Business

Infosys to settle visa violation case in California for $800,000

Its employees had worked there on B-1 visas rather than H-1B

Tech major Infosys will pay California a sum of $800,000 to settle visa related allegations.

Attorney General, State of California Department of Justice, Xavier Becerra said an $800,000 settlement was announced against Infosys and its BPM (business process management) subsidiary. Some 500 Infosys employees were working in the state on Infosys-sponsored B-1 visas rather than H-1B visas between 2006 and 2017, as per an official post available on the website of State of California.

Avoided taxes

This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes. H-1B visas also require employers to pay workers at the local prevailing wage, the post said.

“Today’s settlement shows that attempting to evade California law doesn’t pay,” said Attorney General Becerra. “Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole.”

Responding to the settlement announcement, Infosys said, “Infosys’ agreement concludes the California Attorney General’s investigation into allegations related to the payment of state payroll taxes for some employees travelling on B-1 visas dating back to 2006.”

“The agreement – which notes that Infosys strongly disputes the allegations and in which Infosys admits no wrongdoing – will result in the case being dismissed with prejudice and was reached to avoid the time, expense, and distraction of protracted litigation on allegations dating back more than 13 years. Infosys maintains robust policies and procedures to ensure adherence with all applicable regulations and laws,” the tech major further said.

The settlement resolves the Attorney General’s claims that Infosys’s conduct violated California laws, including the California False Claims Act and Unfair Competition Law. The California False Claims Act permits the Attorney General to recover treble damages and civil penalties against any person who knowingly makes or uses a false or fraudulent statement to either obtain money from the state or avoid paying money owed to the state, as per the post on state website.

“The Unfair Competition Law prohibits any business practice that is unlawful, unfair or fraudulent. A whistle-blower who brought Infosys’s conduct to the attention of the Attorney General’s Office will receive 15% of the settlement pursuant to the California False Claims Act,” the post further said.

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack ‘Jay’ Palmer, a former Infosys employee.

It may be recalled that Infosys had paid $1 million in 2017 to the State of New York to ‘settle’ allegations of submitting incorrect documentation to federal authorities.

“Such repeated instances could signify some laxity regarding compliance. It could also reflect consistently rising misgivings among American workers regarding IT firms staffing projects by employing foreign (mainly Indian) workers,” cautioned Harit Shah, a market analyst at IndiaNivesh Securities.

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Printable version | Feb 25, 2020 2:59:49 PM | https://www.thehindu.com/business/infosys-to-settle-visa-violation-case-in-california-for-800000/article30342221.ece

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