[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Rules and Regulations]
[Pages 65466-65478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27541]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 22 and 52
[FAC 2019-01; FAR Case 2015-017; Docket No. 2015-0017; Sequence No. 1]
RIN 9000-AN02
Federal Acquisition Regulation: Combating Trafficking in
Persons--Definition of ``Recruitment Fees''
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to provide a definition of
``recruitment fees'' to further implement the FAR policy on combating
trafficking in persons. One element in combating trafficking in persons
is to prohibit contractors from charging employees recruitment fees.
DATES: Effective Date: January 22, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Cecelia L. Davis, Procurement
Analyst, at 202-219-0202 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat Division at 202-501-4755. Please cite FAC 2019-01, FAR Case
2015-017.
SUPPLEMENTARY INFORMATION:
I. Background
This rulemaking is intended to clarify the prohibition on the
charging of recruitment fees set forth in FAR subpart 22.17 and clause
52.222-50. This regulatory language reflects a final rule published by
DoD, GSA, and NASA on January 29, 2015 (FAR Case 2013-001, 80 FR 4967)
to implement Executive Order (E.O.) 13627, entitled ``Strengthening
Protections Against Trafficking in Persons in Federal Contracts,'' and
title XVII of the National Defense Authorization Act (NDAA) for Fiscal
Year (FY) 2013, entitled ``Ending Trafficking in Government
Contracting.'' Pursuant to FAR 22.1703(a) and 52.222-50(b),
[[Page 65467]]
which became effective on March 2, 2015, contractors, contractor
employees, subcontractors, subcontractor employees, and their agents
are prohibited from charging employees recruitment fees. This second
rulemaking is meant to clarify the prohibition in the 2015 rule by
defining ``recruitment fees'' for purposes of the prohibition (e.g.,
fees for processing applications, fees for acquiring visas).
Prior to the publication of the 2015 rule, in November 2014, the
Government Accountability Office (GAO) issued report GAO-15-102, which
recommended that agencies ``develop a more precise definition of
recruitment fees.'' The GAO explained that without a clear definition,
agencies would face challenges enforcing the prohibition. The Senior
Policy Operating Group for Combating Trafficking In Persons
(established under the President's Interagency Task Force for
Monitoring and Combatting Trafficking in Persons) agreed with the GAO's
conclusion and requested that the Federal Acquisition Regulatory
Council (FAR Council) consider developing a definition for the term
``recruitment fees'' to create consistency and certainty for
contracting parties. In response, the FAR Council published an early
engagement opportunity on a draft definition on the Defense Acquisition
Regulations System's website, with interested parties encouraged to
submit feedback through March 2015. The original posting and results
are currently available at: https://www.acq.osd.mil/dpap/dars/archive/2015/early_engagement_opportunity_2015.html. After review of the
comments, DoD, GSA, and NASA published a proposed rule in the Federal
Register at 81 FR 29244 on May 11, 2016, to provide a definition of
``recruitment fees'' in FAR subpart 22.17 Combating Trafficking in
Persons, and the associated clause at FAR 52.222-50, Combating
Trafficking in Persons. The objective of the proposed rule, and this
final rule, is to identify the types of charges and fees that
contractors, subcontractors, and their employees or agents are
prohibited from charging to employees or potential employees, under the
Government policy on combating trafficking in persons. Additionally,
the rule enables clarity and consistency in the application and
enforcement of the prohibition. Twenty-eight respondents submitted
comments on the proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Summary of Significant Changes
The following significant changes from the proposed rule were made
in the final rule as a result of the comments received.
Definition. For ease of reading and clarification, the wording and
paragraphs in the definition are restructured. In addition--
In the introductory text of the definition, the phrase
``regardless of the manner'' of imposition or collection of the fee
has been expanded to ``regardless of the time, manner, or
location.''
Several additional illustrative examples of prohibited
fees have been added to the definition for clarification, e.g., fees
associated with obtaining permanent or temporary labor
certification; processing of applications; immigration documents
such as passports; government-mandated levies such as border
crossing fees or worker welfare funds; transportation and
subsistence costs while in transit or from the airport or
disembarkation point to the worksite; security deposits, bonds, and
insurance; or equipment charges.
The second paragraph of the definition clarifies that a
recruitment fee is still a recruitment fee regardless of whether
collected by an employee or a third party, whether licensed or
unlicensed, including labor brokers.
B. Analysis of Public Comments
1. Scope of the Definition ``Recruitment Fees''
Comment: Many respondents indicated they agreed with the scope of
the proposed definition of ``recruitment fees.''
Response: Noted.
a. Too Narrow
Comment: Many respondents indicated the definition of ``recruitment
fees'' was too narrow and should be expanded to be sufficiently broad
to encompass anything of value. One respondent warned against a
definition that would give recruiting parties the ability to define or
``reallocate'' fee elements of the recruiting process outside of the
definition. Many respondents stated it was extremely important not to
cordon off some fees from recruitment fees, because any ``cordoned
fees'' would fall outside of enforcement. These respondents believed
that all costs and fees associated with bringing an employee on board
should be treated as recruitment fees. Many respondents also expressed
concern that the definition may not be broad enough to cover ``all
costs of bringing an employee on board'' if that prospective employee
lived in a rural area, far from the city center where job applications,
passports, and visas are processed.
Response: This category of comments is addressed in the responses
to the more specific categories of comments on this rule.
b. Too Broad
Comment: Many respondents stated the proposed definition was too
broad. These respondents thought that the proposed definition
improperly classified costs associated with valid preconditions or
prequalifications as recruitment fees. One respondent thought that the
definition implied that it was not permitted for employers to require
proof of identification, because proof of identification can cost money
to obtain. Three respondents stated the purpose of the rule was to
distinguish misleading and fraudulent behavior designed to elicit fees
illegally from those actions that may be part of the ethical hiring
practices. Several respondents asked that the proposed definitions be
modified to reflect fraudulent or misleading conduct of recruiters. Two
respondents stated not all costs and fees associated with hiring an
employee should be treated as recruitment fees since companies have
legitimate business interests in identifying and hiring qualified
candidates. Another respondent indicated there were legitimate costs
any individual should bear when they presented themselves at the
factory door for employment and other de minimis costs, such as a bus
fare to work which employees properly bear. One respondent stated it
was inappropriate for liability to attach along every link in the labor
recruitment chain, regardless of intent, knowledge, or ability to
prevent the conduct in question, because of the potentially severe
penalties that could be imposed.
Response: This category of comments is addressed in the responses
to the more specific categories of comments on this rule.
2. General Elements of the Definition
a. Introductory Text
i. Use of the Phrase ``Include, But Are Not Limited To''
Comment: One respondent cautioned against any approach that is
restricted to enumerating the various costs that could fall under the
definition of ``recruitment fees.'' As such, any enumerated list should
begin with the phrase
[[Page 65468]]
``recruitment fees include, but are not limited to.'' However, another
respondent recommended striking out ``not limited to'' and adding
``any'' as this language could encompass very small cost items and
incidentals that should not be included in the definition due to the
cost to track.
Response: The phrase ``include, but are not limited to'' has been
relocated and serves as the introduction to a list of examples of
recruitment fees, in paragraph (1) of the definition. These revisions
to the definition clarify the term ``recruitment fees'' and prevent it
from being overly broad. The definition has been revised to make clear
that it comprises a broad principle, and then provides illustrative
examples of recruitment fees in paragraph (1) of the definition. The
examples are meant to be helpful, but are not intended to be exhaustive
or capture every possible example of a recruitment fee. Therefore, if a
fee is associated with the recruiting process, but is not listed in the
example, it would still be captured by the standard in the rule.
ii. Potential Employees
Comment: Many respondents concurred with the inclusion of fees
charged to potential employees, because they thought that the practice
of charging workers recruitment fees should be prohibited even if a
worker ends up working on another contract or is never hired at all.
Response: Although the phrase ``assessed against employees or
potential employees'' has been removed from the definition of
``recruitment fees'' in the final rule, because to whom the fee is
charged is not an integral part of the definition, the final rule
amends the existing FAR prohibition on charging recruitment fees to
employees by adding the phrase ``potential employees'' at FAR
22.1703(a)(5) and (6) and 52.222-50(b)(5) and (6) and (h)(3)(iii) so
that employers and contractors are prohibited from charging both
employees and potential employees recruitment fees.
iii. Legitimate and Necessary Business Practices and Costs
Comment: Several respondents commented that the definition should
only cover fraudulent or misleading practices, as opposed to legitimate
and necessary business practices and costs.
