Skip to main content

Export Compliance & Anti-Discrimination:
Best Practices to Resolve Competing Interests


Matt Silverman

VIAVI Solutions

Introduction

U.S. anti-discrimination laws—Title VII of the Civil Rights Act of 1964 and The Immigration and Nationality Act—specifically prohibit employers from discriminating based on criteria such as national origin and citizenship. However, U.S. export regulations—The Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR)—require, in certain cases, that companies effectively discriminate in their hiring practices when it comes to candidates of certain nationalities who may need access to export-controlled goods or technology.

While the instinct of many compliance departments may be to simply prohibit hiring as it pertains to candidates of “restricted” nationalities, such practices may present concerns that run afoul of U.S. anti-discrimination laws as determined by the U.S. Department of Justice (DOJ) in recent years. The need to balance these competing interests and mitigate the risk of both discrimination and export violations can be achieved through some of the best practices described in this article. First, however, a brief discussion is provided below of the sometimes complex and often misunderstood regulations at issue.

The Significance of ‘U.S. Person’ Status

U.S. federal anti-discrimination laws prohibit hiring discrimination based on factors such as a candidate’s immigration status and citizenship. However, such laws may allow an employer to restrict jobs to U.S. citizens if there is another U.S. law that would require them to do so. For example, an employer could lawfully refuse to hire an otherwise qualified Portuguese national if she does not have an applicable work visa allowing her to legally work in the U.S. As another example, certain government roles could be restricted to an Australian national where the job requires a clearance (e.g., ‘Secret’ or ‘Top Secret’) that is only granted to U.S. citizens.

Using the same line of reasoning, it might be assumed that a U.S. company could restrict non-U.S. citizens for a position that requires access to export-controlled goods or technology that are specifically restricted under the EAR or ITAR to foreign nationals from countries such as Iran, Cuba, Syria, China or Russia.

This is where many U.S. companies (and non-U.S. companies with U.S.-origin goods/technologies) often misunderstand and/or misapply the regulatory language within the U.S. export regulations. An employer cannot restrict a job to only U.S. citizens because the U.S. export regulations (both the EAR and ITAR) determine eligibility to access export-controlled goods and technology based on whether the recipient is a U.S. Person—a term broader in scope than ‘U.S. Citizen.’

Under the EAR and the ITAR, a U.S. Person includes: (1) U.S. Citizens; (2) U.S. Permanent Residents (‘Green Card’ Holders); and (3) Protected Refugees/Asylees. Anyone who does not fall within one of the above three categories would be considered a non-U.S. Person, including but not limited to foreign nationals in the U.S. on a work visa or foreign nationals who are applying for (but have yet to obtain) citizenship, permanent residence or refugee/asylee status.

The Significance of Dual Nationality

Another area that often causes confusion and misapplication of the law amongst U.S. companies in the hiring process in how to treat dual nationals who may require access to export-controlled goods or technology. This is less straightforward, as the EAR and ITAR differ slightly in their approach. Both regulations state that a U.S. Person (see definition above) remains a U.S. Person for export compliance purposes regardless of any dual nationality they may have. For example, a U.S. permanent resident who also happens to hold Chinese citizenship is considered a U.S. Person for export-compliance purposes.

The split between the EAR and ITAR differ with regard to dual nationality as it pertains to non-U.S. persons. Under the EAR, if a non-U.S. person is a dual national, that person’s most recent citizenship or permanent residence will be determinative for purposes of U.S. export compliance. Whereas under the ITAR, if a non-U.S. person is a dual national, all countries of citizenship and permanent residence will be determinative for purposes of U.S. export compliance.

U.S. Department of Justice Case Studies

These two areas of misunderstanding and misapplication of the U.S. export regulations—U.S. Person status and the significance of dual nationality—have been at the center of recent DOJ case studies that have imposed fines on companies for unlawfully restricting or denying candidates positions that require access to export-controlled goods or technology. Recent and relevant DOJ case studies include: Setpoint Systems Inc. (June 2018); Clifford Chance (August 2018); and Honda Aircraft Company (February 2019).

As well, the DOJ is currently investigating the hiring practices at SpaceX after receiving a complaint from a U.S. permanent resident and dual national that the company failed to hire him due to the fact that he was not a U.S. citizen.

Best Practices

Armed with a better understanding of some of the nuances and complexities of the export regulations that create the risk of butting heads with U.S. anti-discrimination laws during the recruitment and hiring process, let’s consider some of the best practices that companies can imbed in order to mitigate such risk and avoid violations.

First, in posting job openings, be attentive to the specific language used. If a job will not require access to export-controlled goods or technology, there is almost no reason to make any statement in a job posting suggesting that candidates must be of a certain nationality. While a foreign-national candidate may require a work visa, her or his nationality will almost certainly be moot from an export-compliance perspective if she or he does not need access to export-controlled goods or technology.

Assuming that a role does require access to U.S. export-controlled goods or technology, be sure to state such requirement in the job description; however, be deliberate with the terminology used. For example, don’t use the term ‘citizen’ (e.g., “Only U.S. citizens need apply.”) as you most likely need to include the broader term of ‘U.S. Person.’ Furthermore, don’t outwardly discourage foreign nationals from applying to a role that requires access to export-controlled goods or technology, especially considering that many U.S. export-controlled goods and technologies can be lawfully accessed by foreign nationals via license exceptions or exemptions or via a U.S. license from the applicable regulatory agency.

During the candidate screening process, avoid what could be considered under the U.S. anti-discrimination laws to be “unfair documentary practices.” Such practices may include employers requesting more or different documents than those necessary to verify employment eligibility or requesting such documentation with the intent to discriminate based on national origin or citizenship. The perception of such unfair practices can be avoided in a number of ways. First, only request citizenship and/or permanent residency information for positions that require or may reasonably require access to U.S. export-controlled goods or technology. Second, only request citizenship and/or permanent residency verification via a valid form of documentation (e.g., birth certificate or unexpired passport) and let the applicant choose which document to provide. Third, if the applicant is a U.S. Person and provides confirming documentation of such, do not inquire or seek documentation regarding dual nationality—remember, a U.S. Person is a U.S. Person, regardless of having a dual nationality.

Conclusion

Even if a company is appropriately balancing the export-compliance and anti-discrimination requirements in its recruitment and hiring processes, once employees are hired on, it may be necessary to implement safeguards to mitigate the risk of unlicensed foreign nationals from accessing certain controlled goods or technology. Along with the physical and IT restrictions that a company may put in place to prevent such access, it’s also important to provide adequate training to employees so that they (1) understand the reasoning why such restrictions have been implemented; and (2) are discouraged from ‘working around’ such restrictions.

Matt Silverman is the Global Trade Director & Senior Counsel at VIAVI Solutions in Scottsdale, Arizona. He has experience leading corporate compliance programs in the technology, aerospace and energy industries, with specialization in export controls, economic sanctions, antiboycott law and customs compliance. Prior to his corporate career, Matt worked in Washington D.C. on trade policy and legislation.


Disclaimer: The viewpoints expressed by the authors are their own and do not necessarily reflect the opinions, viewpoints and official policies of Practising Law Institute.

To submit an article for consideration, please contact the editor at: editor.plichronicle@pli.edu


This article is published on PLI PLUS, the online research database of PLI. The entirety of the PLI Press print collection is available on PLI PLUS—including PLI's authoritative treatises, answer books, course handbooks and transcripts from our original and highly acclaimed CLE programs.

Sign up for a free trial of PLI PLUS at pli.edu/pliplustrial.