Integrating compliance of export law and immigration discrimination requirements under the Immigration and Nationality Act (INA) can be challenging. Employers who export items controlled under the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) must prevent the deemed export of technical data to non U.S. Persons while avoiding employment discrimination. Recently, both SpaceX and General Motors have come under fire from the Department of Justice (DoJ) for failing to consider INA prohibitions.
General Motors Settlement
The Department of Justice secured a settlement with General Motors (GM) to resolve determinations that GM discriminated against non-citizens in violation of the INA. These actions occurred as a result of the company’s actions taken to comply with their export compliance program. These actions included unnecessarily requiring lawful permanent residents to provide unexpired foreign passports to gain employment. This action improperly combined processes for verifying workers’ permission to work in the United States with export compliance assessments.
GM, under the terms of the settlement must revise its employment policies an retrain personnel on INA requirements. The company has agreed to pay $365,000 in civil penalties, will be monitored by the Department of Justice, and be subject to reporting requirements. Most importantly, GM is required to separate its export compliance processes from its Form I-9 processes.
SpaceX Administrative Lawsuit
SpaceX was found to have misinterpreted export law and immigration discrimination in its assertion that it could not hire asylees and refugees. These actions were too broad an implementation of export control law requirements. The DoJ is seeking the courts to cease this employment practice and pay a civil penalty to the U.S. government. It is alleged that SpaceX required green cards for positions with no exposure to controlled items or associated technical information.
This is not the first run in SpaceX has had with the government concerning its labor practices. In 2021, the company faced actions for failing to comply with a subpoena for discrimination in hiring.
Department of Justice Fact Sheet Recommendations
The DoJ has released a fact sheet to provide guidance for employers in avoiding discriminatory practices. This document states that employers generally should not use national origin, citizenship or immigration status as a criteria for employment unless stipulated by a regulation, law, executive order, or government contract. It further advises that citizenship, immigration status or national origin requirements not be mentioned in job advertisements.
It states that the ITAR or EAR should not be used to limit jobs because of citizenships, national origins, or immigration statuses and that employers and job candidates should understand that U.S. Persons definitions include more than natural born persons. U.S. Persons and Foreign Persons are defined under the ITAR and EAR as follows:
ITAR U.S. Person Definition
A person who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization, or group that is incorporated to do business in the United States. It also includes any governmental (Federal, state, or local) entity. It does not include any foreign person as defined in § 120.63.A Citizen of the United States.
EAR U.S. Person Definition
Any individual who is a citizen of the United States, a permanent resident alien of the United States, or a protected individual as defined by 8 U.S.C. 1324b(a)(3); any juridical person organized under the laws of the United States or any jurisdiction within the United States, including foreign branches; and any person in the United States.
ITAR Foreign Person Definition
The ITAR definition of foreign person is delineated in 22 CFR 120.63. It states that a foreign person is:
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). It also means any foreign corporation, business association, partnership, trust, society, or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments, and any agency or subdivision of foreign governments (e.g., diplomatic missions).
EAR Foreign Person Definition
“Foreign person” is synonymous with “foreign national,” as used in the International Traffic in Arms Regulations (22 CFR 120.16). This definition does not apply to part 760 of the EAR (Restrictive Trade Practices or Boycotts).
Proper Use of I-9 Form
Form I-9 is used to review documentation to assess if a person has permission to work in the United States. The form is not intended for export compliance assessments. Employers are not allowed to limit a person’s choice of documents from the Lists of Acceptable Documents, require other documents than required or necessary for determination, or reject valid documentation. If organizations engage in these practices they are potentially violating the INA.
Department of Justice Best Practices
The following are recommended best practices when making assessments for export compliance purposes:
- Only perform assessments for employees who will work with controlled items.
- When requesting documentation for employees who require export compliance assessment, inform them of the purpose of the assessment.
- Maintain separate procedures for Form I-9 and export compliance assessments.
- Do not use Form I-9 document for proof of citizenship.
- Do not make notes on Form I-9 documents with regards to export compliance.
- Store export compliance documents separately from Form I-9 documents.
- Ensure that personnel handling onboarding processes are properly trained on citizenship based discrimination.
- Explain the separation between Form I-9 and export compliance processes.
CVG Strategy Export Compliance Management Programs
Export Compliance is an important subject for businesses engaged in sales of items that are intended for international sales or could result in international sales. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities.
A well developed export compliance program can help in integrating export law and immigration discrimination regulations. Such a program defines policies and procedures to harmonize regulatory requirements in a manner that can be regularly reviewed and improved.
CVG Strategy can help you in understanding the ITAR and EAR, and help you establish a coherent and effective export compliance system. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.