Four Post-Infosys Strategies for Corporate Customers and Consultants to Minimize Immigration Risks

by Angelo A. Paparelli Herbert, Her Majesty's Home Secretary from 1931-32 (the British equivalent of the U.S. Secretary of Homeland Security), could well have been speaking about two recent immigration-related events when he quipped that "bureaucracy" is "a difficulty for every solution."

One is an October 30 Settlement Agreement between Indian It consulting giant, Infosys, and the U.S. Attorney for the Eastern District of Texas. The other is an October 18 decision by U.S. federal district court judge, William J. Martini, involving the U.S. Department of Labor (DOL) and CAMO Technologies, a much smaller Indian IT consulting firm.
Both reflect a victory, of sorts, for Indian IT firms over U.S. immigration bureaucrats and enforcement agents, and both shed light on the little-discussed crossroads where ambiguous immigration rules bisect the relations between corporate customers and their technology consultants.

The Infosys settlement involved a simple horse trade. Infosys would pony up $34 million and admit paperwork violations of the Form I-9 (employment eligibility verification) rules while the U.S. Attorney would drop civil and criminal charges that the Tech firm -- when placing its Indian employees at U.S. customer work sites -- improperly used the B-1 business-visitor visa in lieu of the more costly, slow and burdensome H-1B visa category for professional workers in specialty occupations.

CAMO Technologies resolved a dispute with DOL over whether the company was merely negligent (the court so ruling) or willful or reckless in failing to confirm that its corporate customers had posted notices at their worksites that the consulting firm's H-1B employees would be sited there.

Why did the U.S. Attorney drop civil and most criminal charges against Infosys when the prosecutor believed the company had engaged in widespread immigration fraud? And why did Judge Martini throw a cold cocktail in the DOL's face in refusing to debar CAMO from further use of the immigration laws to sponsor temporary workers and green-card aspirants?

Technologies, Inc.
The simple answer is that immigration laws are complex and the bureaucratic rules interpreting them are too often ambiguous or impractical and therefore difficult to honor or to prosecute.

In the Infosys matter, prosecutors probably could not prove that "coding and programming" tasks, which ordinarily require an H-1B work visa, would be unlawful if performed by a business visitor under the so-called BILOH (B-1 in lieu of H-1) subcategory. In CAMO Technologies, the DOL could not persuade the court of its contention that the failure to post notices announcing the placement of H-1B workers at customer sites violated the agency's regulations. CAMO maintained that the DOL regulations only required proof that the vendor had asked its customers to allow posting but that the customers refused.

The customer-vendor relationship is fraught with immigration perils for both parties, as I noted in two articles co-authored with Ted Chiappari,“New Corporate Procurement Strategy: Minimizing Immigration Risks From Service Providers," New York Law Journal (June 29, 2009) and "Professional Employer Organizations and Uncharted Immigration Risks," New York Law Journal (December, 2010). But despite the lack of clarity or business practicality from bureaucratically imposed visa mandates, employers and corporate vendors can take steps to avoid brand-damaging assaults by enforcement agents and costly probes by DOL investigators. Here are four:

  1. Engage Outside Immigration Experts to Assess Your Risks. As part of its settlement, Infosys must hire external immigration experts and must submit more explicit business-visitor invitation letters to the State Department in order to minimize the recurrence of alleged immigration violations. Moreover, Jay Palmer, the Infosys employee who blew the whistle on the alleged transgressions stands to receive 15% to 25% percent of the $34 million settlement under the False Claims Act. Why incentivize employees to file charges of immigration wrongdoing and wait till these nasty prescriptions are shoved down your throats? Instead, corporate customers and their service providers should recognize that other companies are already under scrutiny. Each party should therefore proactively engage outside immigration counsel to assess the risks and help avoid or minimize potential brand damage, disruption of key contracts, and havoc-wreaking consequences to business imperatives, not to mention government fines, debarment and criminal prosecution.
  2. Try, together, to follow the rules. Most corporate customers are astonished to learn that the law of vendor relations often imposes immigration-law encumbrances -- the obligation to post notices visible to their employees at the company's worksite or on its intranet and to respond accurately when vendors ask if there have been any layoffs of the customer's employees. Yet, DOL rules are explicit. All employers who place H-1B workers at customer sites must post such notices and H-1B dependent employers must inquire about such layoffs and refrain from assigning their specialty-occupation workers to customer jobsites if the customer has laid off its own workers in similar jobs within 90 days before until 90 days after a subject layoffs. While the posting obligation imposes no penalty on corporate customers under DOL H-1B regulations, the Immigration and Nationality Act (INA) does, as confirmed in this DOL presentation, “The Employment of Non-Immigrants on H-1B Visas” (slides 42-43), the INA provides for "Super Penalty" fines of $35,000 on customers and H-1B dependent vendors alike each time a prohibited layoff occurs. Whether customers are immune or directly exposed to their vendors' H-1B liabilities, customers should cooperate to allow service providers to comply with immigration requirements. If the customer interferes or fails to cooperate, the vendor conceivably could claim that the customer impeded the vendor's performance under the parties' service agreement by blocking or rendering impossible the vendor's compliance with immigration law. Worse yet, the federal government could assert that the vendor and customer, both aware of their respective legal duties, willfully flouted them, and thus criminally conspired to employ "unauthorized" foreign workers.
  3. Where the immigration rules are ambiguous or unworkable, show good-faith efforts that substantially comply. As the Infosys and CAMO Technologies matters demonstrate, some government investigations and prosecutions can be defeated or their adverse effects diminished by pointing out flaws or uncertainties in the immigration rules or by trying to comply substantially with impractical or infeasible agency-concocted requirements. Perhaps a vendor could post electronic notices of H-1B placements on its public corporate web site, and merely post "routing" notices at customer locations directing persons to the vendor's internet page where the legally required text is fully provided. That may be seen by an administrative law judge or federal court as doing more than legally mandated and thus in substantial compliance with agency rules.
  4. Where the immigration rules are downright unlawful, challenge them in court or be prepared to defend your behavior and legal interpretations if the government takes action. Camo Technologies persuaded Judge Martini to reverse the DOL's ruling against the company. Infosys presumably adopted a full-court press by mounting a campaign in the U.S. Attorney's Office to demonstrate the weakness of the government's legal position and in reminding local, state and federal government leaders that prosecution of this large Indian company could hurt jobs and the economy. In simple terms, both companies fought back. Corporate customers and consultants should copy maneuvers from this playbook. The immigration rules of the road are mind-bendingly complex. Government prosecutors, unschooled in the arcana of immigration, must rely on immigration bureaucrats to teach them the law, the same agency employees who created and imposed the ambiguities and impracticalities that customers and contractors are expected to follow.

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As the battle continues for ever greater corporate efficiency and profitability, fueled by the innovations and bright ideas of the consulting industry, customers and vendors alike must recognize that their business objectives can be waylaid by zealous prosecutors and bureaucrats. Forewarned is forearmed. Don't wait for the knock on the door. Be ready to face "the difficulty for every solution."