One respondent considered the definition to be unclear as to
whether the term ``recruitment fees'' only applied to fees charged by
the recruiter or employer on top of, or in addition to, legitimate and
necessary costs, or whether it also applied to the underlying costs.
The respondent concurred with the intent to prevent trafficking in
persons by eliminating the possibility that a job candidate be required
to pay for his or her position through the imposition of recruitment
fees or similar costs. The respondent stated that this goal can be
achieved while also preserving the legitimate and necessary business
practice of, and the legitimate costs associated with, employee
recruitment.
Another respondent recommended amending the definition to prohibit
recruitment fees assessed against employees or potential employees,
associated with the recruiting process, ``with the knowledge and intent
to defraud or mislead such employees or potential employees.''
According to the respondent, this would distinguish between the illegal
conduct of a recruiter (contractor or other third party) and standard
hiring activities and would not undermine the intent of the E.O. 13627
and the governing statutes to discover individuals or contractors
systemically engaging in the prohibited activities or attempting to
entrap individuals in a life of indentured servitude or slavery.
According to the respondent, in some cases, the rule can be viewed as
criminalizing the human resources process of overseas hiring, which the
respondent trusted is not the intended purpose of defining
``recruitment fees.'' This respondent suggested that the rule should
distinguish between fraudulent or misleading practices in recruiting
employees tied to the prohibited costs and those traditionally
ministerial human resources tasks performed during the hiring process
by contractors, contractor employees, or their agents, such as
submitting applications or interviewing job candidates.
Similarly, another respondent stated that the definition ignores
the key element of whether the employer intends to defraud or deceive
the employee, which is suggested as the core indicator of whether there
is vulnerability to human trafficking. The respondent suggested that in
many cases this rule conflates human trafficking with legitimate
interactions that occur as part of the recruitment and hiring process.
Response: With regard to distinguishing between fraudulent or
misleading practices and legitimate business costs, FAR subpart 22.17
and clause 52.222-50 already prohibit charging recruitment fees to
employees. The purpose of this rule is to provide a definition of
``recruitment fees,'' not to create exceptions for when recruitment
fees may be charged, such as under nonfraudulent circumstances. The
standard is whether the fees are associated with the recruiting
process.
Additionally, the introductory paragraph of the definition has been
revised to clarify that the standard is that ``recruitment fees'' are
fees associated with the recruiting process. The introductory paragraph
of the definition has been revised to highlight and make clear this
standard so that employers and contractors have clarity regarding the
existing FAR prohibition on charging employees recruitment fees and
ensure that employees and potential employees are not charged such
fees. It is important to note that fees that fall within the definition
of recruitment fees may still be incurred as part of normal business
practices; they just cannot be passed on to employees or potential
employees.
iv. Timing
Comment: Many respondents commented that the definition should
apply regardless of when fees are imposed or collected. Many
respondents suggested inclusion of ``or timing'' after the phrase
``regardless of the manner'' (i.e., to read ``regardless of the manner
or timing of their imposition or collection''). Many respondents stated
that timing is important to include, since fees can take the form of
kickbacks after arrival at the jobsite, fees at the end of a job for
future recruitment, for safe passage home, for return of collateral at
the end of a job, etc. The respondents further stated that the
definition needs to clearly state that recruitment fees may be paid
long after recruitment is technically over, but are still recruitment
fees, regardless of when the fees are accrued, charged, or collected.
One respondent noted that in some countries, such as Singapore and
Taiwan, labor agents or brokers are legally allowed ongoing placement
fees that are deducted from the workers' pay, which are just
recruitment fees shifted in time. This respondent noted that the
proposed definition should note that prohibited fees include fees
connected with the ``recruiting process and employment relationship''
in order to clarify that the scope of the rule relates to more than
just fees connected with the sourcing, recruiting, and hiring of the
worker.
Response: The definition in the final rule has been amended to
include the phrase ``regardless of the time, manner, or location of
imposition or collection of the fee.'' The Councils agree that the
timing of the fees is not relevant to the question of whether a fee is
a recruitment fee since the operative standard is whether the fees are
[[Page 65469]]
associated with the recruiting process, even if imposed or collected
later in time.
v. Adding Additional Terms to the Definition
Comment: One respondent recommended adoption of a definition of
fees that is broad in time, term, and form to ensure the utmost
protection of vulnerable individuals from exploitation by unethical
recruitment practices. The respondent noted that recruitment fees are
not limited solely to the act of recruiting of a worker, but also
encompass hiring, transportation, onboarding, ongoing employment,
separation, and the return trip to the worker's home country. According
to the respondent, any prohibition against fees needs to take this
continuum into account, as each of these fees, when levied individually
or collectively at the outset or during the course of employment, can
facilitate debt bondage and exacerbate the likelihood that forced labor
will occur.
Response: The definition has been revised to state ``regardless of
the time, manner, or location of imposition or collection of the fee.''
vi. Equating to Prohibition Against Kickbacks
Comment: One respondent suggested the following addition to the
definition of ``recruitment fees'':
``The items identified in this section are illustrative only. They
are not a comprehensive list of all possible costs charged to a
prospective/current worker that would be prohibited under the rule.
Rather, for purposes of application, the same meaning given a kickback
as identified in FAR 3.502-1 will apply to the solicitation of anything
of value from the worker as a condition to receiving employment under
the contract.''
This respondent stated that by referencing an applicable and well-
settled standard under the law, it will more clearly define the
boundaries and limitations of the prohibitions against fees.
Response: The final rule clarifies that the definition is based
upon a broad principle and an illustrative list of examples. The
definition is not limited by the examples, as explained further in the
response to comment 2.a.i.
The Councils decline to adopt the same meaning as kickback, as
defined in FAR section 3.502-1. Reference to a kickback defined in
section 3.502-1 is not necessarily relevant to this rule and section
3.502-1 could be viewed as limiting the definition of ``recruitment
fees.'' Under this final rule, a kickback as understood colloquially is
a recruitment fee if it is associated with the recruiting process.
vii. ``Assessed''
Comment: One respondent stated that the rule should clarify the
meaning of the term ``assessed'' as used in the proposed definition of
``recruitment fees.''
Response: The term ``assessed'' was removed from the definition,
because it is redundant and could potentially limit the FAR prohibition
on charging employees or potential employees recruitment fees.
b. Paragraph (2) of Definition
i. Third Parties
Comment: Several respondents commented on the list of third parties
in paragraph (2) of the definition.
Two respondents commented that a number of third parties, including
recruiters, staffing firms, subsidiaries or affiliates, subcontractors,
and the vaguely defined ``agents,'' whose actions to seek recruitment
fees from an individual not yet employed by the contractor, may be
unknown to the contractor. According to the respondents, this could
result in liability for the contractor when actions of third parties,
unrelated to the contractor recruitment or hiring, violate the
prohibition on charging of recruitment fees. One respondent noted that
the definition does not limit such prohibited fee or payment actions to
those done for the purpose of employment on a specific contract to
which the clauses pertain. These respondents recommended that the
Councils clarify that fees or other payments made by third parties have
to relate directly to the contractor and/or contract to which
compliance is sought.
However, another respondent suggested a change in subparagraph
(2)(v), from ``Any agent or employee of such entities . . .'' to ``Any
agent or employee of such entities, including `subagents' or other
licensed or unlicensed representatives . . . .'' According to this
respondent, the worker may often pay recruitment fees to locally-based
subagents prior to direct contact with the employer's official
representative.
A respondent also thought the rule was not clear as to when a
contractor's recruitment fees obligations become effective and noted
that on occasion, companies will fill open positions on contracts with
third country nationals who have been brought into the performance
country by another contractor for a different contract.
