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Infosys H-1B Fraud Case Heads For Trial

Allegations that outsourcer Infosys abused visa program cannot be settled out of court, judge rules.
Claims that Indian outsourcer Infosys routinely brought foreign tech workers into the United States on fraudulently obtained H-1B visas must be heard at trial, a federal circuit judge in Alabama has ruled. Infosys, which has denied the allegations, had been seeking an out-of-court settlement through arbitration.

The case arose last year, when Jack "Jay" Palmer, who was an Infosys consultant, sued the company, claiming that Infosys officials in management meetings expressed the need to "creatively" get around H-1B restrictions, which require companies to pay foreign workers a wage that's in line with average U.S. salaries for a particular job.

The H-1B program is also capped at 65,000 workers per year, not including set asides for foreign nationals who graduate from U.S. universities.

"During one of the meetings, Infosys management discussed the need to, and ways to, 'creatively' get around the H-1B limitations and process and to work the system in order to increase profits and the value of Infosys' stock," Palmer charged in papers filed in the Alabama court.

[Debate is strong on the future of offshoring IT services. See Indian Outsourcing Model 'Over,' Says HCL Exec.]

"Infosys was sending lower level and unskilled foreigners to the United States to work in full-time positions at Infosys' customer sites in direct violations of immigration laws," Palmer alleged. "Infosys was paying these employees in India for full-time work in the United States without withholding federal or state income taxes. [Palmer] also learned that Infosys overbilled its customers for the labor costs of these employees," he claimed.

Infosys has said that it's reevaluating its visa program, but denies it's guilty of systematically abusing H-1B visas.

"We take very seriously our obligations under the law and specifically our responsibilities to comply with the immigration laws and visa requirements in all the jurisdictions where we have clients. We have made changes in our policies regarding immigration and visa requirements and we will continue to improve such policies as necessary to maintain the absolute best practices for compliance," a company spokesman said at the time of the suit's filing.

The allegations against Infosys have caught the eye of U.S. authorities. In an SEC filing, Infosys confirmed that earlier this year it received a grand jury subpoena from the U.S. District Court in Eastern Texas, seeking "documents and records related to the company's sponsorships for, and uses of, [H-1B] business visas."

Infosys has previously said it "intends to comply with the subpoena and to cooperate with the grand jury's investigation."