Whistleblower Lawsuit Uncovers Massive H-1B Fraud

EPI study shows Indian labor broker HCL underpaid foreign workers by $95 million

By David North on December 13, 2021

The good news came in two, coupled, elements on Friday, December 11:

First, the Economic Policy Institute of Washington, D.C., an advocacy organization dealing with social issues, announced that it had found that one of the big Indian body shops, HCL, cheated its own Indian H-1B employees by an estimated $95 million.

Second, part of the proof of this monster wage theft comes from the use of a fairly new way of citizen-aided enforcement of the immigration laws, by a "qui tam" suit filed against the body shop by a former HCL executive. Qui tam legal actions are based on America’s Civil War-era False Claims Act, designed to allow citizens to help protect the government from grasping contractors.

It rewards informants, like the former HCL executive, with substantial financial rewards if the informant (and the informant’s lawyers) can prove that the government lost money because of corporations’ illegal activities.

The body shop now carries the bland name of HCL, LLC; it used to identify itself more accurately as Hindustan Computers Ltd. It is one of the nation’s largest users of H-1B visas and which bring aliens to the U.S. as temporary, skilled workers. H-1B is a highly controversial program and it has been accused of taking hundreds of thousands of jobs from U.S. workers. HCL and the vast majority of its H-1B workers are from India.

A key segment of the EPI press release follows:

The H-1B statute requires that employers pay their H-1B workers no less than the actual wage paid to their similarly employed U.S. workers, a key protection for both migrants and U.S. workers. But EPI analysis of an internal HCL document, released as part of a whistleblower lawsuit against the firm, shows that large-scale illegal underpayment of H-1B workers is a key part of the firm’s competitive strategy.

The report is by Professor Ronil Hira of Howard University, one of the nation’s leading academic experts on H-1B, and by Daniel Costa, EPI director of immigration law and policy research. The whistleblower in the case is Ralph Billington. The case is before the federal district courts in Connecticut. Its number in the PACER file is 3:19-cv-1185 (MPS).

One of the major arguments of the Hira-Costa team is that the U.S. Labor Department has been mistakenly treating “contractor hires differently than direct hires when enforcing the wage and other provisions in the H-1B statute” and that this loophole leads to the extensive wage theft.

In the course of the civil lawsuit started by Billington, the two sides engaged in the usual discovery procedures, in which each side manages to extract inside information from the other on the grounds that such information is needed by the court. Among the documents secured in this way by Billington and his lawyers were internal ones from HCL that spelled out its hiring and pay practices.

The loss claimed for the government is not the $95 million worth of wage gap; it is some 20 percent of that number and consists of the non-payment of Social Security, Medicare, and federal unemployment insurance taxes on these wages and, to a lesser extent other losses incurred by the government when HCL was found using B-1 (tourist) visas, and L-1 (international executive) visas, which cost less than those in the H-1B program.

The term “qui tam” is not used in either the EPI press release or the civil complaint, although the latter does mention the False Claims Act. The concept of using qui tam to allow citizens to help the government enforce the immigration law is a rather obscure one.

That qui tam has been used to secure previously secret corporate — and damning — information on the H-1B program, however, is nothing but good news.

If the case against HCL succeeds, it will be an excellent precedent in other, similar qui tam cases brought against other body shops using the same practices.

The Hira-Costa report encourages the Labor Department to take direct action against these practices, as seemingly the law allows if not requires it to do.