Winning in a Tough Scenario: Unauthorized Exports v. National Origin Discrimination

With workforce development top of mind for many manufacturing and technology companies, foreign talent is often given heavy consideration despite the added challenge of export and immigration compliance.

When the need to comply with export controls slips into hiring discrimination, organizations are more frequently finding themselves in hot water with the Department of Justice.

Two recent DOJ settlements stand out: General Motors’ employment eligibility verification process (i.e., Form I-9 process) for new hires, which also informed GM’s internal export compliance tasks, was found to violate U.S. immigration and anti-discrimination laws.

As a result, GM will pay a $365,000 civil fine, train its personnel on certain provisions of U.S. immigration laws, revise its employment policies, and submit to regular reporting and oversight by the DOJ.

Similarly, American CyberSystems, an IT services and recruiting firm, was found to violate the same laws by advertising a position open only to U.S. citizens and U.S. legal permanent residents (green card holders or LPRs) in part because the job required access to export-controlled materials.

Like GM, the company agreed to pay a civil fine, provide training, revise policies and is subject to reporting/monitoring.

These cases follow a number of similar violations in recent years and reinforce the need to manage various compliance requirements with peripheral vision.

‘Competing’ Laws

Under the Immigration and Nationality Act’s anti-discrimination provisions, U.S. employers are prohibited from making hiring, firing, or recruiting decisions based on an individual’s U.S. citizenship, immigration status, or national origin.

Moreover, U.S. employers are obligated to confirm, without such discrimination, that every newly hired employee who will work for them in the U.S. has authorization to do so.

Employers meet this obligation by completing the Form I-9 process, in which newly hired employees present one or more acceptable identification documents.

U.S. employers may not dictate which document(s) from the list that an employee may present and they may not require employees to provide more documents than are necessary to complete the Form I-9 process.

On the other hand, U.S. export control laws, namely, the International Traffic in Arms Regulations and Export Administration Regulations prohibit unauthorized exports, including intangible technology and software, to foreign countries.

Importantly, an export can occur when controlled information is transferred to a non-U.S. person in the U.S., which is “deemed” to be an export to that person’s country of nationality and/or citizenship (a “deemed export”).

Non-U.S. persons include foreign nationals who are on temporary work visas.

Before U.S. companies share information with non-U.S. persons (employees or otherwise), companies generally must first obtain authorization from the U.S. Department of State or U.S. Department of Commerce unless it determines that no export authorization would be needed based on the nature of the technology and the citizenship/nationality of the individual.

Notably, the ITAR and EAR do not require companies to limit jobs/positions to U.S. citizens or LPRs. Thus, companies must evaluate their specific export compliance needs as they pertain to the foreign employees.

GM impermissibly combined this deemed export compliance assessment with the Form I-9 process by asking for more documents than allowed.

American CyberSystems’s posting did not even allow the individual export compliance assessment to happen.

In both cases, the intent to avoid unauthorized exports (however well intentioned) resulted in violations of the INA’s anti-discrimination provisions.

Coordinating Compliance

Although seemingly in conflict at times, U.S. employers can successfully comply with both sets of laws by keeping their job postings, Form I-9 process, and export compliance assessments separate and implementing several best practices:

1. Determine which positions/jobs involve the potential of deemed exports to determine those individuals that need an export compliance assessment or technology control plan.
2. Keep the Form I-9 process and export compliance assessment separate and only conduct export compliance assessments after completing the Form I-9 process. Each process satisfies a separate purpose.
3. When conducting the export compliance assessment, make it clear to the individual that they are being asked to provide documentation for the purpose of establishing the need for export authorization, not for establishing their eligibility for employment in the U.S.
4. Review and revise employment policies that discuss the Form I-9 process and export compliance assessment to ensure that they include an explicit statement that each process is separate, with different procedures, purposes, and documentary requirements.

This article first appeared on CBIA's website and is republished here with permission.