Organizations used to view labor rights as an overseas supply chain issue, assuming domestic operations were safe. Despite extensive labor laws and strong enforcement, the US is no longer exempt from corporate watchlists.
Driven by a sharp rise in labor violations, including rollbacks of collective bargaining rights, the International Trade Union Confederation (ITUC) Global Rights Index recently placed the US on its global watchlist alongside nations like Guinea-Bissau, Israel, and Liberia.
This unexpected designation exposes a disconnect between what domestic law permits, what international labor rights standards increasingly expect, and how to implement risk controls in a location long treated as safe.
Areas of growing scrutiny
The disconnect stems from four areas:
1. International treaty participation
The US has not ratified several major international human rights treaties, including the International Covenant on Economic, Social and Cultural Rights (ICESCR), the Convention on the Rights of the Child (CRC), and the Convention on the Protection of the Rights of All Migrant Workers. This lack of formal alignment creates immediate friction between US legal minimums and international supply chain expectations.
2. Migrant worker vulnerabilities
Temporary visa systems (such as H-2A agricultural visas) and third-party staffing agencies create systemic risks, especially in a fluctuating immigration environment. Abuses like recruitment fees, wage theft, and deportation threats often go undetected deep within sub-tier suppliers.
3. Correctional work programs
Under the 13th Amendment, involuntary prison labor remains legally permissible as criminal punishment. Incarcerated workers are integrated into agricultural, manufacturing, and food processing supply chains. When benchmarked against international labor standards, many of these programs exhibit forced labor indicators, including a lack of voluntary consent and sub-minimum wage compensation.
4. Enforcement and remediation gaps
Without a centralized domestic human rights authority with broad investigative powers, visibility into sub-tier labor relies heavily on media reporting, litigation, or non-governmental organization (NGO) exposures rather than routine regulatory oversight.
For multinational organizations, domestic US practices are increasingly clashing with international ESG regulations. Frameworks like the EU Corporate Sustainability Due Diligence Directive (CSDDD) and Germany’s Supply Chain Due Diligence Act (LkSG) require companies to evaluate labor outcomes, regardless of whether a practice is technically legal within a local jurisdiction.
Contractual certifications and management attestations alone offer little protection. When labor rights violations surface deep within tier 2 or tier 3 suppliers, organizations face immediate reputational damage, activist campaigns, and severe supply chain disruption.
High-risk sectors
Labor rights risks in the US are heavily concentrated in higher risk sectors relying on seasonal, temporary, or outsourced workforces:
- Agriculture and food processing: High exposure driven by seasonal migrant visa programs (H-2A) and correctional work partnerships.
- Warehousing and logistics: Heightened vulnerability through heavy reliance on temporary staffing agencies and rapid-turnover contracted labor.
- Manufacturing and construction: Sub-tier risk hidden within multi-layered subcontracting where worker-level visibility drops off.
What should you prioritize now?
To strengthen labor rights due diligence across US operations and supplier networks, prioritize the following:
- Target the high-risk sectors: Conduct enhanced labor rights risk assessments in these priority areas.
- Map your labor exposure: Understand where you rely on temporary visa programs, labor contractors, staffing agencies, and labor-intensive subcontractors, especially beyond tier 1 suppliers.
- Verify at the worker level: Perform worker interviews and independent labor audits instead of relying on management attestations or contractual certifications.
- Open accessible grievance channels: Establish worker grievance mechanisms that migrant workers can trust and use easily, available in the relevant languages.
- Assess prison labor links: Evaluate whether suppliers use correctional work programs, and weigh the associated legal, reputational, and customer risks.
- Track the regulatory horizon: Monitor state-level labor regulations and international due diligence requirements that may impose new expectations on US supply chains.
- Prepare to remediate: Develop procedures for allegations involving forced labor, trafficking, wage theft, recruitment fees, coercion, or restrictions on worker mobility.
Domestic sourcing has long been the least-examined corner of most risk programs, and that’s why it has become a liability. As scrutiny of US supply chains grows, the only real protection is to apply the same due diligence at home that you already apply abroad.
BSI Connect Screen helps organizations gain visibility across domestic and global supplier networks. A risk-based approach to supply chain risk management enables teams to identify, assess, and respond to threats before they become costly disruptions.
