By Rebecca Yeager, Export Solutions

Deemed exports can present a challenging compliance environment for companies as they straddle export control regulations as well as employment and anti-discrimination law.  To understand the risks associated with deemed exports for an organization, it is recommended that the company understands the extent of their export-controlled items.  A deemed export is the release to a foreign national located in the United States of technology that is subject to the Export Administration Regulations (EAR). Persons with permanent residence status, U.S. citizenship, and persons granted status as a “protected individual” are exempt from the deemed export rule. The key distinction is determining what is export controlled. Companies should involve their Human Resource group as well as Trade Compliance to ensure that they are effectively and compliantly navigating the regulations.

Recently this issue was reported on by Texas News Today  concerning an investigation of SpaceX hiring practices. In a court filing, SpaceX was ordered to comply with the Justice Department’s subpoena for the company’s employment records. Specifically, a job candidate for a SpaceX position complained that that SpaceX had been discriminating against him; he believed that the decision to not hire him was based on his answers to his citizenship status. As a result of this complaint, the investigation also was said to be reviewing if “SpaceX engaged in patterns or practices of discrimination.” SpaceX is denying such actions and advised that they employ “hundreds of non-US Citizens.”

There are two important points to keep in mind from this example:

  1. U.S. Permanent Residents are considered U.S. Persons and therefore there are not any deemed export risks.
  2. U.S. companies can apply for licenses for foreign persons to have access to controlled export technology or technical data.

This spring it was also announced that the Justice Department settled a discrimination claim against Aerojet Rocketdyne, Inc. for a civil penalty of $37,008. The settlement resolved a charge brought by a lawful permanent resident whom Aerojet Rocketdyne did not consider for a mechanic position because of his immigration status. The department’s investigation concluded that Aerojet Rocketdyne violated the anti-discrimination provision of the Immigration and Nationality Act (INA) when it only considered U.S. citizens for 12 mechanic positions in Jupiter, Florida, without legal justification.

“Employers cannot limit positions only to U.S. citizens unless they have a legal requirement to do so,” said Principal Deputy Assistant Attorney General Pamela S. Karlan of the Justice Department’s Civil Rights Division. “The department commends Aerojet Rocketdyne for quickly changing its practices when it learned of the issue, and for its cooperation throughout the department’s investigation.”

The investigation also concluded that the company misunderstood its obligations under federal regulations, such as the International Traffic in Arms Regulations (ITAR), by mistakenly believing that they imposed restrictions on the company’s ability to hire non-U.S. citizens, which they do not. The investigation also determined that the company incorrectly believed that some of its government contracts required it to fill the mechanic positions with U.S. citizens. When it learned of the investigation, Aerojet Rocketdyne was forthcoming and quickly changed its practices to avoid future discrimination.

The above cases are recent enforcement efforts by the DOJ to ensure that U.S. companies are not violating the anti-discrimination laws in their efforts to abide by the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR).

To evaluate risk, exporters should:

  • Know if their technology and/or products that they manufacture and/or develop are export controlled.
  • Understand IT user rights to protect against unauthorized access.
  • Work with Human Resources and/or legal to ensure compliance with employment law.
  • Obtain any required deemed export licenses for foreign persons employed for items controlled under the ITAR and/or EAR.

Additional information on the topic can be found in a past blog written on export controls and anti-discrimination.

If you would like to learn more about how to navigate export controls, please contact Export Solutions for a free consultation.


Rebecca Yeager is a Trade Compliance Consultant for Export Solutions -- a full-service consulting firm that specializes in helping companies comply with U.S. and international import/export regulations.