Response: FAR subpart 22.17 already prohibits charging recruitment
fees to employees. Subpart 22.17 also prescribes the clause at 52.222-
50, which makes this prohibition a requirement in contracts. The FAR
does not contain any exceptions to this prohibition for a second
recruiting process. Paragraph (2) of the definition makes clear that
regardless of who actually collects the fee, if the fee is imposed in
association with the recruiting process, it is still a recruitment fee
under the definition. The Councils have reformatted paragraph (2) of
the definition for greater clarity. Paragraph (2)(v) of the definition
in the rule has been revised to add the phrase ``whether licensed or
unlicensed.'' The term subagent was not added, because the phrase
``collected by an employer or third party'' already covers subagents,
and the list of examples is meant to be illustrative and nonexhaustive,
with the phrase ``including, but not limited to.''
ii. ``Remitted in Connection With Recruitment''
Comment: One respondent stated that the term ``remitted in
connection with recruitment'' in paragraph (2) of the definition of
``recruitment fees'' is confusing and out of context with the remainder
of the paragraph, which describes varying types of payment or
remunerations that could be considered ``recruitment fees,'' but it has
no other clear meaning with respect to recruitment fees or is
duplicative or circular in its meaning, and should be stricken from the
definition.
Response: The phrase ``remitted in connection with recruitment''
has been deleted from the definition. This standard is adequately
covered in the introductory paragraph of the definition, i.e., that a
fee is considered a recruitment fee if it is associated with the
recruiting process.
3. Should the Definition of Recruitment Fee Vary Depending on--
a. Whether the job is a professional high-paying, high-skill job, or an
unskilled, low-paying job?
Comment: Numerous respondents supported a definition that does not
vary based on salary or skill level, and stated that attempting to
define different recruitment fees for different skill levels may create
loopholes that could be exploited by employers changing employee titles
and terminology.
One respondent commented that there are legitimate circumstances
where fees are appropriate, particularly when the laborer in question
is a professional,
[[Page 65470]]
white collar, or a highly-skilled worker who is well compensated for
his or her abilities.
Another respondent stated that fees associated with recruiting for
professional, highly-skilled jobs are treated the same as fees
associated with recruiting for low-skilled jobs, which may increase
costs and delays in providing professional, high-skilled workers to
contracting agencies. The concern was that the definition is so broad
that it may encompass not only the recruitment fees that are
trafficking-related, but also the myriad customary pre-qualifications
for professional employment that are not trafficking-related. For
example, a Federal agency's solicitation may include minimum
qualifications for professional positions, such as a security clearance
or a professional certification, or both. Applying the broad definition
of recruitment fee to include security clearances and professional
certifications may have the unintended consequence of interfering with
contractors' recruitment of professional employees, something the
Council explicitly stated it wanted to avoid. Therefore, the respondent
recommends that the definition exclude those costs and charges
associated with pre-conditions or pre-qualifications for professional,
highly-skilled labor.
One respondent stated that in terms of skill level, those needing
the protection seem to be the workers pursuing unskilled, low-paying
jobs; therefore, the definition should apply to them.
Response: The purpose of this rule is to provide a definition of
``recruitment fees'' in FAR subpart 22.17. Subpart 22.17 already
prohibits the charging of recruitment fees to employees. The final rule
does not include an exception for providing professional high-paying,
high-skilled jobs as it is outside the scope of this rule to address
exceptions. If a fee is associated with the recruiting process, it is a
recruitment fee, regardless of the industry or type of job.
b. Location of job?
Comment: Numerous respondents supported a definition that does not
vary based on location of the job. One respondent stated that in terms
of location, it is difficult to see where or why the definition should
change or vary, and while there are different approaches in some
countries, having a single approach is needed for effective and
efficient implementation.
Another respondent recommended that costs and charges associated
with pre-conditions or pre-qualifications for professional, highly-
skilled labor should be excluded from the definition when the
requirement relates directly to an underlying solicitation requirement
or when part of a recruitment effort is in the continental United
States, where the risk of trafficking in labor, particularly among the
professional workforce, is far lower.
Response: As explained in the response to comment 3.a., subpart
22.17 prohibits the charging of recruitment fees to employees. The
purpose of this rule is to provide a definition of ``recruitment
fees,'' not to create exceptions for when recruitment fees may be
charged, such as in certain locations. If a fee is associated with the
recruiting process, it is a recruitment fee, regardless of the location
of employment.
4. Are the Boundaries of the Proposed Definition Clear?
a. Definition Is Not Clear as to the Type of Fee Included
Comment: Many respondents stated that the current definition is not
clear. One respondent believed that the definition is ambiguous and can
be interpreted in dramatically different ways including being limitless
(comprising not only a fee that a recruiter or employer attempts to
charge to a job candidate or new employee, in exchange for access to a
job, but also any and all actual and legitimate costs associated with
the recruiting process). The respondent stated that another reasonable
and good faith interpretation of the proposed definition of
``recruitment fees'' is to read it as including only those fees (or
fees that are disguised as costs) that a recruiter or employer may
attempt to charge a job candidate that are on top of, or in addition
to, necessary and actual costs associated with recruitment. The
respondent noted that if the intent is to only include fees that a
recruiter or employer may attempt to charge a job candidate on top of,
or in addition to, legitimate and necessary costs associated with the
recruitment of employees, but also all underlying costs associated with
the recruiting process, they suggested that that intent should be more
clearly stated.
Response: See response to comment 2.a.iii.
b. Definition Should Include Additional Terms To Clarify
One respondent stated the definition is clear more or less but it
should note that prohibited fees include fees connected with the
``recruiting process and employment relationship'' in order to clarify
that the scope of the rule relates to more than just fees connected
with sourcing, recruitment, and hiring of the worker. This respondent
noted that there are other fees charged to the workers after the
commencement of employment that should also be prohibited.
Other respondents recommended that the definition make clear that
it covers fees charged by agents and/or officials in both origin and
destination countries as well as sometimes in transit countries. The
respondents also suggested, to make clearer that the definition
includes fees that may be gathered long after ``recruitment'' is over,
adding ``includes wage deductions and/or withholdings made by the end
employer'' after the phrase ``regardless of the manner of their
imposition or collection'' at the end of the sentence in paragraph (1)
of the definition.
Response: The definition has been revised to make clear that if a
fee is associated with the recruiting process, it is a recruitment fee.
Therefore, a fee that is charged during employment can be a recruitment
fee if it was associated with the recruiting process, regardless of
timing. An additional phrase regarding timing and location has been
inserted into the definition, as explained in response to comment
2.a.iv. In addition, see response to comment 7.g.
c. Definition Should Include a Statement of Principles
Comment: One respondent thought that it is important the definition
applies regardless of the manner of collection and the payee, and
referenced paragraph (2) of the proposed definition. The respondent
noted that the term ``recruitment'' can be very limiting and provide
opportunity for fees or costs to simply be renamed or classified in
another way, without further clarification in the rule. The respondent
suggested that a statement or set of principles might be helpful and
suggested the following: ``All fees, costs associated with recruitment,
hiring, on boarding, ongoing employment and end of employment and
return to home country,'' or ``Fees at any stage of the recruitment
process; during or after employment,'' or ``All fees incurred once an
offer has been made or accepted.''
Response: Noted. The final definition retains paragraph (2). The
definition has a statement of principles that a recruitment fee is any
fee that is associated with the recruiting process. The definition has
been revised to insert the phrase ``regardless of the time, manner, or
location'' to make clear that all fees that are imposed in association
with the recruitment process are captured by the definition, as
explained
[[Page 65471]]
in the responses to comments 2.a.iv. and 4.b.
d. Definition Should Include a Time Cut-Off
Comment: One respondent stated the boundaries of the proposed rule
are clear, but it would be clearer to use a time cut-off (for example,
the stage at which a candidate is provisionally selected for the role)
as a point at which recruitment costs should be covered. It suggested
that contractors should not be put in a position where they are
required to reimburse potential employees for the incidental unknown
costs of submitting their initial application or attending the initial
interview. This respondent suggested that a time-cutoff would need to
be carefully defined so that it couldn't be used as a loophole to
charge fees to the candidates. It stated that all costs directly
associated with selection such as skills testing, medical assessment,
qualifications verification, security clearance, etc. should always be
included in the recruitment fee and therefore not charged to the
candidate.
Response: The definition in the final rule has been amended to
include the phrase ``regardless of the time, manner, or location of
imposition or collection of the fee.'' The timing of the fees is not
relevant to the question of whether or not a fee is a recruitment fee
since the operative standard is whether the fees are associated with
the recruiting process, even if imposed or collected later in time, as
explained in the response to comment 2.a.iv.
5. As a general matter, is the illustrative list of recruitment fees
helpful in understanding what costs an employee may not be charged? If
not, why?
