DOJ enforcement of U.S. export controls compliance in context of anti-discrimination laws: 2024 update

The release of technology, even within the United States, to a foreign person, is considered an export to the recipient’s country of citizenship or lawful permanent residence status. There are certain differences in the export control regulations on such so called “deemed exports.” However, even if a company understands the different deemed export and deemed reexport standards and exceptions under the Export Administration Regulations (EAR), ¹ the International Traffic in Arms Regulations (ITAR), and regulations administered by the Department of Energy (DOE), companies struggle with applying the rules in the context of employment. In particular, companies sometimes make mistakes in conducting export compliance assessment screening, leading to exposure or enforcement actions under the anti-discrimination provisions of the Immigration and Nationality Act (INA).²

Hogan Lovells has been a thought leader on this issue and has previously authored a number of publications including alerts on this topic.³ This alert addresses recent developments, including settlements between the Department of Justice (DOJ) and various organizations, as well as recent successful challenges to DOJ’s authority to enforce the anti-discrimination provisions of the INA.⁴

Export Controls & Anti-Discrimination Liability

DOJ’s Immigrant and Employee Rights Section, Civil Rights Division (IER) is tasked with enforcing the anti-discrimination provision of the INA. This provision prohibits discrimination against protected individuals on the basis of citizenship or immigration status or national origin, in hiring, firing, and recruitment decisions, including discrimination in hiring during the employment eligibility verification (Form I-9) process. IER investigates complaints of discrimination, imposes penalties and issues press releases about settlement agreements it reaches with companies that it has accused of having violated the INA. IER will also investigate and issue formal resolutions short of a settlement agreement and provide anonymized information about the matter.⁵

IER reaches dozens of anti-discrimination settlements annually. A relatively small but increasing number specifically pertain to companies which violate the INA as they attempt to comply with the EAR, ITAR and DOE regulations.

IER can impose a number of types of penalties. These include civil monetary penalties, back pay compensation, mandatory training, and recordkeeping.

Anti-Discrimination Liability Standard

Under 8 U.S.C. § 1324b, the INA prohibits employment discrimination of protected individuals based on national origin or citizenship status. The INA prohibits employers from making hiring, firing, or recruiting decisions based on workers’ citizenship, immigration status or national origin. Employers also cannot treat workers differently based on these characteristics when verifying their permission to work, including during the Form I-9 process.⁶ This is referred to as unfair documentary practices, and entails restricting what documents employees can use for verification of identity and employment eligibility. Additionally, employers may not retaliate against an individual who has, among other things, filed a charge under Section 1324b.

For the purposes of the deemed export regulations, "U.S. Persons" are those who qualify as "protected individuals" under Section 1324b(a)(3). Such individuals include U.S. citizens, U.S. nationals (a person who owes permanent allegiance to the U.S.), U.S. legal permanent resident aliens (green card holders), individuals admitted as U.S. refugees, and individuals granted U.S. asylum.

Anyone who is not a U.S. Person is a “foreign person” under both the EAR and the ITAR. U.S Persons may receive unclassified export-controlled information in the United States without triggering deemed export regulations. 

That said, there are a limited number of circumstances in which an employer may restrict hiring based on citizenship status under the INA. First, if an individual is not a “protected individual,” then the INA’s antidiscrimination provisions do not apply. Second, a hiring restriction is acceptable under the INA when it is required by law, regulation, executive order, or federal, state, or local government contract, e.g., an individual is being hired to work on a government contract with a U.S.-citizen-only requirement. In these situations, there is no good faith exception—employers can face civil penalties even if they thought they were doing the right thing and trying to comply with the export control laws.⁷

Selected Recent Cases

In recent years, there have been a number of settlements specifically related to the intersection of U.S. export control laws and antidiscrimination laws. In these situations, employers thought they were taking the necessary actions to comply with export control laws. In the enforcement actions to date, some of the employers were implementing an incorrect understanding of export control laws to unlawfully restrict employment opportunities. For example, these practices unduly restricted hiring with requirements such as limiting applicants only to U.S. citizens or only to U.S. citizens and lawful permanent residents, or forbidding dual U.S. citizens.

In other enforcement actions, employers understood the export control laws but did not follow a proper process to conduct the export compliance assessments and engaged in discrimination or unfair documentary practices. For example, employers combined the employment identification verification (Form I-9) process with the export compliance assessment process, or dictated or restricted the documents employees could use to complete Form I-9.

Some recent settlements are detailed below.

Georgia Tech (August 2023)

In August 2023, DOJ entered into a settlement agreement with Georgia Tech, a public university. The settlement was based on DOJ’s determination that Georgia Tech violated the INA through its job recruiting platform, on which third-party employers paid to advertise job openings to attract students. The questions on the electronic platform structure apparently caused certain U.S. Persons not to be able to apply for the position and therefore limited recruiting opportunities based on the students’ citizenship status. The settlement agreement included a civil penalty of $500,000, and a requirement that questions on the online recruiting platform be clarified.

