A labor collusion pact with the aim of suppressing pay levels among Apple, Google, Microsoft, Pixar, and others, demonstrated that the idea that Silicon Valley plays fairly is an illusion. But even more unsavory abuses occur further down the food chain. H1-B visa workers, who are generally held in low esteem in the US since they compete with Americans, take a risk when they sign up with labor brokers, even seemingly legitimate ones like Tata Consultancy, part of the giant Tata Group in India.
As the NBC video below, part of a joint investigation with the Center for Investigative Reporting, explains, the most abusive recruiters are body shops, who abuse the H1-B program by bringing in technology graduates when the firm in fact has no job lined up (hat tip EM). The Indian immigrants are hostage, kept in guest houses where they are told not to go outside until they find work.
The Center for Investigative Reporting account goes into considerable detail, yet acknowledging that most misconduct remains hidden:
From 2000 through 2013, at least $29.7 million was illegally withheld from about 4,400 tech workers here on H-1B visas, U.S. Department of Labor documents show. And this barely hints at the problem because, in the hidden world of body shops, bad actors rarely are caught.
There are two major types of abuse of Indians who come to the US through job brokers. One is the form we mentioned at the outset, and is the focus of the NBC account, that of H1-B visa fraud. Here the tech worker is brought to the US with no work lined up, a visa violation. They are thus illegal immigrants seeking work. From their story:
NBC Bay Area and CIR’s team discovered an organized system that supplies cheap labor made up of highly-educated and highly-skilled foreign workers who come to the US via H-1B visas.
Consulting firms recruit and then subcontract out skilled foreigners to major tech firms throughout the country and many in Silicon Valley.
Those who work for these third party firms that skirt the law often call them “body shops” and sometimes they get caught.
For example in August, 2014, a Cupertino man involved with one body shop pleaded guilty and was sentenced in US District Court to 19 felony counts of visa fraud where he admitted he knowingly applied for work visas for foreigners who had no job offers, filling out applications for fake jobs for a Silicon Valley tech firm.
However, some local workers say many don’t get caught. And the workers are the ones who suffer.
“It virtually makes these employees a slave,” said one worker who came from India more than a decade ago.
The second variant for the H1-B visa workers is wage theft. And if the employee tries switching jobs to escape, he find that his former employer will pursue him to collect a punitive fee for switching jobs. Note that this sort of fee is illegal in California, where many of these body shop staffers are employed. From the CIR report:
For decades, critics have sounded alarms about immigrant tech workers being treated as indentured servants by the worst of these staffing firms, known as “body shops.” In a yearlong investigation, The Center for Investigative Reporting has documented why this exploitation persists – through humiliation, intimidation and legal threats. Judgments against Indian workers sued for quitting their U.S. jobs can exceed $50,000.
The problem, of course, is that immigrant employees are hardly in a good position to use courts to defend themselves: they don’t have a lot of money, are unlikely to be able to screen US lawyers well, and would have even lower odds of success than a native if they were to try the quixotic approach of arguing their case pro se. Even ones that have managed to get good law firms to represent them against powerful recruiters have had a tough time> For instance, Tata Consultancy won a case regarding its job-quitting fees on appeal, arguing that the fact that it violated California law was irrelevant, since the contract was agreed in India. Even if so, what business do US courts have enforcing foreign-country agreements, particularly ones that seem designed to violate US laws flagrantly? By that logic, an agreement made in India to pay someone below minimum wage here would also be permissible and enforceable.
The other ugly part is that these agreements don’t necessarily contain the job-leaving fees that the brokers claim they do:
[Broker] Softech agreed to pay [Gobi] Muthuperiasamy $51,000 a year to continue improving Pennsylvania’s workers’ compensation database. Instead, he changed his mind, taking a better-paying job in Ohio.
When Softech sued him in 2011 for more than $20,000, saying he had agreed to it when he signed his employment contract, Muthuperiasamy was astonished.
Muthuperiasamy was told to pay $5000 in cash to make the problem go away. He negotiated it down to $3500 and thought he had put the matter behind him. Not so:
But after [Softech owner] Kumar returned to Georgia, he claimed the transaction had never occurred. Instead, the Softech owner later would say on the witness stand that Muthuperiasamy had promised at the airport to pay $20,000.
“I said, if he does not honor the signed agreement, there is no other option than going through the legal process,” Kumar told the jury. “Then he agreed to pay the liquidated damages within one week’s time.”
