The hiring of employees does not usually remind of the obligations to comply with international trade regulations. However, together, US export controls and anti-discrimination laws form a web that is overlooked or misunderstood by many types of employers of all sizes in many industries. Anti-discrimination laws prohibit unlawful restrictions on citizenship status on recruitment, and U.S. export controls prohibit the disclosure of controlled information to foreigners without permission. Together, these laws limit acceptable job descriptions and hiring practices.
The final punishments
Failure to comply with these restrictions can lead to enforcement actions, civil penalties, and reputational damage. For example, in late July, a major law firm and legal recruitment firm came to terms with the Department of Justice (DOJ) to implement a policy on the exclusion of dual citizens and eligible non-US citizens from hiring and hiring temporary workers on a document review project. In short, the DOJ noted that the company failed to interpret the requirements of US export controls in the International Traffic in Arms Regulations (ITAR). The firm and the company had to pay civil penalties and back payments. The company was also publicly reprimanded by the DOJ.
Get ready for more settings
The need to adhere to these hiring restrictions is more important than ever. The labor market is becoming more global, which means that more foreigners are employed in the workforce of companies. In addition, many U.S. companies are likely to have to recruit large numbers of their employees as the pandemic subsides and previously laid-off workers will be needed again.
What not to include in a job description
To prepare for recruitment, we provide this brief job description guide. One employer CAN NOT Include any of the following restrictions on a job posting, even if an order requires export control permission:
- US citizens only
- US residents or green card holders only
- Must provide U.S. birth certificate
- H-1Bs or OPT candidates preferred
Additionally, a job posting like this is likely to attract unwanted attention from the DOJ:
To ensure compliance with US export controls, please include your US citizenship status in your cover letter.
It may be safer to take on something along those lines, but keep in mind that acceptable posting also depends on other job and company factors:
To comply with US export control regulations, the applicant should be eligible for all necessary US government approvals.
The candidate is able to meet federally prescribed requirements of U.S. export control laws.
A checklist for hiring
Because of the nuances in this area of law, we recommend a careful approach. Businesses should ensure that personnel involved in the recruitment, recruitment and recruitment process are up to date with the complex web of US export controls and anti-discrimination laws. The following checklist can help you comply with these laws. We recommend consulting a lawyer for specific guidance.
- Does the position include technology or technical data subject to ITAR or Export Administration Regulations (EAR)?
- Is the item classified?
- If so, can the applicant be properly sealed off from sensitive data until a license can be obtained? Or would it be possible to seal off the person permanently?
- Was the job offer made dependent on obtaining a license?
- How long does it take to get a license? Can the company take into account the time required to obtain the license (often a matter of many months)?
Additional background information
For more detailed information on the artificial terms and other legal concepts used in this blog, see the following additional background information that we first provided on this blog.
Export Control Limitations
The Ministry of Foreign Affairs' International Traffic in Arms Regulations (ITAR) and the Ministry of Commerce's Export Administration Regulations (EAR) prohibit the transfer of controlled technical information * to a foreign person without a corresponding export license. Disclosure includes any simple oral or visual access to this information. A foreign person is defined as any person who is not a US citizen, legal permanent resident of the US, or a refugee or asylum protected under US law. Because of this, an employer must obtain a proper export control permit for foreigners in order to access controlled technical information.
Depending on the type of technical information, getting the right export control license can be expensive and time consuming. In addition, the ministries of state and trade may not give the necessary approval. The State Department suspects that export licenses to countries under 22 C.F.R. §126.1 (d) (1). As soon as the foreign person is on board and before the corresponding export license is obtained, the company must carry out internal controls to protect the foreign person from unauthorized electronic or visual disclosure of controlled information. These controls can include passwords on file sharing sites and the encoding of employee badges to restrict access to certain areas of a factory. This pressure is causing some companies to seek U.S. citizens for positions that involve export controls and potentially violating anti-discrimination laws.
* A complete summary of ITAR and EAR controls for technical information is beyond the scope of this article. ITAR specifications are in 22 C.F.R. §120.10; EAR technology is in 15 C.F.R. §772.1. As with many export control issues, the application of the rules to the facts is complex, and export control for certain information varies from case to case.
Under the Immigration and Nationality Act (INA) and Title VII of the Civil Rights Act of 1964, employers generally cannot make hiring, firing, recruiting, or referral decisions based on a worker's national origin. One exception is that employers do not need to hire foreigners who require visa sponsorship (e.g. H-1B, etc.). Outside of this exception, employers can only request documents to determine whether the status of the new employee complies with export control laws, to determine whether a license is required. This review process must be separate from the decision to hire the employee.
An I-9 confirmation form can only be given to an applicant after submitting a job offer. As a rule, an employer only sees the work permit documents on the first working day.
No longer an exception
The interplay between export controls and anti-discrimination laws has often been viewed as being addressed through the exception of bona fide professional qualification (BFOQ) under Title VII. This exemption allows for some discrimination on the basis of national origin when this is necessary for certain statutory work requirements, for example when carrying out classified government contracts. In addition, the National Security Exemption from Title VII permits an employer not to hire an individual if the job is subject to requirements made in the interests of the national security of the United States and the individual does not meet those requirements. The BFOQ exception combined with the national safety exception could lead an employer to believe that they could refuse to hire foreign applicants based on ITAR and EAR. Many companies understood these exemptions to enable the setting of "US Only" to comply with export controls for decades.
However, recent enforcement actions and guidance from the DOJ indicate that the DOJ does not share this interpretation. Rather, the ministry has declined to apply the BFOQ and national safety exemptions in cases where employers refuse to hire foreigners for the sole purpose of complying with the ITAR and EAR. In one case, the DOJ investigated an employer's decision to consider only U.S. citizens or permanent residents for positions requiring access to ITAR or EAR controlled information. The department concluded that the company's business practices violated INA's anti-discrimination legislation. The employer paid a civil fine of $ 44,000 to settle the matter. In a statement attached to the settlement, the DOJ stated that the nationality restrictions are based on the “misunderstanding of the employer's requirements” under ITAR and EAR.