Legal News

A recent $3.2 million settlement involving OpenAI highlights an often-overlooked discrimination risk for employers: hiring practices that favor temporary visa holders over U.S. workers.

The U.S. Department of Justice alleged that OpenAI and its subsidiary Statsig discriminated against U.S. workers during recruitment conducted as part of the Permanent Labor Certification ("PERM") process. The PERM program allows employers to sponsor foreign workers for permanent residency after undertaking required recruitment efforts to determine whether qualified U.S. workers are available.

According to the DOJ, OpenAI allegedly made it more difficult for U.S. workers to apply for certain PERM positions by failing to post those positions on its external careers website, requiring paper applications by mail when electronic applications were ordinarily accepted, and using other recruitment practices that allegedly discouraged U.S. applicants. OpenAI denied wrongdoing.

Under the settlement, OpenAI will pay $1.2 million in civil penalties and establish a $2 million fund for potential back pay. The company also agreed to revise its policies, train employees, expand recruitment for PERM positions, and undergo compliance monitoring.

For employers, the case provides an important reminder that immigration sponsorship does not permit employers to favor foreign workers over qualified U.S. applicants. Employers using the PERM process should ensure that recruitment efforts are genuine and consistent with their ordinary hiring practices.

Employers should consider:

• Using substantially similar application procedures for PERM and non-PERM positions;
• Avoiding unnecessary barriers that could discourage U.S. applicants;
• Ensuring recruiters and hiring managers understand citizenship-status discrimination requirements;
• Maintaining documentation demonstrating good-faith recruitment efforts; and
• Periodically auditing immigration-related hiring and sponsorship practices.

The broader takeaway is that employers should treat immigration compliance and employment discrimination compliance as interconnected issues. A technically compliant immigration process may still create significant exposure if recruiting practices appear designed to favor visa holders or discourage U.S. workers.

Outside Legal Counsel LLP advises employers, executives, and boards on hiring practices, employment discrimination compliance, workplace policies, internal audits, and strategies to minimize employment-related risk. Contact us today.

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This newsletter is for informational purposes only, is not legal advice, and may be considered attorney advertising.

#EmploymentLaw #ImmigrationCompliance #HiringPractices #EmploymentDiscrimination #PERM #HRCompliance

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