$34M Infosys Settlement Highlights Visa Pitfalls

, The Asian Lawyer

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From Corporate Counsel:

After reports by an internal whistleblower and more than two years of U.S. government investigation, Infosys, a top Indian technology outsourcing company, announced this week that it will pay a record $34 million to settle claims that it committed visa fraud and abuse.

The settlement [PDF]—the largest ever in an immigration case—resulted from a claim made by Jack Palmer, an American Infosys employee who alleged that his company illegally used B-1 business visas to bring foreign employees into the U.S., when these employees were performing tasks that required H-1B long-term work visas. H-1B visas are reserved for employees working in fields and performing tasks that require highly specialized knowledge, while B-1 visas apply only to business travelers coming to the U.S. for a short period and for limited purposes.

Ian Macdonald, a shareholder at GreenbergTraurig who specializes in business immigration and compliance, told CorpCounsel.com that he believes the Obama administration is cracking down on visa and immigration issues, so he's not surprised by the unprecedented size of the Infosys settlement.

"The government investigation of this situation has been extensive and longstanding, and there was clear intent by the government to draw a line in the sand and send out a clear message to companies doing business in the United States," said Macdonald.

One of the problems with this kind of visa fraud, Macdonald added, is that "it's so easy" for a foreign worker to hop a plane and come to the U.S. claiming B-1 status, and then do H1-B -level work after they arrive—especially if their competitors are already doing the same. "The last thing that a business entity is going to do is say, 'We're not going to take that project because we can't get that visa quickly enough,' " Macdonald said.

H1-B visas take more time and money to process than B-1s, and are subject to quotas—under current federal law only 85,000 people can be granted H1-Bs, and 20,000 of those visas only go to holders of advanced degrees. According to Macdonald, proposed U.S. immigration reform would help increase these quotas and allow more skilled H1-B holders to enter the country. However, the legislation doesn't appear to be going anywhere in much of a hurry. At the moment, Macdonald said, the immigration system is incentivizing companies like Infosys to "do the wrong thing."

So how can companies, particularly those in areas like IT that use foreign specialized talent frequently, ensure they don't become the next Infosys?

Matthew Dunn, a partner at Kramer Levin Naftalis & Frankel and an expert on immigration, said that as a best practice, companies should make sure everyone is on the same page about an employee's responsibilities and intentions when they go abroad on a B-1 visa. Sometimes a worker will enter as B-1, but then begin performing duties that more closely resemble an HB-1, presenting some big headaches and legal risk. "They need to centralize the review of the activity that the person is going to engage in," Dunn said.

Another important preventative measure, Dunn said, is setting clear boundaries and standards with contractors that may employ foreign workers. "When you engage someone, you've got to make sure that you have in the contract language that it's [the contractor's] responsibility to make sure these guys are legal," Dunn explained.

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