Two recent settlements between employers and the U.S. Department of Justice (DOJ) highlight the complex interplay between U.S. immigration and export control laws in the hiring process. The settlements provide a reminder to employers of the potential employment discrimination pitfalls for companies trying to comply with export control laws.

In late August 2018, the DOJ’s Immigration and Employee Rights Section (IER) reached a settlement agreement with international law firm Clifford Chance US LLP, which the DOJ accused of violating the Immigration and Nationality Act (INA) by refusing to consider employment-authorized non-US citizens and dual citizens for a document review project. Just two months earlier, the DOJ found that engineering company Setpoint Systems, Inc. violated the INA by limiting certain positions to U.S. citizens only.  In both cases, the unlawful employment practices stemmed from a mistaken understanding of the requirements of the International Traffic in Arms Regulations (ITAR).

In this blog, we provide an overview of the overlapping laws and summary of key compliance practices for employers.

Brief Background of Applicable Laws

Export Control Laws

Under the ITAR or the Export Administration Regulations (EAR), companies must obtain licenses before releasing export-controlled technical data or technology to certain “foreign persons,” including foreign persons located in the United States colloquially known as a  “deemed export.”  Companies face severe consequences for failing to obtain the required licenses before release of export-controlled information, and many have entered into civil settlement agreements with the U.S. Government to resolve allegations of violating applicable deemed export rules. Thus, companies must implement compliance processes or technology control plans to assure that they do not release ITAR-controlled or EAR-controlled technology and technical data to foreign person employees in instances where a prior authorization is required. It should be noted that advance authorizations are not always required.

A “foreign person” means any individual who is not a “U.S. person,” i.e., (1) not a U.S. citizen, (2) not a U.S. lawful permanent resident, or (3) not a certain class of protected persons (e.g., refugees and asylees).[1]  In other words, companies need not obtain export licenses for employees that are U.S. persons.  However, employers must keep in mind the applicable discrimination laws when designing an export-control compliance program.

U.S. Discrimination Laws

Title VII of the Civil Rights Act of 1964 prohibits discrimination based on, among other things, race and national origin.  Although Title VII does not directly prohibit discrimination based on citizenship or immigration status, those statuses are typically synonymous with race or national origin. Title VII prohibits both intentional discrimination and policies/practices that have a disparate impact on a protected status.

Title VII protects all persons working in the U.S. However, Title VII does not prohibit an employer from refusing to hire individuals who lack authorization to work in the U.S. or who require the employer to sponsor a work visa. Moreover, Title VII contains a “national security exception,” which permits companies to refuse to hire any person who does not meet federal national security laws, such as export control laws. 42 U.S.C. § 2000e-2. If an employer refuses to hire a person based on the national security exception, the employer bears the burden to prove that the position is subject to national security requirements.

The INA further prohibits discrimination based on (1) national origin or (2) citizenship status for “protected individuals.” 8 U.S.C. § 1324b(a)(1). The statute defines “protected individuals” as U.S. citizens, U.S. nationals, lawful permanent residents, and certain asylees and refugees. 8 U.S.C. § 1324b(a)(3).  Thus, the statute does not protect individuals in temporary, non-immigrant, statuses from citizenship status discrimination. The statute further permits action based on citizenship where necessary to comply with federal laws, including export control laws.

Significantly, the export control regulations’ definition of “U.S. Persons” incorporates the definition of “protected individuals” under the INA. In other words, U.S citizens, U.S. nationals, lawful permanent residents, and certain asylees and refugees are “protected individuals” and, as such, do not trigger export control regulations under ITAR or the EAR. This means that these individuals are not restricted from access to such controlled technologies. Thus, as is shown by the DOJ settlements, ITAR or EAR compliance efforts cannot justify employment restrictions which exclude any class of these “protected individuals.”

Notably, the INA further prohibits (1) unfair documentary practices, and (2) retaliation against any individual for participation in a DOJ investigation. An employer engages in unfair documentary practices if it requests more or different documents than necessary to verify employment eligibility, or specifically requests certain documents with the intent to discriminate on the basis of national origin or citizenship. Indeed, in 2018 alone, the DOJ settled at least four cases against employers accused of engaging in discriminatory document verification practices. See, e.g., Settlement against Rose Acre Farms, resulting in $70,000 in back pay.

Best Practices

Export control programs may run afoul of U.S. anti-discrimination laws in one of four ways: (1) refusing to hire protected persons; (2) advertising for export-controlled positions with unlawful language; (3) applying export control regulations to positions that do not implicate the laws; or (4) failing to separate export control document verification procedures from form I-9 employment verification processes.

First, employers cannot restrict hiring for export-controlled positions to only U.S.-citizens, as the definition of protected persons encompasses more classes of people. The settlements noted above are examples of using overly-restrictive hiring provisions. While employers can restrict hiring for export-controlled positions, the restrictions must carefully align with the export-control requirements. Yet employers can lawfully limit hiring, whether or not the position is export-controlled, to candidates who do not require immigration sponsorship, so long as they implement such policies in a non-discriminatory manner.

Second, when advertising for such positions, employers must use great caution when drafting wording. Even legally accurate language can be regarded as discriminatory due to the possibility of misunderstandings of terminology deterring potential candidates from applying for the position. There is no designated “safe” language for describing immigration-specific limitations in job advertisements.  There are, however, two immigration-specific questions which IER has designated as safe to ask of applicants during the hiring process:

  1. Are you legally authorized to work in the U.S.?
  2. Will you now or in the future require sponsorship for employment visa status (e.g., H-1B status)?

Third, employers must apply export control screening procedures only to those positions that are actually subject to export control laws and must ask only the questions needed to determine compliance. Employers must carefully analyze each position to determine whether it, in fact, is subject to the export control laws, since employers bear the burden of showing such laws apply. Employers must also use caution to carefully limit questions to the necessary information; for example, if the export control laws limit access based on a person’s citizenship, employers must ask only about citizenship and not national origin.

Fourth, employers should separate the Form I-9 employment authorization verification process from the export control U.S. Person verification process. Separating those processes limits violations of INA’s documentary practice provisions and further limits the perception of any present or future discriminatory use of the information. When collecting information for export-control compliance, employers should tell employees that the information collected will not be used for any other purpose.

 

[1] Although not customarily referred to when defining a “foreign person” for export control purposes, a U.S. national is included by reference. Specifically,  22 C.F.R. § 120.15 provides that “U.S. person” means a person “who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(2) or who is a protected individual as defined by 8 U.S.C. § 1324b(a)(3).” (Emphasis added.) In turn, 8 U.S.C. 1324b(a)(3) defines “protected individual” as “a citizen or national of the United States,” “an alien who is lawfully admitted for permanent residence,” and certain refugees and asylees.