Comment: Many of the respondents noted that although they were in
support of an illustrative list of recruitment fees to serve as
examples, they recommended that the regulation also adopt a
functionalist approach and prohibit economic arrangements that make
workers more vulnerable to coercion. One respondent was in support of
an illustrative list of recruitment fees, but thought that the list was
under inclusive.
Two respondents were supportive but thought that guiding principles
would be helpful to add, and noted as a justification, that terminology
may differ by industry or region of the world. One respondent cautioned
against only putting forth an enumerated list without language
suggesting that the list could be more expansive.
One respondent recommended eliminating a list and including a
standard of either recruitment fees or fees that have fraudulent
intent. Another respondent supported a list, but cautioned that it
shouldn't be seen as an exhaustive list and suggested that there should
not be fees or costs charged of any kind to the employee, directly or
indirectly.
Response: The definition has been revised to make clear that the
introductory paragraph provides the standard for defining ``recruitment
fees.'' The definition adopts a ``functionalist approach'' using the
phrases ``any type of fees, including charges, costs, assessments, or
other financial obligations,'' ``associated with the recruiting
process,'' and ``regardless of the time, manner, or location of
imposition or collection of the fee.'' The phrase ``associated with the
recruiting process'' is the principal concept in the definition of
``recruitment fees.''
All fees meeting this definition, i.e., associated with the
recruitment process, are recruitment fees whether or not the fees are
included as examples in paragraph (1) of the definition. The definition
also captures indirect fees by noting that any fee associated with the
recruiting process is a recruitment fee regardless of the timing of it,
the type of fee, how it is paid, or to whom it is paid. In addition,
any fee that is associated with the recruiting process is captured by
the definition, whether or not there was fraudulent intent, as
explained in the response to comment 2.a.iii.
6. What, if any, of the specifically enumerated fees in the proposed
definition should be excluded or otherwise modified?
Comment: Many of the respondents recommended keeping all of the
types of fees enumerated.
Response: The majority of the enumerated fees in the proposed rule
are retained in the final rule. Specific modifications are discussed in
the following paragraphs.
a. For Soliciting, Identifying, Considering, Interviewing, Referring,
Retaining, Transferring, Selecting, Testing, Training, Providing New-
Hire Orientation, Recommending, or Placing Employees or Potential
Employees
Comment: Many of the respondents expressed support for all of the
items. One respondent recommended specifying the parameters of training
to include courses recruiters lead victims to believe they need,
regardless of whether the training is mandatory. Another respondent
suggested eliminating the word ``transferring'' for the reason that
physical transfers should be covered in transportation.
Response: These remain covered by the rule. ``Training'' captures
legitimate and illegitimate training associated with the recruiting
process, if the fee is charged to the worker for training. The term
``transferring'' is not entirely duplicative of the word
``transportation'' and, therefore, is retained. For example, should
workers be charged a ``transfer'' fee for changing hands from one
recruiter to another recruiter, that would be a cost associated with
the recruiting process.
b. For Covering the Cost, in Whole or in Part, of Advertising
Comment: Many respondents supported keeping this language in the
definition.
Response: The rule captures this in paragraph (1)(ii) of the
definition, but the language has been streamlined.
c. For Any Activity Related to Obtaining Permanent or Temporary Labor
Certification
Comment: Many respondents expressed support for this. One
respondent suggested removing ``any activity related to'' and adding
``passport, visa, identification documents.''
Response: The Councils removed ``any activity related to'' and
replaced it with ``including any associated fees.'' The rule captures
passports, visas, and identity documents in paragraph (1)(iii), (1)(v),
and (1)(vi) in the definition.
d. For Processing Petitions
Comment: Many respondents expressed support for processing
petitions.
Response: This is retained in the final rule at paragraph (1)(iv)
in the definition.
e. For Visas and Any Fee That Facilitates an Employee Obtaining a Visa
Such as Appointment and Application Fees
Comment: Many respondents expressed support for this. One
respondent recommended that F-1 visa fees be exempt because the primary
purpose of the F-1 visa is to study at an academic institution, and not
employment.
Response: Noted. If the fee for a visa is one that is associated
with the recruiting process for employment, then it falls under the
definition and is prohibited.
f. For Government-Mandated Costs, Such as Border Crossing Fees
Comment: Many respondents supported inclusion. Two respondents
referenced the private sector Electronic
[[Page 65472]]
Industry Citizenship coalition (EICC) Code of Conduct Interpretive
Guidance, which includes border crossing fees.
Response: Noted. Border crossing fees are listed in the definition
as an example of a recruitment fee in paragraph (1)(x) of the
definition.
g. For Procuring Photographs and Identity Documentation, Including Any
Nongovernmental Passport Fees
Comment: Many respondents recommended keeping this. Two respondents
commented that the inclusion of fees ``for procuring photographs and
identity documentation, including any nongovernmental passport fees''
added confusion to the definition of ``recruitment fees.'' Two
respondents referenced the private sector EICC Code of Conduct, which
prohibits charging workers the costs associated with documentation such
as new passports and identity documents, as instructive.
Response: Noted. The definition provides that recruitment fees
include fees for ``acquiring photographs and identity or immigration
documents, such as passports, including any associated fees'' that are
associated with the recruiting process.
Comment: One respondent provided a general comment that the
inclusion of paragraph (1)(vii) fees ``for procuring photographs and
identity documentation, including any nongovernmental passport fees''
in the definition of ``recruitment fees'' ``adds confusion and implies
that it is not allowed to require provision of an identity card for
employment.''
Response: The Councils do not agree that the definition implies
that an employer cannot require a job applicant to provide a form of
valid identification as part of the application process. The FAR
already has the prohibition on charging employees recruitment fees.
Therefore, an employer, as part of the recruiting process, cannot
charge or seek reimbursement from an employee or applicant for fees
associated with acquiring photographs and identity or immigration
documents.
Comment: Using the example of requiring a job candidate to possess
a passport or other identity document, one respondent offered two
different interpretations of the definition--one which, in addition to
disguised costs, ``does not include the actual cost of the passport''
and one which, in addition to disguised fees or costs, ``also includes
the actual cost of the passport, to be paid to the appropriate
government agency in the job candidate's home country.''
Response: In an effort to clarify the ambiguity surrounding this
example of what is considered a recruitment fee, the Councils revised
the definition to include fees for ``Acquiring photographs and identity
or immigration documents, such as passports, including any associated
fees.'' (See paragraph (1)(vi) in the definition). This does not imply
that an employer cannot require an applicant to possess a valid form of
identification when applying for a job. The regulation does, however,
restrict an employer or its agents from directly charging an employee
for these items when associated with the recruiting process. The
essential element is that the worker is not required to pay the
employer, labor recruiter, or any agent of the employer for these
expenses. For example, an employer cannot charge a new hire employee
for a new passport required for the position.
Comment: In direct response to the Councils' question, one
respondent stated that, ``de minimis expenses such as the fee for a
passport photo (without any markup) can be borne by the worker.''
Similarly, one respondent recommended ``removing this clause as these
are small cost incidentals which should be the responsibility of the
worker.''
Response: The final definition does not quantify the extent of the
fees when it provides that a recruitment fee is any fee that is
``associated with the recruiting process.'' The underlying FAR rule
prohibits the charging of recruitment fees to employees. The purpose of
this rule is to provide a definition of ``recruitment fees'', not to
create exceptions for when recruitment fees may be charged. Therefore,
the final definition does not contain a de minimis exception to the
prohibition on charging employees when a fee is ``associated with the
recruiting process.''
Comment: One respondent stated that ``the proposed definition
requires that fees be paid by employers even when those fees are
permitted by federal immigration law to be borne by the employee . . .
.'' The respondent asserted that the proposed rule is ambiguous as
written and, by way of example, cited a scenario in which ``a worker
chooses on his/her own accord to pay for their passport photos and
obtain their passport so they can make themselves a more attractive
employment prospect for a job in the U.S.'' In this scenario, the
respondent asserts that the employer's obligation is uncertain.
Similarly, another respondent stated that ``voluntary renewal of one's
own passport, including the cost of obtaining new photographs, and
payment for replacement of a lost passport or visa'' should not be
treated as prohibited recruitment fees.
