87R1797 JES-D
By: White H.B. No. 820
A BILL TO BE ENTITLED
AN ACT
relating to requiring certain business entities to audit the
business's supply chain and on-site services for the use of forced
labor; providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 5, Business & Commerce Code, is
amended by adding Chapter 113 to read as follows:
CHAPTER 113. AUDITING AND REPORTING ON USE OF FORCED LABOR
Sec. 113.001. DEFINITIONS. In this chapter:
(1) "Covered business" means a business entity that:
(A) is doing business in this state; and
(B) has annual, worldwide gross receipts that
exceed $500 million.
(2) "Forced labor" means any forced labor practice or
human trafficking activity in violation of state, national, or
international standards, including:
(A) the International Labor Organization
Convention No. 182;
(B) the Trafficking Victims Protection Act of
2000 (22 U.S.C. Section 7101 et seq.); and
(C) criminal prohibitions related to slavery and
human trafficking under Chapter 77, Title 18, United States Code,
if the act had been committed within the jurisdiction of the United
States.
(3) "Gross receipts" means the gross amount, including
cash and the fair market value of other property or services,
received in a transaction that produces business income from the
sale or exchange of property, the performance of services, or the
use of property or capital. The term does not include:
(A) income from the repayment, maturity, or
redemption of the principal of a loan, bond, mutual fund,
certificate of deposit, or similar marketable instrument;
(B) proceeds from the issuance of a business's
own stock or the sale of treasury stock;
(C) amounts received as the result of litigation,
including damages;
(D) property acquired by an agent on behalf of
another party;
(E) federal, state, or local tax refunds or other
tax benefit recoveries;
(F) certain contributions to capital;
(G) income from discharge of indebtedness; or
(H) amounts realized from exchanges of inventory
that are not recognized under the Internal Revenue Code of 1986.
(4) "On-site service" means any service work provided
on the site of a covered business, including food service work and
catering services.
(5) "On-site service provider" means any business
entity that provides workers who perform, collectively, at least 30
hours per week of on-site services for a covered business.
Sec. 113.002. FORCED LABOR AUDIT. (a) A covered business
shall conduct an annual audit of the business's supply chain and
on-site services to investigate the use of forced labor by the
business's suppliers, including direct and secondary suppliers,
and on-site service providers. In performing the audit, a covered
business's auditor must:
(1) conduct worker interviews of a cross-section of
workers that represents the full diversity of the business's
workplace, including, if applicable, men and women, migrant workers
and local workers, and workers from different shifts, performing
different tasks, and from different production teams;
(2) conduct management interviews of a cross-section
of each of the business's suppliers' and on-site service providers'
management representatives, including human resources personnel
and production supervisors;
(3) use audit tools to ensure that workers and
managers are asked a comprehensive set of questions; and
(4) review documentation necessary to provide proof of
compliance and to corroborate or find discrepancies in information
gathered under Subdivisions (1) and (2), including a review of the
following:
(A) age verification procedures and documents;
(B) a master list of workers younger than 18
years of age, if applicable;
(C) worker selection and recruitment procedures;
(D) contracts with labor brokers, if any;
(E) worker contracts and employment agreements;
(F) introduction program materials;
(G) personnel files;
(H) worker communication and training plans and
certifications provided to workers, including skills training,
worker preparedness, government certification programs, and
systems or policy orientations;
(I) collective bargaining agreements, including:
(i) collective bargaining representative
certifications;
(ii) descriptions of the role of the labor
organization; and
(iii) minutes of the labor organization's
meetings;
(J) contracts with any security agency,
including descriptions of the scope of responsibilities of the
security agency;
(K) payroll and time records;
(L) production capacity reports;
(M) written human resources policies and
procedures;
(N) occupational health and safety plans and
records, including:
(i) legal permits;
(ii) maintenance and monitoring records;
(iii) injury and accident reports;
(iv) investigation procedures;
(v) chemical inventories;
(vi) personal protective equipment
inventories;
(vii) training certificates; and
(viii) evacuation plans;
(O) disciplinary notices;
(P) grievance reports;
(Q) performance evaluations;
(R) promotion or merit increase records;
(S) dismissal and suspension records of workers;
(T) records of workers who have resigned; and
(U) worker pay stubs.
(b) In conducting worker interviews under Subsection (a),
the auditor must:
(1) interview a representative group of workers using
age-sensitive interview techniques if the workers are younger than
18 years of age and employed at the facility of a direct supplier or
on-site service provider;
(2) conduct the interview:
(A) on site or, in cases where there are
indications of egregious violations about which the worker may
hesitate to discuss on site, off site and outside of the worker's
working hours; and
(B) individually or in groups;
(3) collect from each interviewed worker copies of the
worker's pay stubs;
(4) ensure all worker responses are confidential and
not shared with management; and
(5) interview a representative of the labor
organization or other worker representative organization that
represents workers at the facility or, if the organization is not
present, attempt to interview a representative from a local worker
advocacy group.
Sec. 113.003. WORKER PROTECTIONS FOR PARTICIPATION IN
AUDIT. A covered business shall include in any contract with a
direct supplier or on-site service provider that the supplier or
provider:
(1) may not retaliate against any worker in
participating in the forced labor audit under this chapter; and
(2) must protect worker participation in the audit
using the same grievance reporting and resolution mechanisms
normally available to the worker for a workplace grievance.
