Ok, it’s the end of the year, time is short so let’s just discuss a few reasons to take heed of the much publicized investigation of the IT consulting firm Infosys Corporation (Infosys).  Recently, the US Department of Justice (DOJ) announced it had reached a settlement with the firm which included a record payment of $34 million in civil fines.  The investigation arose out of a whistleblower case, now dismissed, filed by a manager who alleged that the company misused the B-1 visitor visa in order to circumvent the H-1B work visa process.   According to court documents and the settlement agreement, the government alleged that Infosys:

  • Fraudulently used B-1 visa holders to perform jobs that involved skilled labor that were instead required to be performed by U.S. citizens or legitimate H-1B visa holders.
  • Submitted “invitation letters” to U.S. Consular Officials that contained false statements regarding the true purpose of a B-1 visa holder’s travel.
  • Directed B-1 visa holders to deceive U.S. Consular and Immigration Officials, including providing specific instructions to avoid certain terminology, to secure issuance of the visa and entry of the visa holder into the United States.
  • Told its foreign nationals to inform U.S. Consular Officials that their destination in the United States was the same as that provided in the Labor Condition Application [supporting an H-1B petition], notwithstanding the fact that Infosys knew that the destinations had changed.
  • Wrote and revised contracts with clients to conceal the fact that Infosys was providing B-1 visa holders to perform jobs that involved skilled or unskilled labor that were otherwise required to be performed by U.S. citizens or required legitimate H-1B visa holders.
  • Concealed the fact that B-1 visa holders were performing jobs that involved skilled or unskilled labor that were otherwise required to be performed by U.S. citizens or legitimate H-1B visa holders.
  • Billed clients for the use of off-shore resources when, in fact, work was being performed by B-1 visa holders in the United States.
  • Failed to maintain I-9 records for many of its foreign nationals in the United States in 2010 and 2011 as required by law, including a widespread failure to update and re-verify the employment authorization status of a large percentage of its foreign national employees.

The settlement agreement includes civil forfeiture fines of $10 million, a civil penalty fine of $24 million and continued auditing of the company’s use of B-1 and H-1B visas and its I-9 compliance.   To date, this represents the largest civil penalty ever levied against a company for immigration-related violations.  In a company statement published on its website, Infosys acknowledged the I-9 paperwork errors but denies it committed any fraudulent acts with regard to the B-1 visas.

While $34 million is no small amount of change, Infosys, a company of 160,000 employees and annual revenues of $7.906 billion, may have dodged a bullet or even a missile.  Not only was the company facing criminal charges but it also could have received a significantly higher fine and, most importantly, could have lost access to its lifeblood – its foreign based IT consultants.

As consideration for the settlement, the government agreed to dismiss its complaint with prejudice, released the company and its current and former employees, directors, and officers from civil, administrative and criminal liability.  Infosys also received assurances that there were no other pending investigations by the Departments of Justice, State and Homeland Security concerning I-9s, B-1 and H-1B visa compliance.  [But is it foretelling that the Department of Labor was not mentioned?]  The government also agreed it would not use the alleged violations as grounds to revoke existing visas or petitions or deny future visas or petitions or cite same as grounds for debarment or suspension proceedings relating to B-1 or H-1B visas.

While the case has been resolved, Infosys is not out from under the government’s watchful eye.   Per the conditions of settlement, Infosys agreed, at its own expense, to retain an independent third-party auditor or auditing firm to review and report, for submission to the DOJ, on its I-9 compliance for at least the next two years.  In addition, the company must also submit a report to the DOJ with regard to its use and compliance of the B-1 visa rules and its immigration filings will be subject to government audit for the next two years.

Here are some takeaways for all employers to consider:

  • In justifying its willingness to settle, the government pointed to Infosys’ cooperation during the investigation and its proactive implementation of compliance policies and internal controls.   Among such controls were the institution of an electronic I-9 system and enrollment in E-Verify.
  • However, an electronic I-9 system can be a double-edged sword.  A close reading of the settlement agreement reveals that Infosys initially instituted an electronic I-9 system in 2010 but the complaint alleged that it failed to properly maintain and reverify I-9 records for many of its foreign nationals during the years 2010 and 2011.  The settlement also referenced “significant system improvements.”  Therefore, we can infer that the government found deficiencies with their initial electronic I-9 system. Not all electronic I-9 systems are created equal.  When evaluating new or existing electronic I-9 systems, Employers should engage experienced immigration counsel to assess compliance with applicable I-9 laws and regulations.
  • Companies sponsoring foreign nationals with H-1B and other work visas should not assume that future scrutiny by immigration officials will be limited to those suspected of nefarious acts.    Now is not the time to “push the envelope” when it comes to utilizing the B-1 visitor visa or the Visa Waiver.  Now is the time to assure that tight controls are in place with respect to implementation of corporate immigration programs for H-1Bs and other visas and I-9 compliance.
  • Keeping with the spirit of the holidays, this settlement may be the gift that keeps on giving.   Conspicuously referenced at the conclusion of the settlement agreement was a clause stating that the agreement excludes from its scope any investigations or proceedings arising under Title 26 of the United States Code.  In other words, given the allegations that B-1 visitors were treated as “employees” the Internal Revenue Service may just write the last chapter in this saga.