customer focus on corporate social responsibility has resulted in a proliferation of public-facing sustainability plans and human trafficking prohibitions and codes of conduct. This may also be due in significant part to multi-national corporations aligning their policies and procedures with the hard law requirements of the other jurisdictions in which they operate.

What do you predict for 2021?

The fate of the US Senate will likely determine the fate of human trafficking legislation in 2021. If Democrats control the presidency, the House of Representatives, and the Senate, the Congressional Human Trafficking Caucus may finally get disclosure legislation enacted that mirrors the disclosure legislation in the UK, France, and Australia (that Caucus has had legislation die at least five times since 2011). We also expect to see the XPCC sanctions continue to drive greater efforts by US companies to ascertain and audit their supply chains beyond the first tier. 

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Will Troutman
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