Sec. 113.004. CLOSING MEETING WITH MANAGEMENT. After
completion of the forced labor audit of a covered business's direct
suppliers and on-site service providers under Section 113.002, the
auditor shall hold a closing meeting with the covered business's
management to:
(1) report any violations or nonconformities found in
a supplier's or provider's facility; and
(2) determine the steps to address and remediate any
identified problems with the supplier or provider related to forced
labor.
Sec. 113.005. AUDITOR'S REPORT. The auditor shall prepare
a full report of the audit, which must include:
(1) a disclosure of the audited direct supplier's or
on-site service provider's documented:
(A) processes and procedures that relate to
eradicating forced labor; and
(B) risk assessment and prioritization policies
that relate to eradicating forced labor;
(2) a description of the worker interviews, management
interviews, and documentation review conducted under Section
113.002;
(3) a description of all uses or suspected uses of
forced labor by the supplier or provider; and
(4) for any use or suspected use of forced labor
identified under Subdivision (3), a description of any corrective
and protective actions recommended to the supplier or provider,
including:
(A) the issues relating to the use of forced
labor and any causes of the use;
(B) the implementation of a solution; and
(C) a method to check the effectiveness of the
solution.
Sec. 113.006. REPORT TO SECRETARY OF STATE. (a) A covered
business shall submit a report to the secretary of state, in the
form and by the deadline prescribed by the secretary of state, that
describes:
(1) the findings of an audit performed under Section
113.002, including details of any instance of found or suspected
forced labor; and
(2) efforts taken to eradicate forced labor from the
business's supply chain and on-site services.
(b) The report must disclose the covered business's
policies or procedures, if any, for:
(1) preventing the use of forced labor by the business
and the business's direct suppliers and on-site service providers;
(2) verifying suppliers' and providers' practices to
evaluate and address risks of forced labor, including whether the
verification is provided by a third party;
(3) requiring suppliers and providers to provide
written certification that materials incorporated into the product
supplied or the services provided, respectively, comply with laws
regarding forced labor of each country in which the supplier or
provider is engaged in business;
(4) maintaining internal accountability standards and
procedures for employees or contractors of the business for the
failure to meet requirements regarding forced labor; and
(5) providing training on recognizing and preventing
forced labor to employees, including management personnel who have
direct responsibility for supply chain management and on-site
services, particularly training on mitigating risks within the
business's product supply chains and on-site services.
(c) The report must include a written certification signed
by the chief executive officer or equivalent executive of the
business that states that:
(1) the business has complied with the requirements of
this chapter;
(2) the business exercised due diligence to eradicate
forced labor from the business's supply chain and on-site services;
and
(3) to the best of the executive's knowledge, the
business has:
(A) found no known instances of forced labor by
the business's supply chain or on-site service providers; or
(B) disclosed every known instance of forced
labor used by the business's supply chain or on-site service
providers.
Sec. 113.007. ONLINE REPORT. (a) Except as provided by
Subsection (b), a covered business shall:
(1) publish the report submitted to the secretary of
state under Section 113.006 on the business's publicly accessible
Internet website; and
(2) provide a conspicuous and easily understood link
on the home page of the website that provides access to the report.
(b) A covered business that does not have a publicly
accessible Internet website shall provide the report in written
form to any consumer of the business not later than the 30th day
after the date a request by the consumer for a copy of the report is
received.
Sec. 113.008. ADMINISTRATIVE PENALTY. (a) Except as
provided by Subsection (b), the secretary of state may assess an
administrative penalty of not more than $100 million against a
covered business if, after notice and an opportunity for a hearing,
the secretary of state determines that the covered business
violated a requirement under this chapter.
(b) The secretary of state may increase the penalty under
Subsection (a) to not more than $500 million if the secretary of
state finds that the covered business wilfully violated a
requirement of this chapter.
Sec. 113.009. INJUNCTIVE RELIEF. (a) The secretary of
state may request the attorney general institute a civil action for
relief, including a permanent or temporary injunction, restraining
order, or other appropriate order, if the secretary of state
believes a violation of this chapter constitutes a hazard to
workers.
(b) The attorney general may file an action under this
section in a district court in Travis County or in the county where
the violation occurred.
Sec. 113.010. REPORT TO LEGISLATURE. The secretary of
state shall prepare and submit an annual report to the governor, the
lieutenant governor, the speaker of the house of representatives,
and each member of the legislature that includes each covered
business that in the preceding year:
(1) failed to conduct an audit required under this
chapter;
(2) had an administrative penalty imposed on the
business under Section 113.008; or
(3) has been found to have used forced labor,
including the use of forced labor in the business's supply chain or
by an on-site service provider.
Sec. 113.011. RULES. The secretary of state shall adopt
rules necessary to administer and enforce this chapter.
SECTION 2. (a) Not later than March 1, 2022, the secretary
of state shall adopt rules necessary to administer and enforce
Chapter 113, Business & Commerce Code, as added by this Act.
(b) A business entity required to conduct a forced labor
audit of the business's supply chain and on-site services under
Section 113.002, Business & Commerce Code, as added by this Act,
shall begin conducting the business's first audit not later than
September 1, 2022.
SECTION 3. This Act takes effect September 1, 2021.