Response: Recruitment fees include costs to acquire photographs and
identity or immigration documents such as passports, which are
associated with the recruiting process. Were there to be a situation of
an individual who is not involved with a recruiting process but chooses
to acquire a passport, such fees not associated with the recruiting
process would not fall under the definition. Similarly, renewal of a
passport if for leisure travels, for example, and not associated with a
recruiting process, would not fall under the definition.
h. Charged as a Condition of Access to the Job Opportunity, Including
Procuring Medical Examinations and Immunizations and Obtaining
Background, Reference and Security Clearance Checks and Examinations;
Additional Certifications
Comment: One respondent supports inclusion of these fees. Another
respondent proposed that the FAR Councils break paragraph (1)(viii)
into two separate subparagraphs with the first paragraph as ``For the
cost of procuring medical examinations and immunizations and obtaining
background, reference and security clearance checks and examinations;
``additional certifications'' and the second paragraph as ``Charged as
a condition of access to the job opportunity by any entity enumerated
in paragraph (2) below, and/or for any reason listed in this section.''
Response: Fees that are charged as a condition of access to the job
opportunity, and are associated with the recruiting process, are
captured under this definition. It is deemed unnecessary to make the
other requested change.
Comment: One respondent listed the practice of requiring job
candidates to demonstrate a successful medical pre-screening in order
to be eligible to apply for an open position as another example of a
legitimate cost the respondent thought should be paid by the candidate.
The respondent offered two different interpretations of the rule as
presently drafted. The first interpretation excluded the actual cost of
the medical screening from the definition of ``recruitment fees'' and
the second interpretation included the actual cost of the medical exam
in the definition of proscribed fees. As with the previous section, the
respondent recommended that subsection (1)(viii) be excluded from the
definition or clarified.
[[Page 65473]]
Response: Regarding medical screening, if the medical screening is
associated with the recruiting process, it falls under this definition
and is a recruitment fee, along with any associated fees.
Comment: One respondent expressed concern that the proposed
definition including fees or costs ``charged as a condition of access
to the job opportunity,'' along with the catch-all phrase ``additional
certifications,'' could encompass any pre-condition or pre-
qualification requirement for professional, high-skill positions--
including educational or license requirements. The respondent expressed
concern that this definition would include ``customary pre-
qualifications for professional employment'' that are not typically
associated with human trafficking (e.g., holding a security clearance
or professional certification such as Project Management Professional).
Response: This rule provides a definition of recruitment fees. The
underlying FAR rule prohibits the charging of recruitment fees to
employees. The purpose of this rule is to provide a definition of
``recruitment fees,'' not to create exceptions for when recruitment
fees may be charged. The standard is whether the fee is associated with
the recruiting process. If the certification is being charged in order
to access the job opportunity and is associated with the recruiting
process, then it is a recruitment fee. If degrees or certifications are
obtained outside of any recruiting process, such as professional
certifications earned years earlier in school, then they would not meet
the standard of ``associated with the recruiting process'' (see
response to comment 7.o.).
i. For an Employer's Recruiters, Agents or Attorneys, or Other Notary
or Legal Fees
Comment: Many respondents support inclusion of these fees.
Response: Noted.
j. For Language Interpreters or Translators
There were no specific comments in response to this item, apart
from the respondents expressing general support for each of the
enumerated fees.
7. What, if any, fees not included in the proposed definition
should be added?
a. Submitting Applications, Making Recommendations, Recruiting,
Reserving, Committing, Soliciting, Identifying, Considering,
Interviewing, Referring, Retaining, Transferring, Selection, or Placing
Potential Job Applicants
Comment: Many respondents specifically supported including these
fees.
Response: The final definition captures each of these fees, whether
or not specifically mentioned, to the extent they are fees associated
with the recruiting process. Of the five types of fees not listed
already in the definition in the proposed rule at paragraph (1)(i)--
i.e., ``submitting applications, making recommendations, recruiting,
reserving, committing''--four of them are already captured as fees
``associated with the recruiting process'' and by the language in
paragraph (1)(i). Fees for ``submitting applications'' are captured by
the language in paragraph (1)(iv) and have been added to the final
definition for greater clarity to that paragraph.
b. Labor Broker Services, Both One Time and Recurring
Comment: Several respondents supported including these fees. One
respondent noted that the fees should be paid by the employer.
Response: The final definition makes clear that it encompasses fees
for ``labor broker services'' by referencing fees ``collected by an
employer or third party,'' including agents, recruiters, labor brokers,
staffing firms, and subcontractors, among other entities, in paragraph
(2). Further, temporal issues and recurrence are addressed by the
insertion in paragraph (1) of the language ``regardless of the time,
manner, or location of imposition or collection of the fee.''
c. Exit Clearances, and Security Clearances Associated With Visas
Comment: Several respondents supported including these fees.
Another respondent suggested adding ``and nongovernmental passport
fees'' after ``For visas.''
Response: The final definition includes these fees by referencing
``government-mandated fees'' at paragraph (1)(x) and fees associated
with acquiring visas at paragraph (1)(v).
d. Sending, Transit, and Receiving Country Government-Mandated Fees,
Levies, and Insurance
Comment: Numerous respondents supported including these fees.
Response: Government-mandated fees and levies are included in the
final definition at paragraph (1)(x). Insurance is addressed under
section 7.m. of these comments.
e. Pre-Employment Medical Examinations or Vaccinations in the Sending
Country
Comment: One respondent supported including these fees.
Response: The definition in the proposed rule included these fees
at paragraph (1)(viii), and the final definition includes these fees at
paragraph (1)(vii). The final definition also addresses questions
regarding location of fees charged or paid including in countries of
origin, countries of transit, and countries of performance or
``receiving countries'' in paragraph (1) as the definition states that
it is a fee that is associated with the recruiting process ``regardless
of the time, manner, or location of imposition or collection of the
fee.''
f. Receiving Country Medical Examinations
Comment: One respondent supported including these fees.
Response: The final definition includes these fees at paragraph
(1)(vii). The final definition also addresses questions regarding
location of fees charged or paid including in countries of origin,
countries of transit, and countries of performance or ``receiving
countries'' in paragraph (1) as the definition states that it is a fee
that is associated with the recruiting process ``regardless of the
time, manner, or location of imposition or collection of the fee.''
g. Transportation and Subsistence Costs While in Transit, Including,
But Not Limited to, Airfare or Costs of Other Modes of International
Transportation, Terminal Fees, and Travel Taxes Associated With Travel
From Sending Country to Receiving Country and the Return Journey at the
End of the Contract
Comment: Numerous respondents supported including transportation
fees.
Response: The final definition includes these fees at paragraph
(1)(xi). Costs imposed on workers in association with the recruiting
process, for travel from the country of origin to the country of
performance, and the return journey, are included in the final
definition for clarity as to the transportation costs. For example,
while a worker is being recruited, if a worker is made to pay a lump
sum for a return ticket and a destination ticket, that cost would fall
under the final definition. This is distinct from the affirmative
obligation to provide or cover the costs of return transportation at
FAR 22.1703(a)(7).
[[Page 65474]]
h. Transportation and Subsistence Costs From the Airport or
Disembarkation Point to the Worksite
Comment: Numerous respondents supported including transportation
costs.
Response: See response to comment 7.g.
i. Security Deposits and Bonds
Comment: Many respondents supported including security deposits and
bonds. One respondent noted that security deposits and bonds are
similar to collateral requirements and can be used to keep workers in
debt bondage.
Response: Noted. The definition includes these fees at paragraph
(1)(xii) in the definition.
j. The Inclusion of a Collateral Requirement, Such as Land Deeds, in
Contracts
Comment: Two respondents supported including collateral
requirements. One respondent noted that anytime a worker is required to
offer something of value as collateral it leaves the worker vulnerable
to forced labor.
Response: The final definition encompasses collateral requirements
in paragraph 1 by including ``other financial obligations'' and in
paragraph (2)(i) in the definition by referring to fees ``paid in
property or money.'' In addition, paragraph (1)(xii) in the definition
prohibits fees charged for security deposits and bonds which, like
other forms of collateral, are held to prevent or dissuade employees
from leaving the job.
k. Contract Breach Fees
Comment: Many respondents supported including contract breach fees.
Many respondents noted that breach fees are designed to cover the costs
of recruitment expenses borne by the employer or recruiter or to
compensate the employer or recruiter for forgone profits. This
respondent suggested that breach fees are actually recruitment fees in
another form--instead of being paid upfront they are delayed until the
termination of employment. They also noted that using these fees to
compensate employers or recruiters for lost profits should not be a
cost borne by the employee, and that breach fees increase the relative
power of employers and recruiters over employees.
