02/21/2019

Export Control Laws Not a Blank Check to Exclude Job Applicants

DOJ Settles with Honda Aircraft on Discrimination Claim Related to Export Controls

Earlier this month, the U.S. Department of Justice announced that it had reached a settlement with Honda Aircraft Company LLC in connection with allegations that Honda Aircraft engaged in unfair immigration-related discrimination against job applicants. Specifically, the DOJ alleged that Honda Aircraft, which manufactures and sells business jet aircrafts, violated the Immigration and Nationality Act’s anti-discrimination provision (8 U.S.C. § 1324b) by publishing job announcements which specified that only applicants who are U.S. citizens or lawful permanent residents would be considered for employment in roles involving technical data and technology subject to the International Traffic in Arms Regulations (“ITAR”) or the Export Administration Regulations (“EAR”).

Although the ITAR and the EAR restrict foreign persons’ access to certain export-controlled technical data and technology, the DOJ noted that those regulations do not authorize or require companies to hire only U.S. citizens and lawful permanent residents. As the DOJ further explained, even the ITAR’s definition of “U.S. Persons” extends beyond lawful permanent residents and U.S. citizens to also include U.S. nationals, refugees, and asylees. See ITAR § 120.15; 8 U.S.C. § 1101(a)(20); 8 U.S.C. § 1324b(a)(3). Pursuant to the settlement agreement, Honda Aircraft agreed to pay a civil penalty of $44,626 and to implement remedial measures, such as amending its internal hiring policies and ensuring that all its employees involved in hiring or recruiting receive non-discrimination training.

This enforcement action is not novel and reflects the U.S. Government’s long-held view that export control laws do not give companies a blank check to exclude non-U.S. citizens or lawful permanent residents from open positions. Even the U.S. State Department’s “Guidelines for Preparing Agreements” under the ITAR acknowledge that, in some circumstances, Dual/Third Country Nationals from countries proscribed under ITAR Section 126.1, such as China or Iran, may be given access to ITAR-controlled materials. See, e.g., Guidelines for Preparing Agreements (Revision 4.4b) at Section 3.5.2.

Nevertheless, the Honda Aircraft settlement is an important reminder that companies subject to the ITAR or the EAR must undertake a careful analysis when posting job openings and making hiring decisions to ensure that they appropriately balance the duties and obligations imposed by competing laws and regulations. If a company is overly restrictive in its hiring practices while attempting to comply with the ITAR or the EAR, then it inadvertently may run afoul of anti-discrimination laws and regulations. Although the ITAR and the EAR ultimately may limit foreign person employees’ participation in certain business functions or otherwise may require employers to obtain U.S. export licenses for such employees, a company is now well advised—by the U.S. Government—not to follow a prohibition approach with regard to non-U.S. citizens or lawful permanent residents based on the ITAR or the EAR alone. Non-U.S. companies dealing with ITAR- or EAR-controlled technical data or technology similarly should be wary of adopting a prohibition approach and of contravening their own countries’ anti-discrimination laws while attempting to comply with those U.S. regulations.

Holland & Hart has an experienced team of international trade compliance, employment, and immigration counsel who are well prepared to assist your company’s efforts to balance ITAR and EAR export control restrictions and licensing requirements with federal and state anti-discrimination laws.

Questions? Please contact Steven Pelak (202.654.6929 / swpelak@hollandhart.com), Jason Prince (202.654.6937 / jeprince@hollandhart.com), Roger Tsai (303.295.8171 / RYTsai@hollandhart.com), Gwen Green (202.654.6913 / gsgreen@hollandhart.com), or Brett Ruff (208.383.3923 / bcruff@hollandhart.com).
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