SpaceX’s recent legal troubles with the Justice Department make it the latest employer to allegedly run afoul of federal immigration law by prioritizing compliance with export control rules to the detriment of antidiscrimination provisions.
The DOJ Aug. 24 filed an administrative lawsuit alleging that Elon Musk’s private rocket manufacturer engaged in “routine, widespread, and longstanding” discrimination by refusing to hire asylees and refugees. The company wrongly stated that it could only hire US citizens and lawful permanent residents because of export control laws limiting access to defense and national security-related technologies, the DOJ said.
That’s not an uncommon mistake, attorneys say.
Employers can misinterpret export control laws and regulations—including the International Traffic in Arms Regulations and Export Administration Regulations—to apply more broadly than stated, said Lisa Mays, an associate at Sheppard, Mullin, Richter & Hampton LLP who advises clients on export control compliance. More companies are dealing with export-controlled items, she said, while the pace of hiring has picked up as job applications moved mostly online.
For instance,
The export control regime was originally enacted during the Cold War and is intended to restrict military-related technology from being exported to foreign countries. Violating those rules can come with heavy fines and even criminal penalties.
Companies at all stages of the supply chain of the defense, aerospace, electronics, telecommunications, and transportation industries can be subject to the rules.
Meanwhile, the Immigration and Nationality Act prohibits employers from discrimination in hiring based on citizenship status or national origin, as well as unfair documentary practices used to verify employment eligibility and retaliation or intimidation.
“The key is that companies are prohibited from restricting both hiring and staffing practices based on citizenship or national origin,” Mays said. “So even where a company would require an export license to employ a non-US person in a position, the company must pick the best candidate and then apply for the required export license as necessary.”
‘US Person’
Many businesses that don’t deal with rocket or defense technology are also covered by export control laws, including tech companies. The Commerce Department, for example, recently announced export control restrictions on semiconductor manufacturers to curb Chinese access to the technology.
Yet at the same time, the DOJ’s Immigrant and Employee Rights Section, which enforces the INA’s anti-discrimination provision, has been focusing on identifying hiring discrimination through analyzing companies’ job postings—including those listed on online recruiting platforms.
Companies that fail to navigate antidiscrimination and national security law often do so because of their inability to understand the definition of “US person” authorized to access the technology under the export control regime, Mays said.
Under those rules, “US person” includes not just US citizens, but also US nationals, lawful permanent residents, refugees, and asylees. So a company wouldn’t need to obtain export control authorization from the State or Commerce departments for those employees to access controlled items like rocket technology—unless some other law, regulation, or executive order banned that access.
By contrast, someone considered a “foreign person” under export control rules would need their employer to obtain federal government authorization to work on those materials.
SpaceX tripped up because, contrary to the company’s arguments, ITAR and EAR don’t restrict employment or hiring and don’t require that jobs be based on citizenship and immigration status, the DOJ said. Musk stated in posts on X, formerly known as Twitter, and in online videos that the company isn’t allowed to hire anyone but US citizens and green card holders because of its work on rocket technology for the US government.
SpaceX didn’t return a request for comment on the lawsuit.
Even if a company produces and works on export-controlled items, many employees won’t have access to those items. SpaceX itself hires workers to fill a wide range of roles, including cooks, crane operators, dish washers, marketing professionals, and baristas, according to the DOJ’s lawsuit.
“It is the employer’s responsibility to ensure that the export controlled technology is separated, and walled off, so that only those employees who need to have access to perform their jobs have access,” said immigration attorney Heidi Meyers. “Thus, while certain positions may require an export license for a foreign person, the employer cannot restrict hiring for other positions that do not require access to controlled technology.”
SpaceX’s alleged hiring practices would be a “pretty fundamental mistake” if they’re proven to be true, said Amy Peck, co-leader of the immigration practice group at Jackson Lewis P.C.
“The regulations are confusing,” she said. “And if time is not taken to do a deep dive into the requirements, then a company will make mistakes.”
