In today’s news and commentary, the DOJ sues a software company for hiring discrimination against US citizens, Elon Musk’s xAI and DOJ successfully delay litigation on Colorado AI discrimination law, and USTR hosts a public hearings on forced labor tariffs. 

On Tuesday morning, the DOJ Civil Rights Division announced a proceeding against Cloudera, a California tech company. Cloudera is accused of violating the Immigration and Nationality Act by intentionally favoring foreign workers with temporary visas over US citizens. Cloudera was purportedly using the permanent labor certification program (PERM) to establish permanent residence for its current employees who held temporary work visas. PERM is frequently used by employers to initiate a green card process for current temporary-status employees that the company wants to keep long-term. However as part of this process, the employer is required to go through a “good faith” recruitment process to demonstrate there is no qualified US worker who wants the job. The DOJ suit accuses the company of deterring US citizens from applying, or not considering them entirely. The complaint was filed with the Office of the Chief Administrative Hearing Officer, a DOJ tribunal, and asks for civil penalties and backpay to applicants for lost wages. This suit is in line with the Civil Rights Division’s initiative under the second Trump administration to go after companies that “illegally discriminate against U.S. workers.” 

Meanwhile, the Civil Rights Division joined Elon Musk’s xAI and Colorado’s Democratic Attorney General Phil Weiser in a motion to suspend litigation over Colorado’s SB 205. The bill, set to take effect on June 30th, is a broad anti-AI discrimination measure that would regulate how businesses use AI in “consequential decisions,” including employment, housing, and insurance. It is currently the subject of a federal lawsuit which argues the law is a violation of the First Amendment because it requires AI developers to take steps to prevent discriminatory outcomes, while explicitly permitting AI use that promotes diversity or redresses historical discrimination. Judge Chung of the District Court of Colorado agreed to pause the litigation. He also provided that any violations occurring up to 14 days after the court rules on that motion will be protected from penalties and investigation. These delays come after the bill was initially passed in 2024 with a February 2026 effective date, which was then pushed to June 30th of this year to give the legislature more time to negotiate with tech interest groups. Notably, this is the first time that the federal government has interfered with a state’s attempt to regulate AI, signaling potential willingness by the Trump administration to intervene as such legislation crops up across the country.

Finally, today is the second and final day of public hearings by the Office of the United States Trade Representative (USTR) on potential Section 301 violations of the Trade Act of 1974 regarding forced labor. As Henry covered previously, the agency announced a wide-reaching investigation last month into the governments of 60 countries related to their alleged “failure to impose and effectively enforce a ban on the importation of goods produced with forced labor.”  Trump appointee Jamieson Greer claims that forced labor in the named countries requires American companies to compete with artificially low prices. The investigation appears to be a response by the Trump administration to the Supreme Court’s February decision in Learning Resources, which struck down Trump’s attempt to impose tariffs under the International Economic Emergency Powers Act. Under Section 301, if USTR concludes “unreasonable or discriminatory” burdens or restrictions exist, the agency is permitted to impose tariffs. Courts have the power to review these decisions, and some commentators are suspicious of USTR’s ability under Section 301 to implement the kind of sweeping, fast-paced tariffs seen last year. The current two-day hearing is one of the final opportunities for public comment before the agency makes its determination.