Specifically, as part of the settlement agreement, Georgia Tech is required to have employers sign a certification before they can post a job listing on the recruiting platform. First, employers must indicate whether the job posting contains a citizenship or immigration status restriction.⁸ If the employer selects yes, they must describe the nature of the restriction and provide Georgia Tech with a legal justification for the restriction. The settlement provided exact language for the certification, which includes in relevant part:

 “Please provide the legal justification (that satisfies the INA) for your restriction. If your justification is that a contract requires the restriction, please quote the contract that contains the restriction. If your justification is that a law, regulation, executive order, or Attorney General directive requires the restriction, please provide a citation to the source.”

Georgia Tech Platform Users (June 2022-November 2023)

The DOJ entered into over 30 settlements with multiple different organizations for their use of the platform on the basis that U.S. Persons were prevented from applying for the positions. These agreements were entered into in June 2022, September 2022, May 2023, and November 2023, and leading to over $2.5 million in civil penalties. 

American CyberSystems (May 2023)

On May 16, 2023, DOJ and American CyberSystems entered into a settlement agreement based on findings that the company engaged in discrimination by unlawfully discouraging certain non-U.S. citizens from applying for jobs. The job advertisements were specifically targeted to U.S. citizens and lawful permanent residents because the position involved access to materials and information subject to both the EAR and ITAR. DOJ, however, concluded that American CyberSystems had no justification for excluding U.S. nationals, asylees and refugees from the job posting, as employers did not need authorization to share export-controlled items with those workers. As part of the settlement, American CyberSystems was required to pay a civil penalty, engage in training for its recruiting and human resources staff, and review its policies to ensure compliance.

General Motors (April 2023)

On April 18, 2023 IER secured a settlement agreement with General Motors (“GM”). An investigation revealed that the violations were the result of a failure to properly consider the INA’s non-discrimination requirements when working to comply with export control law. Specifically, GM’s export compliance assessments unnecessarily required lawful permanent residents to provide GM with an unexpired foreign passport. DOJ determined that this imposed a discriminatory barrier in the hiring process. Under the settlement, GM paid $365,000 in civil penalties, and was required to train employees on INA’s requirements. Further, GM had to separate its process to verify permission to work with its export compliance assessment process, and could no longer require lawful permanent residents to present a foreign passport.

Aero Precision (November 2022)

In November 2022, DOJ reached a settlement agreement with Aero Precision, LLC, a firearm manufacturer in the state of Washington. According to DOJ, “Aero Precision had a policy of unlawfully screening out non-U.S. citizen job candidates” in violation of the INA. DOJ stated that asylees and refugees have the same eligibility to work in jobs involving sensitive defense-related information as U.S. citizens, but were unlawfully screened out, in a way that placed unnecessary hiring restrictions on Aero Precision’s workforce. As part of the settlement, Aero Precision had to train its staff and review its policies. The settlement did not include a civil penalty.

Recent Challenges to the Constitutionality of IER Administrative Law Judges

In two recent cases, federal courts in Georgia and Texas found that the DOJ’s IER administrative enforcement procedure was unconstitutional, thus pausing enforcement actions brought by DOJ against those companies for violation of the INA. Both courts found that the administrative law judge (ALJ) enforcement procedure, in which Section 1324b lawsuits are filed before a DOJ administrative tribunal, violates the U.S. Constitution. The concern centers around the differences between ALJ proceedings and federal courts. ALJs are not accountable to elected officials because there are neither appointed by the president nor confirmed by the Senate.

Although these decisions do not apply nationwide at this time, they indicate a potential defense to enforcement that employers may have. Therefore, companies can strategically leverage the challenges in the face of Section 1324b investigations. The cases also do not change the ongoing substantive legal exposure of companies under other laws who incorrectly interpret the U.S. Person definition under the export control laws.

Compliance Considerations

Complying with both export controls and anti-discrimination laws can be complex and challenging. To navigate these laws, companies might consider the following points when developing their screening and hiring processes such as:

• Determine whether a job position requires release of, or provides access to, controlled technical data or technology in a way that cannot be feasibly restructured to prevent releases;
• Assess whether to state in a job advertisement that there is a specific export control law or U.S. government contract restrictions that cannot be mitigated;
• Separate the Form I-9 identity and employment eligibility verification from any export controls compliance assessment screening, and do not dictate what documents can be used in the Form I-9 verification; and
• Ensure that any export control assessment screening language is explicit about its use solely for the purpose of export control compliance.⁹

Next Steps

If you have questions about this complex and evolving area of the law, please contact one of the authors of this article or the Hogan Lovells lawyer with whom you work.