On August 29, 2018, in a settlement involving Clifford Chance US, LLP, a large international law firm, the Department of Justice (“DOJ”) provided the export community with a perfect example of the intersection of, and friction between, immigration anti-discrimination laws and the export control regulations, namely the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”). Clifford Chance’s misfortune can serve as a reminder to other companies to strike the appropriate balance between ITAR and EAR compliance and adherence to other relevant federal laws and regulations.
DOJ determined that Clifford Chance violated the Immigration and Nationality Act (“INA”) by unlawfully limiting its staffing for 36 positions on an ITAR-related document review project to U.S. citizens without dual citizenship.1 By excluding non-U.S. citizens and U.S. citizens with dual nationality from positions for which they were otherwise qualified, Clifford Chance was ostensibly attempting to avoid ITAR violations related to “deemed exports.” Briefly, a deemed export is the release, whether intentional or not, of export-controlled technical data to a non-U.S. person. The transfer is deemed to be an export of that technical data to the non-U.S. person’s country or countries of nationality and can constitute a violation of the ITAR if a required export license was not obtained prior to the transfer. Clifford Chance’s error, though, was in confusing U.S. person with U.S. citizen. Under the ITAR and the EAR, a “U.S. Person” includes not only U.S. citizens but also U.S. permanent residents (i.e., “green card” holders), refugees, and asylees.2
Ultimately, Clifford Chance’s misunderstanding resulted in a violation of the INA’s anti-discrimination provision, which prohibits hiring discrimination based on citizenship and national origin, because non-citizens (e.g., permanent residents) and U.S. citizens with dual nationalities are examples of U.S. persons under the ITAR. However, these individuals were disqualified by the law firm from positions for which they were eligible.3 The choice to alienate certain employees from the project based on citizenship ultimately led to serious consequences for Clifford Chance, including a $132,000 civil penalty, a requirement that the DOJ oversee the firm’s actions for a two-year period, and the reputational harm that comes with a law firm violating the law.
The Clifford Chance settlement is not the first time DOJ has dealt with the intersection of the INA’s anti-discrimination provision and the export regulations. In prior guidance, the DOJ’s Civil Rights Division explained that the ITAR does not limit the categories of work-authorized non-U.S. citizens an employer may hire, but rather requires employers to obtain export licenses for non-U.S. person employees whose positions require access to ITAR-controlled technical data. In other words, employers adopting a blanket policy of only hiring U.S. persons for ITAR positions could be in violation of the INA’s anti-discrimination provision if the employer’s policy does not even contemplate the option to obtain export licenses for non-U.S. persons.
If your company finds itself having to navigate a similar situation that implicates both hiring discrimination and export control compliance, you should review the company’s hiring and contracting processes and avoid limiting your hiring to only U.S. citizens without reviewing the INA’s anti-discrimination provision and the export laws very carefully. The attorneys at Torres Law are experienced at handling matters involving this confusing intersection of laws and are happy to assist.
1 Justice Department Settles Immigration-Related Discrimination Claim Against International Law Firm, U.S. Department of Justice (Aug. 29, 2018), https://www.justice.gov/opa/pr/justice-department-settles-immigration-related-discrimination-claim-against-international-law.
2 15 C.F.R. § 772.1 (2018); 22 C.F.R. § 120.15 (2018).
3 Immigration and Nationality Act, 8 U.S.C. 1324b (1996).
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