It’s Complicated: Employers Who Ignore the Interplay Between US Export Control and Anti-Discrimination Laws Risk Penalties

In all three cases, the DOJ’s Immigrant and Employee Rights Section (IER) settled claims against employers alleged to have violated the anti-discrimination provisions of the Immigration and Nationality Act (INA) by limiting positions involving sensitive data governed by the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR) only to US citizens and/or lawful permanent residents, and failing to open such positions to US nationals, asylees and refugees, as is required by law.

This alert explains that employers – including law firms – may not limit positions where the employee will have access to ITAR and EAR controlled technology only to US citizens, but rather must also open such positions to US nationals, lawful permanent residents, asylees and refugees. Further, an employer may also choose to hire a foreign national who is authorized to work in the United States and then apply for the appropriate export control license to allow that foreign national to hold the position in question. It’s not easy or intuitive to comply with both sets of laws!

DOJ Settles Discrimination Claims Against A Manufacturing Company, a Law Firm and an Engineering Firm for Failing to Open Positions to US nationals, Asylees and Refugees.

In three recent settlements, the DOJ settled claims against employers who had restricted positions governed by the EAR or ITAR to US citizens or lawful permanent residents, and had failed to open these positions to US nationals, asylees and refugees, as is required by law.

Last summer, a US subsidiary of a British law firm reached a settlement after the DOJ had determined that there was reasonable cause to believe that from March 30, 2017 until at least July 7, 2017, the law firm had restricted its staffing for 36 positions on a limited-duration document review project based on citizenship status. The DOJ determined that the law firm had excluded otherwise qualified non-US citizens and dual US citizens from document reviewer positions, based on the law firm’s good faith efforts to comply with the ITAR’s data restrictions. The Department also found that the law firm had improperly terminated or removed three individuals from their positions based on their citizenship status. Under the settlement, the law firm:

• Was ordered to pay lost wages to three individuals who were removed from the project;
• Agreed to pay a $132,000 civil penalty to the United States;
• Agreed to train relevant employees about the requirements of the INA’s discrimination provision, inform clients who request citizenship status restrictions for staff of the INA’s requirements;
• Agreed to review its policies for hiring and firing based on citizenship status and national origin; and
• Is subject to departmental monitoring and reporting requirements for two years.

Notably, the DOJ rejected the law firm’s good faith argument, observing that “8 U.S.C. § 1324b does not provide, nor does the jurisprudence under the law recognize, a good faith exception to the general prohibition against discrimination on the basis of citizenship status or national origin[.]”

More recently, on February 1, the US Department of Justice reached a settlement with a manufacturing company regarding a claim that the company had restricted certain jobs to US citizens and lawful permanent residents in violation of the INA’s anti-discrimination in 8 U.S.C. § 1324b. The DOJ had determined that it had reasonable cause to believe that between August 2015 and December 2016, the company had posted at least 25 job announcements that required applicants to be either lawful permanent residents and/or US citizens based on an apparent misunderstanding of the ITAR and EAR’s requirements. The jobs had been posted on the company’s website and several third-party websites.

Under the terms of the settlement, the company agreed:

• To pay a civil penalty of $44,626;
• Not to discriminate on the basis of citizenship, immigration status or national origin in violation of 8 U.S.C. §1324b; and
• To review its hiring and firing requirements based on citizenship or foreign national status.

Furthermore, the agreement required employees who had any role in hiring or recruiting processes to attend training on the INA’s anti-discrimination provision and ensure that trained personnel review future job advertisements. Finally, the company is subject to ongoing monitoring by the DOJ to determine its compliance with the settlement agreement during the term of the agreement.

Finally, in June 2018, the DOJ settled an immigration-related discrimination claim against an engineering company. The DOJ found that from August 2015 to June 2017, the company had had an unlawful policy of hiring only US citizens for professional positions and refusing to consider otherwise qualified non-US citizens based on the company’s erroneous understanding of the ITAR’s requirements. Under the settlement, the company agreed:

• Not to discriminate based on citizenship or immigration status and should review its hiring and firing policies based on citizenship status and national origin;
• To pay a $17,475 civil penalty;
• To train its employees who have any role in recruiting or hiring on the requirements of the INA’s anti-discrimination provision;
• To review its hiring and firing policies based on citizenship status and national origin; and
• To be subject to departmental monitoring and reporting requirements.