Response: The term ``contract breach fee'' is not specifically
included in the final definition. However, if the fee is associated
with the recruiting process, regardless of when the fee is charged or
what it is called, it falls under the definition in the final rule. The
practices described by respondents' concern fees charged to the
employee to cover the costs of recruitment. Therefore, such fees are
prohibited, regardless of when the fee to the employee is charged.
Employers are prohibited from charging employees any fee, including
when called a ``contract breach fee,'' if the fee is associated with
the recruiting process.
l. An Employer's Recruiters, Agents or Attorneys, or Other Notary or
Legal Fees
Comment: Several respondents supported including these fees.
Response: The definition in the proposed rule included these fees
at paragraph (1)(ix) and definition includes them at paragraph
(1)(viii).
m. Insurance
Comment: Numerous respondents supported including insurance. One
respondent suggested that the language should read, ``any associated
insurance costs over and above those mandated by governments''.
Another respondent suggested the language, ``all insurance fees,
including, but not limited to health, medical, and dental insurance.''
One respondent noted that insurance could be used fraudulently and
cited one case in which the victim made the trafficker the beneficiary
of her work life insurance, because the trafficker told the beneficiary
that she could not put a family member down. The trafficker promised to
send the money to the victim's family should anything ever happen to
her.
Response: A fee to purchase insurance, in association with the
recruiting process, is included under (1)(xii) of the definition. This
does not include a situation where an employee purchases insurance
separate and apart from the recruiting process, such as if an employee
who has been employed by a company, chooses to start purchasing dental
insurance.
n. Contributions to Worker Welfare Funds or Government Provided
Benefits in Sending Countries Required to be Paid by Suppliers
Comment: Two respondents supported including these fees.
Response: The definition encompasses these fees under paragraph
(1)(x), which prohibits charging workers for government-mandated fees.
o. Other
Comment: One respondent suggested including ``providing advice''
and ``arranging for travel and/or accompanying the applicant on that
travel,'' noting that recruiters often make employees who have never
traveled abroad feel that this is a service they need to pay for.
Response: The final definition includes these fees at (1)(ix).
Comment: One respondent suggested including ``any activity related
to labor procurement'' and noted that recruiters often charge workers
for a variety of costs incurred in the duration of the recruiting
process.
Response: The standard is whether the ``charges, costs,
assessments, or other financial obligations'' are ``associated with the
recruiting process.'' Paragraph (1) of the definition lists examples
for further clarity incorporating more examples than in the proposed
rule. However, the list is not intended to be exhaustive and other fees
not listed are recruitment fees if they are ``associated with the
recruiting process.''
Comment: One respondent suggested including bribes and kickback
payments made by an employer or any of its agents.
Response: These fees were included in the proposed definition and
are included in the definition in the final rule at paragraph (2)(iv).
Comment: Many respondents suggested including fees that relate to
pre-departure training or ``onboarding fees'' such as skills tests,
additional certifications beyond those required for job eligibility,
and pre-departure orientation.
Response: As noted above, fees for certifications for accessing the
job opportunity are listed in (1)(vii) of the definition as an example
of a recruitment fee, if the fee is charged in association with the
recruiting process, without regard to the question of eligibility. If
degrees or certifications are obtained outside of any recruiting
process, such as professional certifications earned years earlier in
school, then they would not meet the standard of ``associated with the
recruiting process.'' In contrast, if for example, workers are asked to
pay a fee, while they are being recruited, to take a language course or
obtain a certification from the employer in the specific skill set of
their job, those costs would be associated with the recruiting process.
Fees for skills testing and orientation are included in the definition
as examples in paragraph (1)(i).
Comment: One respondent suggested including fees that would be
charged to the worker for equipment, such as laptop computers.
Response: Paragraph (1)(xiii) of the definition lists equipment
charges as an
[[Page 65475]]
example of a cost that can be associated with the recruiting process.
Comment: One respondent suggested adding ``or of any activity
related to labor procurement.'' Another respondent suggested adding
``and overhead.''
Response: Overhead costs are included generally in the examples in
paragraph (1)(i) of the definition. Regarding activities related to
labor procurement, the language has been streamlined to make clear that
the definition captures fees for activities associated with the
recruiting process.
Comment: Two respondents suggested including ``ongoing fees.'' One
respondent noted that some countries allow labor brokers to deduct
recruitment fees from workers' paychecks on an ongoing basis.
Response: The definition in the final rule addresses the temporal
aspect of fees charged in the introduction paragraph as it includes
fees ``associated with the recruiting process, regardless of the time,
manner, or location of imposition or collection of the fee.''
8. Need for Advanced Notice of Proposed Rulemaking
Comment: One respondent stated that the proposed rule contains an
extensive list of questions to public respondents and feels that these
questions should have been addressed through information collection and
research prior to issuing it as a proposed rule. The respondent
recommended that research should have been done in the ``Early
Engagement Opportunity'' that closed in March 2015. An advanced notice
of proposed rulemaking would have been more appropriate than the
``Early Engagement Opportunity.'' According to the respondent, the
proposed definition places on the public the onus to conduct analysis
and provide information that the Councils should have addressed before
issuing the proposed rule.
Response: The ``Early Engagement Opportunity'' promoted substantive
public input early in the process, similar to what might have been
solicited through an advanced notice of proposed rulemaking. Asking
questions in the preamble to the proposed rule did not put an unfair
burden on the public, but provided the public an opportunity to provide
input on the proposed rule and potential alternatives to the rule.
9. Economic Analysis of Benefits and Costs Under Executive Order 12866
Comment: One respondent stated that the proposed rule is designated
a ``significant'' rulemaking and is subject to Office of Information
and Regulatory Affairs (OIRA) review. The respondent stated that the
Councils have not conducted any economic analysis of benefits and costs
under Executive Order's 12866 and 13563. The respondent further stated
that the proposed rule does not provide either quantitative or
qualitative assessment of alternatives. The respondent noted that
Executive Order 12866 requires the agencies to consider the alternative
of no regulation. According to the respondent, a simple survey of
potentially affected contractors would have provided useful data
regarding the extent to which different types of charges to employees
are made and could have informed assessment of the incidence and
severity of impacts of including or excluding certain types of charges
under the definition.
Response: As detailed further in section IV, DoD, GSA, and NASA
have concluded that there is a regulatory cost impact associated with
this final rule.
The ``Early Engagement Opportunity'' and the proposed rule provided
opportunity for the public, including potentially affected contractors,
to provide data on the potential impact of the rule. The questions
asked in the preamble identified some of the alternatives that the
Councils were considering, and specifically requested comment on these
alternatives.
The alternative of ``no regulation'' is not helpful, because the
FAR already prohibits the charging of recruitment fees to employees or
potential employees per the E.O. and the final rule (FAR Case 2013-001)
published in 2015 in the Federal Register at 80 FR 4967. This rule is
meant to clarify the 2015 rule by identifying the types of expenses
that are considered to be recruitment fees for purposes of the
prohibition (e.g., fees for processing applications, fees for acquiring
visas). Leaving the term undefined will perpetuate inconsistent
interpretation and enforcement of the FAR requirement.
10. Comments Regarding the Initial Regulatory Flexibility Analysis
Under Executive Order 13563
For comments and responses relating to the initial regulatory
flexibility analysis, see section VII of this preamble.
11. Issues Outside the Scope of the Current Rule
Comment: One respondent raised the issue of providing workers, in
their home country, with a contract in a language that workers
understand that specifies certain working terms. The respondent also
suggested that receiving companies should keep notarized documents
certifying that they have paid recruiters all recruiting fees and
receipts of such, and should compensate workers who paid any
recruitment fees.
Response: These issues are outside the scope of a definition for
the term ``recruitment fees.'' Additionally, the FAR already contains,
at 22.1703(a)(5)(i), the requirement that contractors, contractor
employees, subcontractors, and subcontractor employees, and their
agents not use ``misleading or fraudulent practices during the
recruitment of employees or offering of employment, such as failing to
disclose, in a format and language accessible to the worker, basic
information.''
