Infosys settles with California over alleged H1-B visa scam

Indian outsourcing giant also facing tax-evasion charges denies wrongdoing

Indian outsourcing giant Infosys has agreed to an $800,000 settlement with the State of California, which had accused the company of evading taxes by using B-1 business-visit visas for hundreds of foreign workers instead of the hard-to-obtain and expensive H-1B.

State officials took legal action on behalf of whistleblower Jack “Jay” Palmer, a former Infosys employee, and sued Infosys in 2017. According to the just-unsealed Nov. 16 settlement agreement, state officials claimed that from 2006 to 2017, Infosys was responsible for “falsifying documents, false reporting and/ or falsely identifying their employees for the purposes of procuring the wrong immigration visa for their employees that were traveling to the United States.”

Palmer, according to the 2017 lawsuit, had attended Infosys planning meetings in 2010 in which managers discussed a need to get around H-1B restrictions by using B-1 visas to cut costs and increase profits.

State Attorney General Xavier Becerra’s office said in a prepared statement that Infosys brought 500 employees to California on the wrong visas “in order to underpay them and avoid paying taxes.” The lawsuit alleged that the workers were placed at third-party firms, in many cases doing computer programming and engineering. Infosys had submitted to consular officials deceptive “invitation letters” falsely claiming foreign workers would be attending “meetings” or “discussions” when in fact the workers would be coding and programming, the suit alleged.

The settlement agreement, filed in Sacramento County Superior Court, also included state officials’ claim that the company evaded taxes because B-1 visas, unlike the H-1B, don’t require income- or payroll-tax deductions. The $800,000 settlement will be paid to the State of California.

Infosys, in settling the case, denied the claims and admitted no wrongdoing.

Silicon Valley technology giants rely heavily on the H-1B visa, either directly em

ploying visa holders or obtaining them through outsourcers. The tech industry has long argued that the industry needs more of the visas to secure the world’s top talent. Critics point to reported abuses by outsourcing companies and claim the H-1B is used to supplant U.S. workers and drive down wages.

Each H-1B visa typically costs employers thousands of dollars in government fees and legal costs to obtain. The B-1, available in unlimited numbers for purposes including business meetings, conferences and contract negotiations, requires a $160 fee.

Infosys has settled similar claims over the years. In 2017, it agreed to pay $1 million to the State of New York, which had alleged a scheme involving false documents sent to federal authorities, and instructions to foreign citizens to deceive officials. “Infosys workers using B-1 visas were doing work that would otherwise have been performed by U.S. citizens or H-1B visa holders, and were paid significantly less than what comparable U.S. workers or H-1B visa holders would have been paid in the same positions,” the New York Attorney General’s office claimed in announcing that settlement.

Infosys denied all New York’s allegations and cited “paperwork errors.”

In 2013, Infosys agreed to a $34 million settlement with the U.S. government. Immigration and Customs Enforcement alleged that Infosys submitted false statements to consular officials and directed foreign citizens to deceive officials about the purpose of their visits to the U.S. The company also allegedly wrote and revised contracts with clients to conceal the fact that B-1 holders were doing jobs that should have been done by U.S. citizens or H-1B visa holders, authorities alleged.

Infosys denied the government’s claims. “Infosys’s use of B-1 visas was for legitimate business purposes and not in any way to circumvent the requirements of the H-1B program,” the company said at the time. “Infosys has never intended to, nor has it ever circumvented the requirements of the H-1B program.”

In 2018, Infosys, along with Apple, was accused in another whistleblower lawsuit of bringing two Indian workers into the U.S. on B-1 visas instead of H-1B visas. Whistleblower Carl Krawitt lost that case in March, then appealed, before dropping the appeal in July. Also at issue in the Krawitt case were “invitation letters” allegedly saying the Indian workers were coming to Apple for meetings. Apple and Infosys both said their use of the B-1 visas was legal and appropriate.