Exports deemed via H-1B workers
YOUR COMPANY IS developing online banking systems and incorporating biometric
identifiers and high-level encryption source code. When an H-1B employee works on these
and certain other technologies, that information is considered -- or deemed -- exported
to the employee's country of origin. As a result, you may need to acquire an export
license or you could face severe criminal and civil penalties, says Matthew McGrath, an
attorney at McKenna & Cuneo, in Washington.
1. Understand 'deemed export'
When a company shares knowledge, services, or technology with a foreign national in
the United States, there is a deemed export, McGrath says. Foreign nationals include H-
1B employees but not permanent residence or "green card" employees.
The Department of State oversees licenses covering military use technologies. The
Bureau of Export Administration (BXA) grants dual use technologies. Due to national
security reasons and the increased number of H-1B visas granted, "deemed exports" to
India and China are under scrutiny by the BXA, experts say.
2. Review controlled technologies
"Most commercial software is not a controlled technology," McGrath says. To
determine whether an export license is needed to allow H-1B employees to work on a
project, review the Export Administration Regulations and the Controlled Commerce List
(CCL), McGrath says. This CCL, maintained by the BXA, categorizes technologies for
export license requirements.
3. Review license needs at hiring
"The HR department needs to consider during the hiring phase if a deemed export
license will be needed for an H-1B employee," McGrath says. Obtaining a license can
take 12 weeks through the State Department or six weeks through the BXA, if no
additional reviews are needed.
Some managers are concerned about inquiring into a person's national origin because
of employment discrimination laws. "If you have a legitimate business reason, it is
proper to find out an H-1B employee's national origin. Doing so needs to be managed as
a risk and left to HR professionals," McGrath says
4. Extend license review
Processes for deemed export license review should be built in at other business
phases, such as assembling teams for new projects. In addition, companies must be
concerned about not only deemed exports to their own H-1B employees but to those of
their suppliers, customers, and strategic technical partners.