Comment: One respondent stated that from a practical standpoint the
proposed rule as currently written fails to provide guidance or
direction on several issues that frequently arise for contractors
performing work overseas. The respondent thought that the scope of the
contractor's obligation is currently unclear as it relates to the
utilization of employment websites. This respondent stated that it
isn't uncommon for companies to utilize commercial or local employment
websites to identify potential job candidates and thought that under
the proposed rule it isn't clear who has the obligation to vet those
websites. The respondent suggested including guidance in the rule
related to this type of situation would be very helpful so that
contractors fully understand their obligations.
Response: These issues are out of the scope of the definition of
``recruitment fees.''
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule does not affect the applicability of FAR clause 52.222-
50, Combating Trafficking in Persons. Pursuant to 41 U.S.C. 1905 and
1906, the FAR Council signed determinations on January 20, 2015, that
Title XVII of the NDAA for FY 2013 (as implemented in FAR clause
52.222-50), should apply to contracts and subcontracts in amounts not
greater than the simplified acquisition threshold, except for the
requirement for certification and a compliance plan; and the
acquisition of commercial items (other than commercially available off-
the-shelf items). Likewise, pursuant to 41 U.S.C. 1907, the
Administrator for Federal Procurement Policy signed a determination on
the same date that
[[Page 65476]]
Title XVII of the NDAA for FY 2013 (as implemented in FAR clause
52.222-50), should apply to contracts for the acquisition of
commercially available off-the-shelf items, except for the requirement
for a compliance plan and certification.
IV. Expected Cost Impact to the Public
DoD, GSA, and NASA have concluded that there is a regulatory cost
impact associated with this final rule. However, as explained in this
section, some costs associated with the rule are difficult to quantify.
Since 2015, FAR 22.1703(a)(6) and the associated clause at FAR
52.222-50(b)(6) have prohibited Government contractors from charging
their employees recruitment fees. This prohibition was published in a
final rule (FAR Case 2013-001) to implement Title XVII of the NDAA for
FY 2013 and E.O. 13627, Strengthening Protections Against Trafficking
in Persons in Federal Contracts, dated September 25, 2012. The
prohibition took effect on March 2, 2015 (80 FR 4967). The prohibition
did not prevent contractors from charging fees for recruitment
services; it simply precluded such fees from being charged to
prospective or actual employees on Government contracts or
subcontracts. To the extent these fees were being paid by employees,
the rule effectively shifted these costs so that they are borne by
contractors that have hired the recruiters or to the contractors
themselves (if they are handling recruitment activities in-house).
This rule clarifies the 2015 rule by identifying the types of
expenses that are considered to be recruitment fees for purposes of the
prohibition (e.g., fees for processing applications, fees for acquiring
visas). Similar to the 2015 rule, this rule does not prohibit the
entity performing recruitment from charging for its services; it only
protects prospective or actual contract and subcontract employees from
having to bear the costs. It is possible, if not likely, that some
contractors will be required to pay higher costs to recruiters as they
switch from unethical to ethical recruitment companies. However, no
assertion of such higher costs were made by the commenters in response
to this rulemaking, presumably because contractors have already been
taking action to eliminate unethical recruitment companies from their
supply chains as a result of the recruitment fee prohibitions that went
into effect in 2015.
Equally important, this final rule does not change FAR rules
addressing the allowability of costs in FAR Part 31--meaning the rules
governing what recruitment costs may be otherwise reimbursed to a prime
contractor remain unchanged.
Because the FAR did not originally provide a definition of
``recruitment fees,'' there has been some disparity in the
interpretation of what constitutes a recruitment fee. For this reason,
DoD, GSA and NASA are unable to quantify the net change in burden due
to the addition of the definition.
DoD, GSA, and NASA have calculated the cost of regulatory
familiarization with the new definition, based on FPDS data for FY
2017, estimating that for the first year 89,565 entities will be
subject to the prohibition, 30 minutes per entity; and due to turnover
and new entrants, 20 percent of that amount in subsequent years. The
estimated public cost for familiarization, calculated in 2016 dollars
at a 7 percent discount rate in perpetuity is as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
Annualized................................ $.8 million.
Present Value............................. $11.9 million.
Annualized Value Costs as of 2016 if Year $.7 million.
1 is 2019.
------------------------------------------------------------------------
V. Executive Orders 12866 and 13563
E.O.s 12866 and 13563 direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). E.O. 13563 emphasizes the
importance of quantifying both costs and benefits, of reducing costs,
of harmonizing rules, and of promoting flexibility. This is a
significant regulatory action and, therefore, was subject to review
under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated
September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
VI. Executive Order 13771
This final rule is considered an E.O. 13771 regulatory action. The
total estimated annualized cost of this rule will be $.8 million (with
a total present value of $11.9 million). The annualized value as of
2016 if year 1 is 2019 is $.7 million. More details on the costs
associated with this rule can be found in the expected cost impact
section of this preamble (section IV).
VII. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a final regulatory flexibility
analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
The purpose of this final rule is to provide a standard
definition of ``recruitment fees'' in order to clarify how the
Government treats this prohibited practice associated with labor
trafficking on Government contracts.
The objective of this final rule is to clarify the types of
charges and fees that contractors, subcontractors, and their
employees or agents are prohibited from charging to employees or
potential employees, under the Government policy on combating
trafficking in persons.
One respondent submitted the following comment on the initial
regulatory flexibility analysis published in the proposed rule:
Comment: According to the respondent, the initial regulatory
flexibility analysis of the impact on small entities is without
meaningful content. The respondent stated that such a pre-proposal
research survey as recommended for the cost benefit analysis could
have also provided the data those agencies cited as needed, but
missing, for analysis of small business impacts under the Regulatory
Flexibility Act.
Response: The initial regulatory flexibility analysis laid out
the number of small entities that could potentially be affected, and
how they could be impacted by this rule. DoD, GSA, and NASA invited
comments from small business concerns and other interested parties
on the expected impact of the rule on small entities. As noted, only
one respondent raised this concern. While the anticipated costs
associated with this rule are difficult to quantify, Section IV,
above, provides an overview of cost estimates. The Councils
anticipate that any such impact will be outweighed by the expected
benefits of this rule.
This final rule will apply to all entities, whether small or
other than small, that are contractors or subcontractors on U.S.
Government contracts. As of 2018, there were about 450,000 active
registrants in the System for Award Management (SAM). Approximately
75 percent of those registrants (338,000) certified to meeting the
size standard as small for their primary NAICS code. However, there
would be no actual impact from this rule unless the small entity was
planning to charge or allow another entity acting on their behalf to
charge, a recruitment fee to an employee or potential employee,
which is already prohibited under FAR clause 52.222-50, Combating
Trafficking in Persons. There is no data available to estimate this
impact. Further, for the definition of ``small business,'' the
Regulatory Flexibility Act refers to the Small Business Act, which
in turn allows the U.S. Small Business Administration (SBA)
Administrator to specify detailed definitions or standards (5 U.S.C.
601(3) and 15 U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105
discuss who is a small business: ``(a)(1) Except for small
agricultural cooperatives, a business concern eligible for
assistance from SBA as a small business is a business entity
organized for profit, with a place of business located in the United
States, and which operates primarily within the United States or
which makes a significant contribution to the U.S. economy through
payment of taxes or use of American
[[Page 65477]]
products, materials or labor.'' Therefore, this final regulatory
flexibility analysis does not need to address impact on foreign
small entities with Government contracts or subcontracts that are
not small businesses as defined by the Small Business Act.
There were no significant alternatives identified that would
meet the objective of the rule.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat Division. The Regulatory Secretariat has
submitted a copy of the FRFA to the Chief Counsel for Advocacy of the
Small Business Administration.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies.
Although there are information collection requirements associated with
FAR 52.222-50 and FAR 52.222-56 (OMB Control Number 9000-0188, which
has been extended to September 30, 2021), this case does not impact the
information collection requirement, because it just adds a definition
of ``recruitment fees'' to FAR 52.222-50.
List of Subjects in 48 CFR Parts 22 and 52
Government procurement.
Dated: December 10, 2018.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA and NASA are issuing a final rule amending 48
CFR parts 22 and 52 as set forth below:
0
1. The authority citation for parts 22 and 52 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
0
2. Amend section 22.1702 by adding, in alphabetical order, the
definition ``Recruitment fees'' to read as follows:
22.1702 Definitions.
* * * * *
Recruitment fees means fees of any type, including charges, costs,
assessments, or other financial obligations, that are associated with
the recruiting process, regardless of the time, manner, or location of
imposition or collection of the fee.
