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Lawsuits by Tech Industry Guest Workers Allege Multiple Unlawful Practices

The Silicon Valley technology industry is one of the nation’s biggest employers of H-1B foreign guest workers. H-1B visas allow people to come to the U.S. temporarily for jobs requiring specialized education and skills. Federal law limits the number of new visas available each year, and competition is fierce. A recent report, based on an investigation by NBC Bay Area and The Center for Investigative Reporting (CIR), describes alleged mistreatment of tech industry guest workers, such as non-payment of wages, by some companies. H-1B workers have challenged these practices in several class actions in Northern California courts. These issues may affect businesses in Silicon Valley and the greater Bay Area, even those that do not employ foreign guest workers.

The H-1B visa is available to foreign workers in “specialty occupations” that require specialized or unique knowledge and skills. Qualifying workers must have a bachelor’s degree or a higher degree in a relevant field. A U.S. employer must file a petition on behalf of a worker with the federal government. Federal law states that an “employer-employee” relationship must exist between the petitioning employer and the worker, meaning that the employer must have a qualifying job available for the worker when it files the petition. Employers may not charge workers for the costs of the visa petition, and they may not pay workers less than the “actual or prevailing wage” for their position.

The CIR report describes businesses, many of them based in India, that essentially act as staffing consultants for the tech industry. Some of these firms, described as “body shops,” have been accused of violating federal immigration law, such as by petitioning for H-1B visas on behalf of workers who do not have qualifying job offers, then placing them with tech companies once they are here.

One class action, filed in a Northern California state court, asserted multiple causes of action under California employment law against a company it described as a “staffing agency, hiring foreign professionals to work in the United States and placing them as temporary and contract workers with its [technology industry] clients.” Bathla, et al v. Silicon Valley Systech, Inc., complaint at 1 (Cal. Super. Ct., Santa Clara Co., Mar. 3, 2009). The defendant petitioned for H-1B visas on behalf of the plaintiffs, Indian citizens it had recruited for technology jobs in the U.S.. When they arrived in California, it placed them in a three-bedroom, two-bathroom “guest house” while they awaited work assignments. In some cases, the plaintiffs claimed that they waited weeks or months for assignments.

The defendant allegedly failed to pay them regular wages or promised “allowances” for time between assignments. It also allegedly sought to enforce non-compete clauses in their contracts during periods when they lacked both employment and pay. The lawsuit asserted common law claims for breach of contract and fraudulent inducement, as well as statutory claims like unpaid wages, minimum wage violations, and waiting time penalties. Unfortunately for the plaintiffs, the defendant went out of business while the lawsuit was pending. Another class action with similar facts, however, resulted in a settlement for nearly $30 million after seven years of litigation, amounting to about $1,600 per plaintiff. Vedachalam v. Tata America Int’l Corp., No. 4:06-cv-00963, complaint (N.D. Cal., Feb. 14, 2006).

Cirrus Law PC has represented Bay Area businesses for nearly 40 years. If you or your business is involved in a legal dispute, we can help you understand your rights and obligations while advocating for your interests. To schedule an initial confidential consultation, contact us today online or at (925) 463-1073.

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