Infosys to pay $800,000 to California, to settle charges of misclassification

indica News Bureau-

In order to settle allegations of misclassification of foreign workers and tax frauds, Indian IT giant, Infosys has agreed to pay a sum of USD 800,000 (Rs 5.7 crores) to California, in an out-of-court-settlement, said officials on Tuesday, December 17.

It has been alleged that around 500 employees, recruited by Infosys between 2006-17 were working in the state on company sponsored B-1 visa instead of H-1B visas, a misclassification because of which the company avoided California payroll taxes like unemployment insurance, disability insurance, and employment training taxes, said California Attorney General Xavier Becerra, Economic Times reported.

On the other hand, the H-1B visa requires employers to pay employees at the local prevailing wage, said the attorney in his official statement. “Today’s settlement shows that attempting to evade California law doesn’t pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole,” Becca said.

Infosys, however, denied the allegations and asserted of no wrongdoings. It told the officials that in 2017, the company had agreed to the pay the state of New York a sum of USD 1 million, to settle the allegations of submitting wrong paper-work of employees to the federal authorities.

The state of California initiated legal action against the IT giant after whistle blower Jack ‘Jay’ Palmer, a former employee of the company, filed a complaint against the company, suing it in court in 2017. The Californian settlement that was carried out in November was released to the media on Tuesday.

Former New York Attorney General Eric T. Schneiderman had said in June 2017 that the IT giant had paid USD 1 million in settlement for systematically abusing US visa rules in placing foreign workers at client sites in New York state, in 2015, reported Live Mint.

He also alleged that the IT firm did not abide by the minimum-wage rule to workers placed in New York and also avoided paying them the taxes.

“The outsourcing firm has significant presence in the New York state, offering consulting and outsourcing services to several financial sector clients and other industries. Infosys gave instructions to its employees on B-1 visas on how to deceive the US consulate, customs and border protection officers. It also created a ‘dos and don’ts’ list for its techies to hoodwink the US authorities and avoid talking about what they were doing,” Schneiderman said.