Elon Musk is, these days, perhaps the most controversial billionaire. With memes and cryptic tweets, he acts more like a troll on Twitter than a subdued and clandestine wealthy person espousing the 3×5 card of allowable opinions. Despite his unpredictable online behavior, though, Musk is considered to be an accomplished businessman and engineer, as is evident in the stock price of Tesla Motors. Musk has faced the occasional lawsuit, but his companies appear to follow federal and state laws. And it seems that adhering to edicts handed out by politicians and bureaucrats could get his rocket corporation into trouble.
Musk v. DOJ
The Department of Justice (DOJ) will be investigating the hiring policies of Musk’s SpaceX after a candidate submitted a complaint to its Immigrant and Employee Rights Section. But while the company contends that the applicant “gave an unimpressive screening interview,” the individual thinks he was turned down because of his citizenship status.
Fabian Hutter is a permanent U.S. resident, holding dual citizenship from Austria and Canada. He is not a U.S. citizen. According to the complaint, Hutter was interviewed for the role of technical strategy associate in March 2020. He alleges he was rejected after he was asked about his citizenship, and the subsequent interview by a corporate recruiter “was perfunctory.”
“Within five seconds, I knew this wasn’t a real interview,” Hutter told CNBC. Court records show that the DOJ unit will investigate the complaint and “may explore whether [SpaceX] engages in any pattern or practice of discrimination.” DOJ attorney Lisa Sandoval averred that SpaceX failed to hire Hutter because he is not a U.S. citizen. The Musk-led company refrained from obeying a subpoena or submitting an I-9 form spreadsheet that contained employee information. It was later forced to comply.
The aerospace manufacturer and space transportation services company issued a statement:
“Hutter gave an unimpressive screening interview, and SpaceX rejected his application at that point; in fact, as of July 1, 2020, SpaceX had rejected every candidate it gave a technical screening interview to and had hired no one for the position.”
SpaceX also verified that Hutter was requested to confirm his citizenship and immigration status, explaining that “federal regulations impose restrictions on SpaceX’s employment of non-US persons.” After this point in the interviewing stage, the company clarified, there was no additional discussion of his citizenship or immigration status. SpaceX said:
“Apparently, Hutter could not conceive of being rejected for legitimate reasons, and so ascribed SpaceX’s decision to discriminatory animus based on his citizenship, despite the fact that SpaceX selected him for an interview from among hundreds of applicants knowing he was not a U.S. citizen.”
Musk has been clear that he wishes to hire non-U.S. workers, but federal regulations prevent him from doing so because SpaceX’s work is considered advanced weapons technology. On the other hand, Tesla Motors possesses a U.S.-based workforce that is approximately one-quarter non-American. But does the government prohibit companies from employing foreign workers?
ITAR and AECA
In 1976, the federal government established the International Traffic in Arms Regulations (ITAR) and the Arms Export Control Act (AECA) in response to the Cold War. The purpose of these regulatory measures is to protect U.S. national security and foreign policy objectives by restricting, controlling, and safeguarding military technologies.
In recent years, SpaceX has secured many U.S. military contracts, including for missile-warning satellites and rockets capable of delivering weapons around the world at 7,500 miles per hour. Under the ITAR framework, SpaceX is only permitted to hire U.S. citizens or green cardholders. Companies caught violating these rules can face stiff fines and hurt their chances of winning future government contracts.
The U.S. State Department could grant an exception to ITAR rules, but it is unclear if Musk has attempted to submit requests. Musk revealed his frustrations over the constraints his company faces, telling an audience during the International Astronautical Congress in Guadalajara, Mexico in 2016:
“U.S. government regulations make getting a job in the U.S. hard enough as it is, but if you’re working on rocket technology, that’s considered an advanced weapons technology, so even a normal work visa isn’t sufficient unless you get a special permission from the secretary of defense or the secretary of state. So, I want to be clear, this is not out of some desire of SpaceX to just hire people with green cards.
“I think that this is not a wise policy for the U.S., because there are so many talented people all around the world that would love to have worked at our company, but unless they can somehow get a green card, we’re legally prevented from hiring anyone. I wish we could do more, but our hands are tied.”
Could there be some pushback in the future? There will inevitably be international cooperation for conquering and colonizing the stars, so multilateral treaties might force the U.S. government to update ITAR. Until then, everything SpaceX produces is made in America.
Is it peak statism when a company is investigated for following the mechanisms inside the government’s playbook? How can a business get into trouble for abiding by federal rules and regulations? Can the entertaining billionaire figure win this battle against the U.S. government? If anything, Musk has shown a knack for defeating some of the biggest forces on the planet, from the short-sellers to social justice warriors on Twitter. He will probably slay his adversaries with a meme.
Read more from Andrew Moran.