United States: DOJ Guidance On Navigating Between A Rock – Export Controls – And A Hard Place – Employment Nondiscrimination

U.S. companies, particularly defense and other high-tech companies, have long faced challenges of how to comply with both the deemed export rule, which may require employment discrimination in very limited circumstances, and employment laws that prohibit discrimination. On March 31, 2016, the U.S. Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices (the "OSC") issued guidance to help navigate these seemingly contradictory requirements. While helpful in some areas, that guidance may add to the confusion surrounding these requirements in other areas.

The Rock – The Deemed Export Rule

The deemed export rule, enforced by the Directorate of Defense Trade Controls ("DDTC") and the Bureau of Industry and Security ("BIS"), treats as an export the release of technical data to a foreign person within the United States. If a company's product is classified as a defense article under the International Traffic in Arms Regulations ("ITAR"), then in most cases the company would need an export license from DDTC to release technical data related to that product to an employee who is a foreign person. Release to foreign persons of technology related to nondefense articles is subject to the Export Administration Regulations ("EAR") and may need a license from BIS, depending upon the specific product and foreign nationality involved.

The ITAR defines a "foreign person" as "any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3)." The EAR uses the term "foreign national," which essentially has the same meaning as the ITAR's "foreign person."

The ITAR definition of "technical data" includes "[i]nformation ... which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation." The EAR defines "technology" as "[s]pecific information necessary for the development, production, or use of a product." Given these broad definitions, many employees would need access to controlled technical data in order to fulfill their job functions. Before the company can allow an employee to have such access, it must determine (1) whether that employee is a foreign person; and (2) if yes, then whether an export license is needed based on the products and the foreign person's nationality. If yes, it must then apply for and obtain the needed license. The likelihood of DDTC or BIS issuing a license varies depending upon the nationality of the foreign person. Also, DDTC is barred statutorily from issuing licenses where the employee's home country is subject to an arms embargo, such as is the People's Republic of China. As explained below, companies trying to comply with these requirements need to be very careful not to overstep what is permitted under the federal and state employment nondiscrimination laws.

The Hard Place – Employment Nondiscrimination Requirements

The Immigration and Nationality Act ("INA") includes antidiscrimination provisions which prohibit (1) citizenship or immigration status discrimination with respect to hiring, firing, and recruitment or referral for a fee; (2) national origin discrimination with respect to hiring, firing, and recruitment or referral for a fee; (3) unfair documentary practices related to verifying the employment eligibility of employees; and (4) retaliation against or intimidation of individuals who file charges with OSC, who cooperate with an OSC investigation, who contest action that may constitute unfair documentary practices or discrimination based upon citizenship or immigration status or national origin, or who assert their rights under the INA's antidiscrimination provisions.

Title VII of the Civil Rights Act of 1964 makes it unlawful to fail or refuse to hire or to discharge any individual or otherwise to discriminate against any individual with respect to his or her compensation, terms, conditions, or privileges of employment or to limit, segregate, or classify employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his or her status as an employee because of such individual's national origin. National origin discrimination involves treating applicants or employees unfavorably because they are from a particular country or part of the world or because of their ethnicity. U.S. citizens and noncitizens alike may be subject to and assert claims of national origin discrimination.

DOJ Provides Guidance on Navigating the Rock and the Hard Place

For employers that due to the nature of their business are caught between complying with both export control laws and antidiscrimination laws, guidance from the agencies responsible for enforcing these laws has been sparse. The OSC recently released its response to a request for guidance regarding complying with antidiscrimination laws (specifically under the INA) when verifying employees' citizenship status under U.S. export control laws, including the EAR and the ITAR.

The request letter asked whether an employer may require employees to present documents to establish their citizenship or immigration status. The letter also asked whether employers, including staffing agencies, may ask job applicants or newly hired employees whether the individual is a U.S. citizen, lawful permanent resident of the United States, or a person admitted to the United States as an asylee or refugee, and if the individual answers "no" to any of these questions, to provide proof of their citizenship and U.S. immigration status.

The OSC begins its response by clarifying that the ITAR does not impose requirements on U.S. companies concerning the recruitment, selection, employment, promotion, or retention of foreign persons; rather, it requires that employers obtain export licenses for non-U.S.-person employees if their positions require access to information governed by the ITAR. Accordingly, the OSC states the "ITAR does not limit the categories of work-authorized non-U.S. citizens an employer may hire."

It goes on to state that in order to avoid confusion among applicants or human resources personnel about the need for the information, the proposed questions regarding citizenship and immigration status should not be asked of all new applicants, assuming that the employer hires for at least some positions not subject to export control restrictions. The OSC also expressed concern that asking job applicants questions about their immigration or citizenship status for positions that are subject to export control laws may deter individuals such as refugees or asylees from applying due to a misunderstanding about their eligibility.

The OSC further opined that it was unlikely an employer would violate the INA's prohibition on citizenship status discrimination if it asks the proposed questions of all job applicants or new hires for positions subject to export control restrictions to determine only whether the employer (including a staffing agency's client) will need an export license for certain individuals for particular positions. The OSC stated, however, that an employer may be engaging in citizenship-status discrimination if it rejected an application from a protected individual, such as a refugee or asylee, based on that individual's answers or if a staffing agency limited the scope of potential assignments based on a protected individual's answers to the questions.

The OSC also expressed concern that the questions as posed could lead to unlawful hiring decisions by human resources personnel who make assumptions about an applicant's eligibility based on his or her country of citizenship or show a preference in hiring based on national origin. The OSC also found that the proposed questions could lead rejected applicants who disclosed their country of citizenship to believe that they were denied employment due to their actual or perceived national origin, which may lead them to file a discrimination charge.

Finally, the OSC found that the questions implicate the prohibition against unfair documentary practices in the employment eligibility process. The OSC confirmed that an employer that implements a document verification process to determine only a new employee's immigration or citizenship status to comply with export control laws is unlikely to violate the antidiscrimination provision if the document verification process is separate and distinct from the employment eligibility process. However, the OSC cautioned employers that to the extent these "separate and distinct" processes appear to be integrated, such as due to proximity in time, employees and human resources personnel may have the impression that the documentary requests are for employment verification purposes. Seeking immigration and citizenship information using documents separate from those used in the employment eligibility process – which include introductory language or legends explaining that the purpose of the inquiries is to comply with export control laws – may help convey that the two processes are distinct. If feasible, employers should make different personnel or even separate departments responsible for handling each of the distinct processes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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