The letter and previous OSC guidance documents it cites highlight several fundamental questions and points of tension that companies often fail to recognize as raising legal and compliance risks in connection with hiring processes, including:

• When can a company worried about its export control obligations ask about citizenship, immigration status or national origin during the application and new-hire process?
• What can a company ask?
• What kind of documentation can a company require to demonstrate citizenship, immigration status or national origin?
• Is a company permitted to prescreen or otherwise not hire candidates if the company would be required to obtain an export license or other authorization in order for candidates to do the job for which they are applying?

OSC’s letter does not upend the core concepts that companies are not obligated to sponsor non-U.S. persons for work-authorized immigration status or for export licenses, and can therefore refuse to hire such persons on that basis without violating anti-discrimination laws. However, it does indicate that DOJ and other government agencies will examine such situations closely, and will scrutinize any even arguably improper conduct. As a result, the letter is an important reminder that employers should implement and periodically revisit thoughtful, carefully crafted plans and structures for dealing with their screening and hiring of non-U.S. persons in order to avoid inadvertent violations and anticipate close government review.

The Regulatory Landscape – Immigration and Export Control Overlap

OSC’s guidance sits at the intersection of several legal regimes and hiring processes. First, the anti-discrimination provision of the Immigration and Nationality Act (INA, codified at 8 U.S.C. § 1324b) − which is enforced by OSC − prohibits, among other things: (1) national origin, citizenship or immigration status discrimination in hiring, firing, or recruiting or referral for a fee, and (2) unfair documentary practices (commonly known as “document abuse”) during employment eligibility verification via either the Form I-9 or E-Verify process. The risk of violation can arise whenever questions about citizenship, immigration status or national origin are raised during new-hire processes.

However, U.S. export control laws and regulations − including the International Traffic in Arms Regulations (ITAR) administered by the U.S. Department of State, the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce, and the Part 810 controls administered by the U.S. Department of Energy − place restrictions on the sharing of certain technology, technical data or other information with non-U.S. persons, even if those persons are employees of a U.S. company. Companies hiring non-U.S. persons (i.e., persons other than U.S. citizens and nationals, lawful permanent residents and certain refugees and asylees) may be required to obtain “deemed export” licenses or other authorizations from one or more federal agencies if non-U.S. employees or contractors will be provided access to controlled information. This makes it imperative that employers have information about citizenship, immigration status or national origin as early in the hiring process as possible.

The issue is even more acute for employers who sponsor non-U.S. employees for visas pursuant to USCIS Form I-129, which requires the employer to complete the following certification:

With respect to the technology or technical data the petitioner will release or otherwise provide access to the beneficiary, the petitioner certifies that it has reviewed the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) and has determined that:

1.   A license is not required from either the U.S. Department of Commerce or the U.S. Department of State to release such technology or technical data to the foreign person; or

2.   A license is required from the U.S. Department of Commerce and/or the U.S. Department of State to release such technology or technical data to the beneficiary and the petitioner will prevent access to the controlled technology or technical data by the beneficiary until and unless the petitioner has received the required license or other authorization to release it to the beneficiary.

Depending on which export control regime applies to the information to which a new hire might have access, the level of applicable controls and the corresponding need for licenses can vary dramatically. In some cases, a candidate from one country may be able to access all of the controlled information applicable to a job with no need for a license, while a candidate from another country would be able to access almost none of the same controlled information without a license. Because this variable level of control is dependent on nationality, it is vital that a company executing this certification have complete and well-verified supporting information.

Unpacking the OSC Letter

Unfortunately, OSC’s new letter does not resolve the inherent tension between avoiding discrimination based on citizenship, immigration status and national origin in hiring and firing decisions, and obtaining clear and confirmed information about citizenship, immigration status and national origin in order to ensure compliance with export control requirements. However, its careful parsing of the issue does underscore a handful of guiding principles:

• Asking for information about citizenship, immigration status or national origin during the hiring process must be carefully managed because it is and will continue to be a potential third rail.

If you know that you are hiring for some positions that will not implicate export controls, or you are unsure whether a position might implicate export controls, asking applicants about their citizenship, immigration status or national origin prior to their being hired puts you at risk of violating − or at least being accused of violating − the anti-discrimination provisions of the INA. Even if you do know that a position will be subject to export controls, OSC warns that asking for information on citizenship, immigration status or national origin could raise anti-discrimination concerns. Accordingly, any hiring system that is anything other than blind to citizenship, immigration status and national origin must be designed, implemented and overseen with OSC’s guidance in mind.

To date, OSC has endorsed only two questions as safe to ask of applicants in this context:

1. Are you legally authorized to work in the U.S.?

2. Will you now or in the future require sponsorship for employment visa status (e.g., H-1B status)?

OSC does not object to asking applicants about their citizenship, immigration status or national origin if needed to comply with export controls or other federal law, but questions must be narrowly tailored to meet that purpose. This includes asking only if the position at issue is known to implicate those legal restrictions. Thus, companies asking for such information at the pre-hire stage must be careful about when and how they do so, as even the slightest appearance of selective or discriminatory hiring can generate complaints and OSC scrutiny.

• Employers are not obligated to hire non-U.S. persons requiring export licenses in order to perform their job, but this is a narrow and disfavored exception.

If a company knows that it would be required to apply for an export license in order to hire a non-U.S. person into a particular position, it may choose not to hire that candidate. Because such a decision is based on the licensing requirement and not that person’s citizenship, immigration status or national origin, it would not be considered improper discrimination under the INA. However, companies making such hiring decisions must be cautious not to apply this exception: (1) in a potentially discriminatory fashion (e.g., not hiring candidates from certain countries but hiring them from others, even though the licensing requirements for the countries would be similar); (2) prospectively (e.g., not hiring a non-U.S. candidate for a position that does not require a license, because the next position in his or her progression through the company would); or (3) based on assumption (i.e., because a license might be required at some point in the future, versus knowing that a license will be required for the position into which the candidate would be hired).

(As a related reminder, employers also have no general obligation to sponsor a non-U.S. person for a green card, work visa or other work-authorized immigration status, but similarly must make the decision, for or against sponsorship, in a non-discriminatory manner − e.g., not based on gender or national origin.)

The careful wording of OSC’s letter is a strong signal that it disfavors companies choosing not to hire non-U.S. candidates due to export licensing requirements, and will apply close scrutiny to companies that do so if it ever investigates their hiring practices. However, that is a business decision many companies make for a variety of very good reasons, including the costs and challenges that come with applying for and managing compliance with export licenses. Companies making that decision need to conduct thoughtful, well-documented analysis of whether particular positions implicate export control considerations, before refusing to hire non-U.S. candidates on that basis.

• You must keep employment eligibility processes separate from export compliance processes.

If a company does not maintain adequate delineation between the process for confirming employment eligibility (completion of Form I-9 or E-Verify), and the process for determining citizenship, immigration status or national origin in order to comply with export control laws, it is at risk of committing document abuse. These two processes need to be separate and distinct, and not be or appear to be integrated.

McGuireWoods’ Strategic Risk & Compliance team regularly counsels clients in connection with export control and immigration/worksite enforcement matters, drawing on resources from the firm’s Labor & Employment, Government Investigations & White Collar Litigation, and other departments. Please contact us for more information about the issues raised by the OSC letter, or any other compliance or risk management needs.