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Infosys settles visa case with California for $800,000

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Bengaluru, Dec 18, 2019-

Global software major Infosys on Wednesday said it reached an out-of-court settlement for $800,000 (Rs 5.7 crore) with the California Attorney General on charges related to the alleged violation of B-1 visa rules by it to its techies.

“Our agreement concludes the California Attorney General’s investigation into the allegations related to the payment of state payroll taxes for some employees travelling on B-1 visas dating back to 2006,” Infosys Company Secretary A.G.S. Manikantha said in a regulatory filing on the BSE.

California Attorney General Xavier Becerra said from Sacramento that Infosys would pay the western state $800,000 to resolve the charges that the Indian IT firm and its subsidiary (Infosys BPM Ltd) had employed about 500 techies in California on B-1 visas rather than H-1B visas between 2006 and 2017.

“This misclassification resulted in Infosys avoiding California payroll taxes such as unemployment insurance, disability insurance and employment training taxes. H-1B visas also require employers to pay workers at the local prevailing wage,” said Becerra in a statement sourced here.

The settlement will result in the case being dismissed with prejudice and was reached to avoid time, expense and distraction of protracted litigation on the charges against the city-based IT behemoth.

“We dispute the allegations and admit to no wrong-doing in the case,” asserted the $11-billion outsourcing firm.

The company also reiterated that it maintains robust policies and procedures to ensure adherence with all applicable regulations and laws.

“The settlement shows that attempting to evade California law does not 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,” asserted Becerra in the statement.

The settlement resolves the Attorney General’s claims that Infosys’s conduct violated California laws, including the California False Claims Act and Unfair Competition Law.

The California False Claims Act permits the Attorney General to recover treble damages and civil penalties against any person who knowingly makes or uses a false or fraudulent statement to either obtain money from the state or avoid paying money owed to the state.

The Unfair Competition Law prohibits any business practice that is unlawful, unfair or fraudulent. A whistleblower who brought Infosys’ conduct to the attention of the Attorney General’s Office will receive 15 per cent of the settlement pursuant to the California False Claims Act.

The company, however, declined to confirm the amount it paid, including taxes and penalty, if any, to settle the visa fraud case out-of-court.

The company also did not reveal how many employees it sent to the US for onsite work under B-1, a business visa, which doesn’t allow its holder to work unlike in the case of H1-B visa in North America.

The company’s blue-chip scrip of Rs 5 face value remained flat during intra-day trading session on the BSE at Rs 727.50 as against Rs 728.30 at the end of Tuesday’s trading session and the same price when the market opened earlier in the day.  (Agency)

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