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A class action accusing Tata Consultancy Services Ltd. of bias against U.S.-born workers could make big waves in the information technology staffing industry.
The case is one of seven asserting that IT staffing companies prefer foreign workers from South Asia over qualified Americans. All of the companies being sued are heavy users of H-1B guestworker visas, which go to skilled professionals in “specialty occupations.”
Should a court rule that Tata Consultancy’s and other consulting firms’ use of those visas violates anti-discrimination laws, it could force the companies to change their long-standing hiring and business models. If there aren’t enough U.S. workers to take the place of H-1B visa holders, as the companies say, that could force them out of business.
Tata Consultancy is the second largest H-1B user, with 14,697 visa petitions approved in fiscal year 2017, according to U.S. Citizenship and Immigration Services data. By contrast, the company recruited about 3,000 U.S. workers last year, and 12,500 over the past five years, a spokesman told Bloomberg Law.
Cognizant Technology Solutions Corp., a defendant in one of the other class actions, led the H-1B pack with 28,908 approved petitions last year.
The case against Tata Consultancy is one of “straightforward pattern and practice of discrimination that violates federal discrimination laws,” Daniel Kotchen of Kotchen & Low in Washington said in an email to Bloomberg Law. Kotchen’s firm is acting as lead or co-counsel in all seven class actions.
“Plaintiffs are confident in their case and look forward to trying the issues,” he said.
As more and more U.S. companies outsource their IT functions, that work has been absorbed by the overseas staffing companies, Allen Orr, second vice president of the American Immigration Lawyers Association, told Bloomberg Law. It’s much cheaper for a company with a temporary IT project to contract it out than to hire an H-1B worker directly, he said.
IT staffing companies have high numbers of H-1B workers because the work that otherwise would’ve been spread out among their clients is concentrated in those organizations, said Orr, who practices with the Orr Immigration Law Firm in Washington.
A finding of discrimination could put those companies out of business, but that wouldn’t end the dominance of H-1B workers in the IT industry, he said. It just “shifts the market demand” back to direct hiring of H-1B workers, he said.
IT staffing companies’ use of the H-1B program has been under fire by various government officials since a pair of high-profile cases in 2015 in which U.S. tech workers at Southern California Edison and Walt Disney World were laid off and required to train their H-1B replacements. The H-1B workers were employees of the IT staffing companies that SCE and Disney contracted with in lieu of retaining their own IT departments.
The Trump administration also took aim at the specialty visa program with an April 2017 executive order requiring employers to prioritize hiring of U.S. workers.
The class action cases take aim at seven different companies, each with roots in India or Sri Lanka. They include: Koehler v. Infosys Techs. Ltd., E.D. Wis., No. 2:13-cv-00885; Buchanan v. Tata Consultancy Servs., Ltd., N.D. Cal., No. 4:15-cv-01696; Palmer v. Cognizant Tech. Solutions Corp., C.D. Cal., No. 2:17-cv-06848; Phillips v. Wipro, Ltd., S.D. Tex., No. 4:18-cv-00821; Sugg v. Virtusa, D.N.J., No. 3:18-cv-08036; Grant v. Tech Mahindra (Americas) Inc., D.N.D., No. 3:18-cv-00171; and Voll v. HCL Techs. Ltd., N.D. Cal., No. 5:18-cv-04943.
Wipro “will vigorously defend against these meritless allegations in court,” the company said in a statement provided to Bloomberg Law. It added that Wipro “is committed to the principle of equal employment opportunity and provides all our employees with a work environment that is free from discrimination and harassment of any kind.”
“Tech Mahindra denies the allegations and is challenging the matter in court,” a company representative said in a statement provided to Bloomberg Law. “Tech Mahindra does not discriminate against any group or individual on the basis of race, creed, sex, sexual orientation, age or national origin,” the representative said.
“HCL is an equal opportunity employer and does not tolerate discrimination or harassment based on national origin, age, gender, color, religion, sexual orientation, pregnancy, disability etc.,” the company said in an email to Bloomberg Law. “We take great pride in our employment practices, including diversity at workplace.”
Representatives for the other IT staffing companies couldn’t be reached for comment about the national origin bias allegations.
A win for U.S. workers “would shake those corporations to the very core,” said David North, a fellow with the Center for Immigration Studies, which supports lower immigration levels.
The IT staffing industry in the U.S. is dominated by companies and workers from another part of the world, said North, who served as assistant for farm labor to the secretary of labor in the Johnson administration. “You cannot imagine a parallel situation to what we have with the Indian outsourcing companies,” he told Bloomberg Law.
A representative for NASSCOM, the trade association representing Indian IT services companies, declined to comment on the cases.
The Tata Consultancy case is the furthest along, with a trial date set for Nov. 5 in federal district court in California. That makes it the most likely to set the standard for other cases to follow.
The judge presiding over the case last year refused to throw out the lawsuit and allowed it to go forward as a class action. Last month, she also rejected Tata Consultancy’s “hail-Mary effort” to restrict the workers’ remedy to just monetary damages.
That means the company could be subject to a court order requiring it to change its hiring and employment practices.
The company, however, denies the allegations.
“TCS is an equal opportunity employer, and as such, bases its employment decisions—including recruiting, hiring, promotions, retention, and discipline—on legitimate non-discriminatory business reasons without regards to race, national origin, color, religion, gender, sex, sexual orientation, gender identity, disability, age, veteran status, or any other characteristic protected by federal, state or local law,” a Tata Consultancy spokesman said in a statement provided to Bloomberg Law.
The company believes the allegations are “baseless,” he said.
But Kotchen said the company “has a corporate preference to predominantly staff U.S. positions with South Asians, including visa holders from India.” As a result, employees who aren’t South Asian aren’t given work to do and are fired at “strikingly disproportionate rates,” he said.
“It’s hard to show that there’s discriminatory intent,” especially when a company can’t be certain which employees it can hire in a given year, Orr said. For the past several years, demand for H-1B visas has outstripped supply, resulting in a lottery to determine which employers can access the visas.
Employers filed 190,098 applications this year for a total 85,000 H-1B visas.
Many employees of IT staffing companies also wind up getting green cards, a process that requires a labor market test, Orr said. “If U.S. workers had those qualifications, then they’d be filling those jobs,” he said.
The Justice Department’s Immigrant and Employee Rights section launched an initiative to combat discrimination against U.S. workers, but it only has jurisdiction to prosecute national origin claims against small companies.
“It’s hard for government officials to get their minds around the concept that maybe a minority is being discriminated for as opposed to against,” North said. On the political left you have the feeling that you shouldn’t attack a minority group, and on the right you have a reluctance to attack corporations, he said.
It’s a “niche situation” that often “gets ignored,” North said.
The Equal Employment Opportunity Commission has jurisdiction over large companies, but it’s prohibited by law from confirming or denying the existence of specific discrimination charges, or from providing information about ongoing investigations, agency spokesman Joseph Olivares told Bloomberg Law.
He did point to an EEOC report finding that the tech industry in general employs a higher share of white, Asian, and male workers than the private sector in general.
Sara Blackwell, a Florida-based attorney who represented former Disney tech workers in a lawsuit that was later dropped, said a class action win “would open the doors for a lot of these American workers.” She said “their opportunities are really small.”
But “unless you change the business model, this isn’t going to fix” the problem for many U.S. workers, Blackwell told Bloomberg Law.
Congress needs to change the law to have a meaningful impact on the practice, she said.
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