The U.S. Department of Labor has issued an investigation to determine if Indian third-party information technology companies - Tata Consultancy Services and Infosys – have violated American labor laws. This investigation directly relates to the use of H-1B visas, a non-immigrant visa that allows a U.S. employer to temporarily employ foreign workers in specialty occupations. Both companies deny the allegations.  This investigation reaffirms the U.S. government's previously stated position that it will investigate vigorously and, if necessary, fine companies that violate U.S. immigration laws.  Employers using third-party sourcing entities should review these relationships closely and make sure suitable compliance procedures are in place.  Failure to do so could have devastating consequences.

This is not the first time that the U.S. government has investigated Indian third-party information technology outsourcing companies for immigration-related challenges. Less than two years ago, Infosys paid $34 million following a lengthy investigation and settlement with the Department of Justice for systematic visa fraud and abuse of immigration policies.  In response to this record settlement amount involving immigration violations, government officials stated that the U.S. government would aggressively pursue companies that circumvent immigration processes, including the H-1B and B-1 visa classifications, which are used extensively by Infosys and and Tata.  In a October 2013 press release, U.S. Attorney Bales, asserted: “The H-1B and B-1 visa programs are designed and intended to protect the American worker; and we will vigorously enforce the requirements of those programs.” In that same press release,  David M. Marwell, Special Agent in Charge of Homeland Security Investigations in Dallas, concurred:  “This settlement against Infosys is the largest immigration fine on record.  The investigation indicated that Infosys manipulated the visa process and circumvented the requirements, limitations, and governmental oversight of the visa programs.  The investigation also showed that more than 80 percent of Infosys’s I-9 forms for 2010 and 2011 contained substantive violations.  Ultimately, these actions by Infosys cost American jobs and simultaneously financially hurt companies that sought to follow the laws of this nation.  Companies that misuse the visa process can expect to be scrutinized and held accountable.” As noted in an article by Ian Macdonald, employers should consider the following:

• Review all contracts with third-party sourcing entities and ensure compliance with the Immigration Reform and Control Act of 1986, making sure that clear guidelines for control of vendor employees are specified.

• Communicate with and train all managers who oversee projects staffed by contractors to ensure they understand what interactions with vendor employees are permissible with respect to avoiding co-employer liability.

• Require review by designated employees rather than individual managers on all requests by employees of third-party sourcing entities for immigration-related information or assistance, such as internal posting notices, business invitation letters and employment verification letters for work conducted at client worksites.

• Require third-party sourcing entities to apply the same standards of compliance to all outsourcing entities they subcontract work from.

• Only conduct business with third-party service providers that are enrolled in the E-Verify program.