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 is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions…

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as transactional and legislative issues. Her practice also includes bid protest and contract claims and appeals litigation before GAO, agency boards and the federal courts. Ms. Plitsch has particular expertise in advising clients in the pharmaceutical and biologics industry. She advises a range of pharmaceutical and biologics manufacturers on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as research and development contracts and grants with various federal agencies. She also has significant experience advising on the requirements of various programs under which vaccine products and biodefense medical countermeasures are procured by the Government.

Photo of Alexander Hastings Alexander Hastings

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in…

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in e-discovery. He assists in investigations and litigations that involve complex e-discovery issues and has represented clients in matters involving the U.S. Department of Justice, Securities and Exchange Commission and the United States International Trade Commission.

Mr. Hastings’ government contracts experience includes advising clients regarding new developments in regulatory requirements, including the Federal Acquisition Regulation’s (FAR) anti-human trafficking requirements and the FAR and Bayh-Dole Act’s intellectual property provisions. Mr. Hastings also provides due diligence regulatory advice to clients contemplating the acquisition of government contracting entities or assets.

Mr. Hastings’ e-discovery experience includes advising a wide-array of clients on best practices in information governance and document collection and assisting clients develop effective mobile device and document management policies.

Mr. Hastings also maintains an active pro bono practice and routinely writes on issues related to government contracts and e-discovery.