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The $34 Million Question What IT Consulting Companies Should Learn from the Infosys Settlement
Jang Hyuk Im
Monday, February 10, 2014
Infosys, one of India's largest IT consulting companies traded over the NYSE with market capital exceeding $30 billion could not escape the U.S. government's investigation into the legality of its immigration practices as evidenced by its recent $34 million settlement with the U.S. Department of Justice (DOJ), regarding claims that the company improperly used the B-1 nonimmigrant classification in violation of the U.S. immigration laws. So the $34 million question is "What can we learn from the Infosys settlement?"

Beware the Whistleblower

One of the hard lessons that Infosys learned was the impact that a disgruntled employee could have on its activities. The DOJ investigation began after an employee complained that Infosys was bringing in foreign workers to the United States on B-1 visas for unlawful work assignments. This whistleblower stands to collect a portion of the settlement proceeds so the financial incentive to report organizational misconduct is strong. Couple that with the whistleblower's resentment of the employer and you have a recipe for the type of expensive disaster that Infosys just experienced.

Do Not Neglect the Legal Limits on the B-1 Visa Classification

The B-1 visa classification allows foreign nationals to engage in certain activities. These include consulting with the U.S. business associates; attending business conventions; participating in litigation; negotiating contracts; and other temporary activities involving and incident to international trade or commerce. But the B-1 category does not permit employment or labor for hire. This means B-1 visitors cannot work here while in the US.

As part of the visa application process, many U.S. consular officers require invitation letters from the U.S. businesses to confirm that the foreign national is eligible for a B-1 visitor's visa. Here, the DOJ charged Infosys with drafting invitation letters that falsified or misstated the true intentions of the B-1 applicants that it supported. The DOJ alleged that many of these B-1 visitors were brought to the U.S. to perform coding and programming work, but the Infosys support letters represented that the entries were for, "customer discussions and related business development activities meetings and business discussions."

The Infosys settlement underscores how expensive immigration violations can be. To avoid these problems, companies need to control the B-1 visa process and make sure that all B-1 support letters accurately include, among other things, the exact purpose of the trip. This may require implementation of proper internal anti-fraud policies, including internal controls by the company's Human Resources and Legal Departments of the B-1 visitor application process and support letters.

Follow the H-1B Requirements Even After Approval

The DOJ also alleged that Infosys failed to satisfy important H-1B visa requirements. The H-1B category allows foreign national employment to work here in professional "specialty occupations" for their company sponsors. To secure H-1B approval, the sponsoring employer first must obtain an approved Labor Condition Application (LCA) representing, among other things, the employer will pay the legally required wage at the place(s) of employment. The DOJ charged Infosys with assigning H-1B employees to locations not mentioned on the LCAs. This reminds all H-1B employers to closely monitor where H-1B employees are working and to explore the need to file amended H-1B petitions in the event that changes in the employee's physical location, salary, or job requirements are contemplated.

Follow the I-9 Verification Requirements

Finally, the DOJ alleged that Infosys failed to properly maintain its I-9 records for its nonimmigrant employees. These I-9s either were not properly completed or were not re-verified when extensions of nonimmigrant status were approved. Companies should have in place specific I-9 protocols that assure proper and timely completion of the I-9s, proper storage, provide for periodic self-audits, and in the context of Infosys, proper re-verification of expiring nonimmigrant visa status. Failure to follow these requirements could result in substantial administrative fines.
Infosys learned a hard $34 million lesson-the highest monetary fine of its kind in the history of immigration violations. But, the silver lining is other employers can learn from its transgressions and avoid these problems going forward.

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