After a two-year investigation, the Department of Justice (“DOJ”) has announced a USD 34 million civil settlement with Infosys, one of the largest India-based IT sourcing companies in the world.  

At the center of the investigation was the company’s alleged misuse of short-term business visitor (B-1) visas to circumvent the more expensive and onerous process associated with longer-term work visas, including H-1B (specialty occupation) visas.  This enforcement action reflects a continuing trend by government agencies across the globe to crack down on business visitors engaging in work.  In its statement, Infosys “denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse.”

The US government’s investigation of Infosys began in February 2011, when a former Infosys employee sued the company for allegedly retaliating against him for blowing the whistle on Infosys’s visa practices.  The DOJ, the Department of Homeland Security, and the Department of State investigated whether Infosys’s use of B-1 visas had resulted in the displacement of American workers.  Part of the investigation was premised on the government’s allegations (denied by Infosys) that foreign employees were brought to the United States on short-term, business visitor visas and then assigned billable work in violation of US immigration law.

Generally, B-1 visa holders visitors may enter the United States for purposes of attending meetings, trade shows, conferences, and scouting new business ventures or office locations.  Business visitors cannot perform productive work for or receive income from a US-based company.  Instead, US immigration law requires companies seeking to sponsor foreign nationals to perform productive work in the United States to obtain a valid work visa. 

Work visas, however, have their limits.  The H-1B visa, for example, is available for foreign workers in highly skilled occupations (e.g., business, information technology, engineering, scientific research, accounting), but only 65,000 H-1B visas are available each year.  While an additional 20,000 H-1B visas are available for foreign nationals who complete a graduate degree program in the United States, demand far exceeds supply.  For FY 2014, which began on October 1, 2013, approximately 124,000 H-1B visas were requested by employers during the first week the visas were made available.  Immigration legislation passed by the Senate, as well as bills pending in the House, would substantially increase the number of available H-1B visas, but prospects for enactment of this legislation are uncertain. 

Concerns regarding visa fraud that executive branch agencies and Members of Congress have expressed over the last several years have resulted in large appropriations for the US immigration enforcement function.  This has resulted in heightened scrutiny of applications for US business visitor, H-1B, and L-1 (intracompany managers/specialized knowledge employees) status, as well as an increased amount of post-adjudication, on-site investigation by the government.

As the attached settlement terms make clear, US government agencies will apply particular scrutiny to the following conduct or fact scenarios: (1) overly broad or misleading representations in B-1 invitation letters; (2) internal instructional memoranda to B-1 visa applicants (which are discoverable); (3) whether H-1B visa holders, in fact, are working at the location specified on approved Labor Condition Applications; and (4) whether the terms of corporate fee agreements with labor and outsourcing vendors contain evidence of potential immigration violations.  

Employers should proactively assess how best to mitigate the risks associated with governments’ heightened scrutiny of their immigration practices.  Use of the B-1 visa category should be subject to internal scrutiny to avoid the impression that B-1 visas are being used to circumvent H-1B or other work visa categories.  Also, companies should assess whether their business visitor visa policies can be reconciled with any I-9 information on related individuals.  Business visitor requirements differ significantly based on the jurisdiction to which companies seek to send their employees, and strategies must be tailored to reflect the specific legal developments in each jurisdiction.  Specifically, as companies enter emerging markets, it is important that they develop a comprehensive policy for determining whether a work permit is needed to support the proposed activities.  Such a policy can reduce exposure to criminal and civil penalties for immigration-related violations that can affect their operations in jurisdictions across the globe.