Kumar sent letters threatening to sue, according to trial exhibits. And in August 2011, he followed through on that threat with a claim for $20,000 plus attorney fees in the Gwinnett County court – 17 miles from Softech’s headquarters in Norcross and 575 miles from Muthuperiasamy’s home in Ohio….
At the defense table, Muthuperiasamy sat beside his attorney, Ted Lackland, a former assistant U.S. attorney. Privately, Muthuperiasamy worried about whether Lackland was up to the task: Previously, he had represented three of Softech’s employees – and lost.
Just as worrisome was the diminutive figure at the plaintiff’s table next to Kumar. Past president of the South Asian Bar Association of Georgia, attorney Roy Banerjee has a penchant for wearing bow ties and representing body shops. He has prevailed in many cases against Indian immigrant programmers, winning judgments or settlements from some, while others fled back to India..
Banerjee’s case was based on a simple premise: Muthuperiasamy had pledged to pay $20,000 if he left Softech before a year was up. The employee quit after a couple of days, so he owed $20,000….
At trial, Lackland avoided the complex question of whether the $20,000 penalty violated H-1B immigration laws. Instead, he told the jury that there was never any agreement to pay $20,000.
As proof, Lackland recruited an expert witness to assess the Softech contract attached to an email sent to Muthuperiasamy by the company. The document didn’t call for a $20,000 payment, and the expert testified that no one had tampered with it.
“If you find there is no contract, there is no meeting of the minds, there is no mutual agreement,” Lackland said.
The jury returned a verdict in favor of Muthuperiasamy in two hours.
His case is far from the only example in this story and it’s one of the very few that turns out well.
The article describes how, despite having formal policies against companies that use bonded labor and engage in wage theft, yet is a heavy user of services from WiPro, which has documented cases of engaging in that type of abuse.
If you think these problems apply only to immigrant workers, think again. US firms are trying to apply the bonding model:
Concept Software & Services Inc., an Atlanta-area body shop, makes potential workers sign up for training as a condition of employment.
During the depths of the recession, Concept advertised a training program for software developers. Participants were trained for four months and paid $500 per month. Once trained, they were to be contracted out to other companies. The catch: If the workers quit before 12 months, they owed the company $9,800, according to court filings.
But four workers interviewed quit before receiving postings. They said the training was bogus and the promise of work specious. They described the $9,800 “balance due” as a technique to keep them in reserve until contracts for technology work emerged.
Concept also used other techniques common in the H-1B world, they said, including exaggerating workers’ technical skills and experience to drum up business.
“They basically told us they were going to be falsifying our résumés,” said former employee Reuben Otero, now 29, who left the company in February 2012 after three months. “They said, ‘This is how the world works. Everybody does it. This is how you get in the front door.’ ”
Otero and his co-workers balked but were required by an arbitrator to pay up. Otero’s bill for training, arbitration fees and attorney fees came to $29,000, he said. The workers sued in federal court for underpayment of wages but lost.
Ravindra Bhave, Concept’s president, acknowledged that he instructs programmers to send padded résumés to potential clients. But he says his workers are so well trained that clients still are getting a good deal….
Canvas InfoTech Inc., a Fremont, California, labor broker that boasts of providing workers to Google Inc. and eBay Inc., has filed at least seven lawsuits since 2011 demanding payment from workers who quit.
Deepti Garg of Hayward, California, said she had good reason to leave.
“They made me forge my résumé and made me apply and interview for positions that were much higher-level than my skill set,” she said. “It’s a total fraud.”
A U.S. citizen originally from India, Garg enrolled in a six-week training and job placement program with Canvas in April 2011, hoping to get a better job to help provide for her two children. After paying Canvas $1,000 and signing a one-year contract, Garg decided the program was a dead end.
She rejoiced when she found a software-testing job that September – on her own. Canvas officials hit back, filing a lawsuit claiming she owed them $10,000 because she had left before completing her contract…
Eager to focus on her career and family, Garg, 34, said she settled the suit with Canvas last year, though she could not recall the precise sum.
“It was the most depressing thing of my life,” she said.
So far, these abuses are largely confined to minority groups and thus aren’t perceived as a mainstream labor threat. But the fact that these brokers are getting away with it and are expanding their reach says there’s the potential for them to do a lot more damage, particularly if the job market continues to remain soft. In other words, don’t assume that this problem will remain in the Indian software worker ghetto. This could be part of your future if the public doesn’t demand a stop to it, for their protection as well as that of immigrant workers.