Federal Acquisition Regulation: Combating Trafficking in Persons-Definition of “Recruitment Fees”, 65466-65478 [2018-27541]

Download as PDF 65466 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations and National Aeronautics and Space Administration (NASA). DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION ACTION: NATIONAL AERONAUTICS AND SPACE ADMINISTRATION SUMMARY: Summary presentation of a final rule. 48 CFR Chapter 1 [Docket No. FAR 2018–0001, Sequence No. 6] Federal Acquisition Regulation; Federal Acquisition Circular 2019–01; Introduction Department of Defense (DoD), General Services Administration (GSA), AGENCY: This document summarizes the Federal Acquisition Regulation (FAR) rule agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2019–01. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the internet at http:// www.regulations.gov. For effective date see the separate document, which follows. DATES: Ms. Cecelia 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. FOR FURTHER INFORMATION CONTACT: RULE LISTED IN FAC 2019–01 Subject FAR case Combating Trafficking in Persons—Definition of ‘‘Recruitment Fees’’ ................................................................... A summary for the FAR rule follows. For the actual revisions and/or amendments made by this FAR Case, refer to the specific item number and subject set forth in the document following this item summary. FAC 2019–01 amends the FAR as follows: SUPPLEMENTARY INFORMATION: Combating Trafficking in Persons— Definition of ‘‘Recruitment Fees’’ (FAR Case 2015–017) khammond on DSK30JT082PROD with RULES2 This final rule amends the Federal Acquisition Regulation (FAR) to provide a definition of ‘‘recruitment fees’’ in FAR subpart 22.17 and the associated clause at FAR 52.222–50 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 or potential employees recruitment fees. This final rule will not have a significant economic impact on a substantial number of small entities. Federal Acquisition Circular (FAC) 2019– 01 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration. Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2019–01 is effective December 20, 2018 except for FAR Case 2015–017, which is effective January 22, 2019. Dated: December 10, 2018. William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Dated: December 14, 2018. Kim Herrington, Acting Principal Director, Defense Pricing and Contracting. Dated: December 11, 2018. Jeffrey A. Koses, Senior Procurement Executive/Deputy CAO, Office of Acquisition Policy, U.S. General Services Administration. Dated: December 13, 2018. William G. Roets, II, Acting Assistant Administrator, Office of Procurement National Aeronautics and Space Administration. [FR Doc. 2018–27540 Filed 12–19–18; 8:45 am] BILLING CODE 6820–EP–P 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’’ Department of Defense (DoD), General Services Administration (GSA), AGENCY: VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 2015–017 Analyst Davis. and National Aeronautics and Space Administration (NASA). ACTION: Final rule. 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: SUMMARY: 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), E:\FR\FM\20DER2.SGM 20DER2 khammond on DSK30JT082PROD with RULES2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations 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. Twentyeight respondents submitted comments on the proposed rule. II. Discussion and Analysis The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 65467 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 E:\FR\FM\20DER2.SGM 20DER2 65468 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations ‘‘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. khammond on DSK30JT082PROD with RULES2 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 VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 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 E:\FR\FM\20DER2.SGM 20DER2 khammond on DSK30JT082PROD with RULES2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations associated with the recruiting process, even if imposed or collected later in time. as understood colloquially is a recruitment fee if it is associated with the recruiting process. 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.’’ vii. ‘‘Assessed’’ 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 wellsettled 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 VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 65469 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, E:\FR\FM\20DER2.SGM 20DER2 65470 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations khammond on DSK30JT082PROD with RULES2 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 traffickingrelated, but also the myriad customary pre-qualifications for professional employment that are not traffickingrelated. 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 preconditions 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 VerDate Sep<11>2014 20:04 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 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 E:\FR\FM\20DER2.SGM 20DER2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations in the responses to comments 2.a.iv. and 4.b. khammond on DSK30JT082PROD with RULES2 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 VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 65471 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. 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. 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. d. For Processing Petitions 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. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 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. 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 E:\FR\FM\20DER2.SGM 20DER2 65472 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations 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. khammond on DSK30JT082PROD with RULES2 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.’’ VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 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 prescreening 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. E:\FR\FM\20DER2.SGM 20DER2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations 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 prequalification 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. khammond on DSK30JT082PROD with RULES2 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? VerDate Sep<11>2014 20:04 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 65473 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). E:\FR\FM\20DER2.SGM 20DER2 65474 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations 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. khammond on DSK30JT082PROD with RULES2 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 VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 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 E:\FR\FM\20DER2.SGM 20DER2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations khammond on DSK30JT082PROD with RULES2 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 VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 65475 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 Offthe-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 E:\FR\FM\20DER2.SGM 20DER2 65476 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations khammond on DSK30JT082PROD with RULES2 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— VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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 ................ Present Value ........... Annualized Value Costs as of 2016 if Year 1 is 2019. $.8 million. $11.9 million. $.7 million. 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 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 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 E:\FR\FM\20DER2.SGM 20DER2 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations 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: ■ 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 2. Amend section 22.1702 by adding, in alphabetical order, the definition ‘‘Recruitment fees’’ to read as follows: ■ 22.1702 Definitions. khammond on DSK30JT082PROD with RULES2 * * * * * 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, VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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, inkind 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 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 65477 (G) Subcontractors at all tiers. * * * * ■ 3. Amend section 22.1703 by— ■ a. Revising paragraph (a)(5)(i); and ■ 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 4. Amend section 52.212–5 by— a. Revising the date of the clause and paragraphs (b)(33)(i) and (e)(1)(xiii)(A); and ■ 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). * * * * * * * * E:\FR\FM\20DER2.SGM 20DER2 65478 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Rules and Regulations (e)(1) * * * (ii) * * * (K) _ (1) 52.222–50, Combating Trafficking in Persons (JAN 2019) (22 U.S.C. chapter 78 and E.O. 13627). * * * * * ■ 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). * * * * * ■ 6. Amend section 52.222–50 by— ■ a. Revising the date of the clause; ■ b. Adding to paragraph (a), in alphabetical order, the definition ‘‘Recruitment fees’’; ■ c. Revising paragraph (b)(5)(i); ■ d. Removing from paragraph (b)(6) ‘‘employees’’ and adding ‘‘employees or potential employees’’ in its place; and ■ 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 Persons. Combating Trafficking in * * * * * khammond on DSK30JT082PROD with RULES2 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, VerDate Sep<11>2014 18:46 Dec 19, 2018 Jkt 247001 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, inkind 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 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 (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; * * * * * ■ 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 Items. * * Subcontracts for Commercial * * * 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 DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Chapter 1 [Docket No. FAR 2018–0001, Sequence No. 6] Federal Acquisition Regulation; Federal Acquisition Circular 2019–01; Small Entity Compliance Guide Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Small entity compliance guide. AGENCY: This document is issued under the joint authority of DOD, GSA, and NASA. This Small Entity Compliance Guide has been prepared in accordance with section 212 of the Small Business Regulatory Enforcement SUMMARY: E:\FR\FM\20DER2.SGM 20DER2

Agencies

[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.

-----------------------------------------------------------------------

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