(1) Recruitment fees include, but are not limited to, the following
fees (when they are associated with the recruiting process) for--
(i) Soliciting, identifying, considering, interviewing, referring,
retaining, transferring, selecting, training, providing orientation to,
skills testing, recommending, or placing employees or potential
employees;
(ii) Advertising;
(iii) Obtaining permanent or temporary labor certification,
including any associated fees;
(iv) Processing applications and petitions;
(v) Acquiring visas, including any associated fees;
(vi) Acquiring photographs and identity or immigration documents,
such as passports, including any associated fees;
(vii) Accessing the job opportunity, including required medical
examinations and immunizations; background, reference, and security
clearance checks and examinations; and additional certifications;
(viii) An employer's recruiters, agents or attorneys, or other
notary or legal fees;
(ix) Language interpretation or translation, arranging for or
accompanying on travel, or providing other advice to employees or
potential employees;
(x) Government-mandated fees, such as border crossing fees, levies,
or worker welfare funds;
(xi) Transportation and subsistence costs--
(A) While in transit, including, but not limited to, airfare or
costs of other modes of transportation, terminal fees, and travel taxes
associated with travel from the country of origin to the country of
performance and the return journey upon the end of employment; and
(B) From the airport or disembarkation point to the worksite;
(xii) Security deposits, bonds, and insurance; and
(xiii) Equipment charges.
(2) A recruitment fee, as described in the introductory text of
this definition, is a recruitment fee, regardless of whether the
payment is--
(i) Paid in property or money;
(ii) Deducted from wages;
(iii) Paid back in wage or benefit concessions;
(iv) Paid back as a kickback, bribe, in-kind payment, free labor,
tip, or tribute; or
(v) Collected by an employer or a third party, whether licensed or
unlicensed, including, but not limited to--
(A) Agents;
(B) Labor brokers;
(C) Recruiters;
(D) Staffing firms (including private employment and placement
firms);
(E) Subsidiaries/affiliates of the employer;
(F) Any agent or employee of such entities; and
(G) Subcontractors at all tiers.
* * * * *
0
3. Amend section 22.1703 by--
0
a. Revising paragraph (a)(5)(i); and
0
b. Removing from paragraph (a)(6) ``employees'' and adding ``employees
or potential employees'' in its place.
The revisions read as follows:
22.1703 Policy.
* * * * *
(a) * * *
(5)(i) Using misleading or fraudulent practices during the
recruitment of employees or offering of employment, such as failing to
disclose, in a format and language understood by the employee or
potential employee, basic information or making material
misrepresentations during the recruitment of employees regarding the
key terms and conditions of employment, including wages and fringe
benefits, the location of work, the living conditions, housing and
associated costs (if employer or agent provided or arranged), any
significant costs to be charged to the employee or potential employee,
and, if applicable, the hazardous nature of the work;
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Amend section 52.212-5 by--
0
a. Revising the date of the clause and paragraphs (b)(33)(i) and
(e)(1)(xiii)(A); and
0
b. In the Alternate II, revising the date and paragraph
(e)(1)(ii)(K)(1).
The revisions read as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Items (JAN 2019)
* * * * *
(b) * * *
* * * * *
_ (33)(i) 52.222-50, Combating Trafficking in Persons (JAN 2019)
(22 U.S.C. chapter 78 and E.O. 13627).
* * * * *
(e)(1) * * *
(i) * * *
(xiii) * * *
_ (A) 52.222-50, Combating Trafficking in Persons (JAN 2019) (22
U.S.C. chapter 78 and E.O. 13627).
* * * * *
Alternate II (JAN 2019). * * *
* * * * *
[[Page 65478]]
(e)(1) * * *
(ii) * * *
(K) _ (1) 52.222-50, Combating Trafficking in Persons (JAN 2019)
(22 U.S.C. chapter 78 and E.O. 13627).
* * * * *
0
5. Amend section 52.213-4 by revising the date of the clause and
paragraphs (a)(2)(viii) and (b)(1)(viii)(A) to read as follows:
52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Items).
* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Items) (JAN 2019)
(a) * * *
(2) * * *
(viii) 52.244-6, Subcontracts for Commercial Items (JAN 2019).
* * * * *
(b) * * *
(1) * * *
(viii)(A) 52.222-50, Combating Trafficking in Persons (JAN 2019)
(22 U.S.C. chapter 78 and E.O. 13627) (Applies to all solicitations and
contracts).
* * * * *
0
6. Amend section 52.222-50 by--
0
a. Revising the date of the clause;
0
b. Adding to paragraph (a), in alphabetical order, the definition
``Recruitment fees'';
0
c. Revising paragraph (b)(5)(i);
0
d. Removing from paragraph (b)(6) ``employees'' and adding ``employees
or potential employees'' in its place; and
0
e. Removing from paragraph (h)(3)(iii) ``employee,'' and adding
``employee or potential employee,'' in its place.
The revisions and addition read as follows:
52.222-50 Combating Trafficking in Persons.
* * * * *
Combating Trafficking in Persons (JAN 2019)
(a) * * *
Recruitment fees means fees of any type, including charges, costs,
assessments, or other financial obligations, that are associated with
the recruiting process, regardless of the time, manner, or location of
imposition or collection of the fee.
(1) Recruitment fees include, but are not limited to, the following
fees (when they are associated with the recruiting process) for--
(i) Soliciting, identifying, considering, interviewing, referring,
retaining, transferring, selecting, training, providing orientation to,
skills testing, recommending, or placing employees or potential
employees;
(ii) Advertising;
(iii) Obtaining permanent or temporary labor certification,
including any associated fees;
(iv) Processing applications and petitions;
(v) Acquiring visas, including any associated fees;
(vi) Acquiring photographs and identity or immigration documents,
such as passports, including any associated fees;
(vii) Accessing the job opportunity, including required medical
examinations and immunizations; background, reference, and security
clearance checks and examinations; and additional certifications;
(viii) An employer's recruiters, agents or attorneys, or other
notary or legal fees;
(ix) Language interpretation or translation, arranging for or
accompanying on travel, or providing other advice to employees or
potential employees;
(x) Government-mandated fees, such as border crossing fees, levies,
or worker welfare funds;
(xi) Transportation and subsistence costs--
(A) While in transit, including, but not limited to, airfare or
costs of other modes of transportation, terminal fees, and travel taxes
associated with travel from the country of origin to the country of
performance and the return journey upon the end of employment; and
(B) From the airport or disembarkation point to the worksite;
(xii) Security deposits, bonds, and insurance; and
(xiii) Equipment charges.
(2) A recruitment fee, as described in the introductory text of
this definition, is a recruitment fee, regardless of whether the
payment is--
(i) Paid in property or money;
(ii) Deducted from wages;
(iii) Paid back in wage or benefit concessions;
(iv) Paid back as a kickback, bribe, in-kind payment, free labor,
tip, or tribute; or
(v) Collected by an employer or a third party, whether licensed or
unlicensed, including, but not limited to--
(A) Agents;
(B) Labor brokers;
(C) Recruiters;
(D) Staffing firms (including private employment and placement
firms);
(E) Subsidiaries/affiliates of the employer;
(F) Any agent or employee of such entities; and
(G) Subcontractors at all tiers.
* * * * *
(b) * * *
(5)(i) Use misleading or fraudulent practices during the
recruitment of employees or offering of employment, such as failing to
disclose, in a format and language understood by the employee or
potential employee, basic information or making material
misrepresentations during the recruitment of employees regarding the
key terms and conditions of employment, including wages and fringe
benefits, the location of work, the living conditions, housing and
associated costs (if employer or agent provided or arranged), any
significant costs to be charged to the employee or potential employee,
and, if applicable, the hazardous nature of the work;
* * * * *
0
7. Amend section 52.244-6 by revising the date of the clause and
paragraph (c)(1)(xiii)(A) to read as follows:
52.244-6 Subcontracts for Commercial Items.
* * * * *
Subcontracts for Commercial Items (JAN 2019)
* * * * *
(c)(1) * * *
(xiii)(A) 52.222-50, Combating Trafficking in Persons (JAN 2019)
(22 U.S.C. chapter 78 and E.O. 13627).
* * * * *
[FR Doc. 2018-27541 Filed 12-19-18; 8:45 am]
BILLING CODE 6820-EP-P