Late last week the House Foreign Affairs Committee approved H.R. 400, which would require the Department of State and the United States Agency for International Development (USAID) to propose a definition of recruitment fees within 180 days of the statute’s enactment.  H.R. 400 explains that “contractors sometimes employ foreign workers who are citizens neither of the United States nor of the host country and are recruited from developing countries where low wages and recruitment methods often make them vulnerable to a variety of trafficking-related abuses,” including the charging of certain fees during recruitment.  Highlighting the potential for harm associated with such fees, H.R. 400 discusses a  report of the Office of the Inspector General for the Department of State, which found that 77 percent of foreign workers reported paying fees to recruiters and that a majority of these fees resulted in “debt bondage at their destinations.”

In light of the renewed emphasis on this issue, companies are taking action to prohibit their suppliers from charging recruitment fees to foreign workers.  For instance, within the last six months, two prominent electronics manufacturers have voluntarily prohibited their suppliers from charging recruitment fees to foreign workers.  Nevertheless, while these voluntary steps are laudable, the GAO recently reported that agencies should develop a “more precise” definition of recruitment fees in order to better advance efforts to end the practice of charging these fees to foreign workers.

Notably, although the definition of recruitment fees developed pursuant to H.R. 400 would apply to the Trafficking Victims Protection Act of 2000 (the “TVPA”), 22 U.S.C. § 7104(g)(iv)(IV), this definition will inform the interpretation of the term in other contexts.  Indeed, the current prohibitions on human trafficking arise from several sources, including the TVPA, title XVII of the National Defense Authorization Act of 2013, Executive Order 13627, FAR 52.222-50, -56  and DFAR  252.203–7004, –7040.  However, none of these sources provide a definition of recruitment fees.  For example, as we have previously discussed, the revised FAR Human Trafficking Rule—which went into effect earlier this week and implements Executive Order 13627 and title XVII of the National Defense Authorization Act of 2013—prohibits the charging of recruitment fees.  Similar to H.R. 400, the FAR Council observed that “[p]rohibiting recruitment fees for employees is a key anti-trafficking in persons principle, since being charged any recruitment fees increases workers’ vulnerability to debt bondage or involuntary servitude.”  However, similar to the TVPA and other human trafficking provisions, the newly-revised FAR provision does not provide a definition of recruitment fees, but instead leaves this definition for further rulemaking.

To that end, the FAR Council is in the early stages of developing a definition of recruitment fees that would apply to the revised FAR Human Trafficking Rule.  The draft definition currently provides that the term recruitment fees includes several types of charges to employees, including fees associated with interviewing, selecting, and placing potential employees, securing visas, and paying the employer’s recruiters and agents.  The draft definition further provides that “[a]ny fee, charge, or cost may be a recruitment fee . . . regardless of whether it is deducted from the wages,  . . . remitted in connection with recruitment, or collected by an employer or third party[.]”  The FAR Council has provided an early engagement opportunity for public input on this draft definition, which will close early this month.

Therefore, although a definition of recruitment fees may help bring greater certainty to the obligations of contractors under current anti-human trafficking prohibitions, contractors should remain aware of the development of any proposed definitions.  We will continue to monitor the progress of H.R. 400 and the FAR Council’s rulemaking efforts.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
  • the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.