First Solar Discovers Forced Labor in its Malaysia Facilities

Aug. 18, 2023
By: Hannah B. Kreinik

In the heat of the Uyghur Forced Labor Prevention Act (“UFLPA”), companies have been shifting their efforts towards solutions to potential forced labor risks in their supply chains. First Solar, a major solar panel manufacturer, decided to take action to investigate their own forced labor risk. The solar industry has been a main target of UFLPA enforcement since the Withhold Release Order against Hoshine Silicon Industry Co., which produces silica-based products used in solar panels. First Solar funded a third-party audit on its factories in Malaysia and Vietnam and discovered victims of forced labor in Malaysia. Third-party audits may be the next progression for businesses determined to avoid forced labor issues.

The forced labor violations uncovered in Malaysia included unethical recruitment practices, passport retainment, and illegal withholding of wages. Additionally, it was found that workers did not receive their contracts for employment in their native languages, nor were there factory rules in place for migrant workers. Finally, the third-party audit revealed inadequately compensated for overtime work.

After the discovery, First Solar has started to implement new practices to avoid any potential forced labor violations in the future. First Solar has inquired into creating a reimbursement scheme for the effected workers. The focus of the scheme would be on the repayment of unlawful recruitment fees collected from the laborers in Malaysia. First Solar’s CEO reports that these findings of forced labor in their Malaysian factories were disclosed to demonstrate transparency in the industry. He also stated that there is a benefit in hiring third-party auditors when forced labor recently has such an increased presence. Companies may wish to take advantage of hiring a third-party auditor to understand its potential forced labor risks. Hiring a third-party audit may potentially be the saving grace for a company from future Withold Release Orders or CBP Findings.

First Solar’s CEO also concluded that business accountability for the Uyghur Forced Labor Prevention Act (“UFLPA”) involves much more commitment than basic pledges but requires a full demonstration of the industry’s credibility. First Solar’s auditing process at their Vietnamese factory rewarded them with a “platinum status,” the highest rating for validated assessment programming. Although the Vietnamese factory received this rating, the factory contained subsidies that were distributed incorrectly but will be repaired with uniform monitoring. Third-party audits can give a company the chance to right the wrongs in their supply chains.

If your company needs help with forced labor compliance, the attorneys at Barnes, Richardson & Colburn are here to assist you.