Cognizant agrees to pay back-wages to H-1B visa employees in US

Software services provider Cognizant said it has agreed to pay $509,000 as back-wages to 67 employees who went on H-1B visa to the US, after the US Labour department asked it to do so.

This comes to about $75 a month for these 67 employees over the eight years in question. Between 2001-2008, Cognizant had 40,000 people in the US, including whose who went on H1-B visas.

In a release, the department said its Wage and Hour Division found that Cognizant did not comply with regulations related to paying computer professionals hired under the H-1B program the proper wages, failed to offer all H-1B workers equal benefits or eligibility for equal benefits, and failed to maintain required records.

H-1B is a professional visa and usually given for three years and extendable for another three, so it is effectively a six-year visa. IT companies vie for the majority of H-1B visas.

The Department of Labour reviewed all of Cognizant’s LCA or labour condition applications from 2001 to 2008 through a process launched a couple of years back.

“During the 8 years in question when Cognizant had over 40,000 employees at Cognizant US, it was determined that we had unintentionally differed from the H-1B required wage level in just 67 cases, or a meager 0.17% of our employee wage payments. Cognizant believes that these 67 individuals were already paid at or above the required wage, but to avoid any doubt, we are immediately paying back wages to them. Communication to that effect has been sent to the associates concerned,” Cognizant spokesperson said.

Issues over H-1B visas are not new to the IT industry. During the year ended March 31, 2008, Infosys voluntarily settled with the California Division of Labor Standards Enforcement toward possible overtime payment to certain employees in California, USA, for a total amount of Rs 102 crore ($26 million) pertaining to the last three years.

In June 2007, Patni Computer Systems agreed to pay more than $2.4 million to settle US federal allegations that 607 employees hired by the India-based technology services company to do computer work in 32 states in 2004 and 2005 were not paid prevailing local wages.

“Cognizant Technology Solutions has taken immediate steps to correct all identified violations and ensure future compliance,” said Joseph Petrecca, director of the Wage and Hour Division’s Northern New Jersey District Office. “This level of cooperation sets a standard for others in the industry.”

Given the increasingly protectionist tone in Washington, wages to H-1B employees are an important issue in outsourcing, especially at a time when the economy is shrinking and people are losing jobs. Traditionally, one of the key grouse of the anti-outsourcing lobby is that foreigners ready to accept low wages take away American jobs.