The ITAR and EAR Limit Access to Certain Sensitive Information to “US Persons”

The ITAR regulates specific exports of defense articles and services, and limits access to certain sensitive information to “US persons” unless the State Department has issued a license or other authorization. In turn, the EAR regulates commercial goods and technology that could have military or other sensitive applications and, depending on the export classification of the technology in question, may require a license or other authorization from the Department of Commerce to employ a non-US person or (in most cases) not Canadian. The term “US person” in the ITAR or EAR means:

1. US citizen;
2. A US lawful permanent resident as defined by 8 U.S.C. § 1101(a)(20); or
3. A certain class of “protected individuals” as defined by 8 U.S.C. § 1324b(a)(3) (e.g., US nationals, refugees and asylees).

The term “US person” is thus not limited to US citizens, and the ITAR and EAR consequently do not require employers to hire only US citizens.

In addition, an employer may choose to hire a non-US person who is authorized to work, and obtain State or Commerce Department license or other authorization when one is required under the applicable law. However, the State and Commerce Departments do have a policy of denying licenses for the release of certain technology to persons who are citizens of certain countries. For example, both agencies typically do not grant licenses to release defense technology in the United States to citizens of US arms-embargoed countries such as Iran and China absent additional circumstances indicating that the citizenship has been terminated and the person has acquired a different citizenship. The advice of counsel should be sought before asking citizenship questions in order to avoid any claims of national origin discrimination by the applicant.

The INA Prohibits Discrimination Based on National Origin, Citizenship, and Immigration Status

The INA’s anti-discrimination provision prohibits, among other things, discrimination based on (1) national origin, (2) citizenship, and (3) immigration status. Federal immigration laws also prohibit employers from requiring or suggesting a particular document from an employee during the I-9 or E-Verify process, and from intimidating or retaliating against someone for making a complaint about unlawful or discriminatory practices.

Typically, discriminatory acts occur during the recruiting, hiring, promotion, and termination process. For example, employers may run afoul of the INA’s anti-discrimination laws by:

• Restricting job candidates only to US citizens or lawful permanent residents; and
• By asking candidates detailed questions about their immigration status during the interview process, or by requiring an employee to show a green card or other specific document to complete I-9 requirements. 

In sum, since the ITAR and EAR’s definition of “US persons” incorporates the definition of “protected individuals” under the INA, employers may not restrict hiring for export-controlled positions to US citizens and lawful permanent residents to the exclusion of “protected individuals” such as asylees or refugees. And again, an employer may also choose to hire a foreign national who is authorized to work in the United States and then apply for the appropriate export control license to allow that foreign national to hold the position in question.

Employers Should Exercise Caution When Advertising for Positions Subject to the ITAR or EAR

In the DOJ press release announcing its most recent settlement, Assistant Attorney General Eric Dreiband of the DOJ Civil Rights Division stated that “[t]he Department of Justice is committed to ensuring that employers do not unlawfully exclude non-US citizens because of their citizenship status… Employers who are subject to the ITAR or the EAR should carefully review their responsibilities under anti-discrimination statutes.”

The main takeaways for employers are:

1. The DOJ will not accept an employer’s good faith interpretation of the ITAR and EAR’s data restriction requirements to justify discrimination in hiring individuals protected under the INA.
2. Employers may not adopt ITAR or EAR compliance policies which restrict export-controlled positions to only US citizens and exclude any class of “protected individuals” under the INA.
3. Employers should review their hiring and contracting processes to make sure that they do not limit hiring or outsourcing to only US citizens and lawful permanent residents, or otherwise limit candidates based on their citizenship, immigration status, or national origin. In case of doubt, employers should contact counsel to review their hiring policies.
4. Employers must use caution when advertising for open positions. Employers may ask candidates for positions governed by the ITAR or EAR:
   1. Answer yes or no. Are you a US citizen, US national, legal permanent resident, asylee or refugee? If the answer is yes, the employer will most likely not need to apply for a license for the employee. If the answer is no, the employer may still consider such candidates and extend an offer of employment for ITAR or EAR positions, but the employer may need to apply for a license depending on the classification of the technology and the nationality of the employee. Counsel should be consulted.
   2. Answer yes or no. Will you now or in the future require sponsorship for employment visa status? If the answer is yes, the employer may still consider such candidates and extend an offer of employment for ITAR or EAR positions, but the employer may need to apply for a license depending on the classification of the technology and the nationality of the employee. Employers should also know that they are not obligated to sponsor anyone for an employment visa. Counsel should be consulted.
5. I-9 audits have increased under the current Administration. Employers should be careful to properly complete, document, and retain their I-9 forms, while also being careful not to require the employee to produce any particular work authorization or identity document (i.e., US passport or green card).
6. Employers should ask only the questions needed to determine compliance with the INA and export control regulations when applying export control screening procedures for export-controlled positions.

The Department of Justice has published a bulletin on how employers can avoid unlawful citizenship status discrimination here, and has posted additional FAQ’s regarding citizenship status discrimination here.