Bill Text: TX HB820 | 2021-2022 | 87th Legislature | Introduced
Bill Title: 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.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2021-03-23 - Left pending in committee [HB820 Detail]
Download: Texas-2021-HB820-Introduced.html
87R1797 JES-D | ||
By: White | H.B. No. 820 |
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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. |