What You Need to Know
- Key takeaway #1Guidance from CBP to modify WROs represents a key barometer for compliance programs for importers to institute preemptively, since importers are strictly liable for their supply chains.
- Key takeaway #2CBP introduces an “Identify, Correct and Prevent” framework which involves identifying risks, implementing corrective actions, and establishing preventative measures to ensure compliance and ethical labor practices.
- Key takeaway #3CBP emphasizes remedies focused on worker concerns, thereby requiring interaction with workers, establishing robust grievance mechanisms, and engaging with worker representatives to ensure all voices are heard.
- Key takeaway #4Third party audits are essential to demonstrate impartial and independent fact finding of potential violations.
- Key takeaway #5CBP reiterates strict liability on importers for supplier practices, policies, and procedures in the realm of forced labor.
Introduction
On June 2, 2025, U.S. Customs and Border Protection (“CBP”) issued its first ever Withhold Release Order (“WRO”) and Finding Modifications Guide (“Guide” or “the Guide”). The Guide serves as a roadmap for importers facing a possible WRO or Finding due to allegations of forced labor in the supply chain of their goods imported into the U.S. It provides guidance on information to be included in a modification petition, identifies possible cases in which CBP might request additional information, and provides resources for importers facing a WRO or Finding.
Identify, Correct, and Prevent: Framework Overview
The Guide introduces a “Identify, Correct, and Prevent” framework for the remediation of forced labor claims.
Identify
“Identify” means that an entity subject to a WRO or Finding should conduct a comprehensive review of its supply chains to identify forced labor risks. CBP recommends involving workers to the greatest degree possible in this process, particularly in the form of engagement with independent, worker-led organizations to detect forced labor risks and obtain a better understanding of working conditions. CBP also recommends that companies familiarize themselves with all 11 of the International Labor Organization (“ILO”) Indicators of Forced Labor to ensure that they can proactively recognize situations which meet some or all of ILO Indicators. Finally, CBP recommends that companies employ an independent auditor certified in social compliance and experienced in identifying the presence of forced labor for an in-person review of their workplace.
Although CBP “strongly recommends” that an audit be carried out by social compliance auditors, the Guide also emphasizes that “no single audit can serve as a definitive assessment of the labor conditions in a workplace.” CBP recommends that audits include significant engagement with a representative sample of the workers in a workplace, focusing specifically on those workers at higher risk for forced labor conditions, including migrant workers, day workers, sub-contractors, and tenant farmers. CBP further recommends that audits include in-person worksite visits, unannounced visits, document reviews, and management systems reviews, as well as possible engagement with outside organizations with insight into labor conditions in the specific sector at issue.
CBP provides a list in the Guide of the recommended elements of a third-party audit, which include:
- A root cause analysis;
- A management systems analysis;
- An explanation of the methodology used in the audit;
- A list of all current employees, disaggregated by number of workers involved in each step of the production process, sex, geographic location, worksite, contract type, and immigration status;
- A review of the entity’s supply chain purchase practices;
- A significant number of worker interviews; and
- A policy of zero tolerance for retaliation against employees involved in the audit that is communicated clearly to all workers in their native language.
Correct
“Correct” means that following a thorough review of workplace standards, entities are recommended to develop a Corrective Action Plan (“CAP”) as a structured way to existing forced labor issues and to prevent such issues in the future. Again, CBP recommends close engagement with workers to inform the development and implementation of the CAP.
The Guide contains a list of possible measures to be taken during the CAP to provide redress to workers whose rights have been violated, including financial compensation, rehabilitation, non-financial compensation, improved working and living conditions, and access to a confidential grievance mechanism.
The CAP should include the following:
- All adverse audit findings, including forced labor indicators from the WRO or Finding, and any additional indicators identified in the assessment.
- An analysis of the systemic problems and root causes linked to those indicators.
- List of workers’ responsibilities in each functional area.
- A plan with specific action(s) to remedy the forced labor indicators identified, with timelines for their implementation, and responsible parties for their completion.
- A plan for how each action will be verified and confirmed, including by record review, employee interviews, establishing new mechanisms to detect forced labor in the workplace, or other means.
- Training for all management on forced labor and new policies, procedures, and expectations of management.
- An analysis of supply chain procurement practices, contracts, and pricing pressures to determine if these factors contributed to forced labor conditions.
Prevent Recurrence
“Prevent” means that entities subject to a WRO or Finding must address the causes of forced labor in their facilities more broadly. Remedies at this level include strengthening internal controls, ensuring more direct communication with employees and worker representatives, and ensuring that workers can engage with the entity to report grievances and violations in a transparent, accessible, and understandable way.
The Guide provides recommendations to entities regarding the implementation of strategies to prevent the recurrence of forced labor conditions. The Guide focuses in large part on the development and implementation of internal controls across all levels of an organization. The five components of an internal control are:
- The control environment;
- Risk assessments;
- Control activities;
- Information and communication; and
- Monitoring
CBP recommends that companies continuously update and assess internal controls to ensure their continued applicability to ongoing risks.
Format and Medium of Remediation
Finally, CBP provides a list of core formatting aspects of a modification petition of a WRO. The below list, taken from the Guide, comprises the actions recommended.
What’s Next
Importers now have a clearer standard of what it takes for a modification of a WRO once CBP imposes one. This standard is high and likely burdensome for companies that have not established a compliance program for forced labor prevention in their supply chains.
- Conduct a forced labor risk assessment to identify red flags and risk signals in supply chains using the 11 ILO Indicators as a benchmark.
- Establish/update your forced labor compliance program.
- Set up documentation requirements and mapping/traceability systems.
- Proactively engage stakeholders such as suppliers, NGOs, workers.
- Monitor resources like the Department of Labor’s high-risk materials and geographies list, updates on labor conditions, and industry-specific compliance programs.
For further information, please contact:
David Stepp, Partner, Crowell & Moring
dstepp@crowell.com
