(Image source from: india.com)

In order to settle the allegations of misclassification of workers of foreign workers that approximately 500 employees of Infosys were working in California on Infosys-sponsored B-1 visas rather than H-1B visas, between 2006 and 2017, India’s top IT major agreed to pay USD 800,000 to California, as announced by officials on Tuesday.

Xavier Becerra, California Attorney General said that, for resolving the allegation of foreign workers and tax fraud, Infosys will be paying USD 800,000 to California.

As a result of the misclassification, Infosys avoided payroll taxes of California such as unemployment insurance, disability insurance, employment training taxes.

An official statement said that, H-1B visas also require payment to the workers by the employers at the local prevailing wage.

“Today’s settlement shows that attempting to evade California law doesn’t pay. Infosys brought in workers on the wrong visas in order to under pay them and avoid paying taxes. With this settlement, California has been made whole,” said Becerra.

Infosys has agreed to pay the State of New York USD 1 million in 2017 for the settlement of allegations made of submitting wrong documents to the federal authorities.

The Californian settlement was released to the media on Tuesday, where in the settlement was actually made in November.

Attorney General claimed that, Infosys has violated the laws of California that included the California False Claims Act and Unfair Competition Law.

Prohibition of business practices being made which are unlawful, unfair or fraudulent is done by the Unfair Competition Law.

The California False Claim Act gives the General permission to recover the penalities against any person who makes or uses a fraudulent statement knowingly in order to obtain money from the State or to avoid paying the money owed to the State.

A complaint was filed by whistleblower Jack “Jay” Palmer, a former Infosys employee which led to the legal actions being taken against Infosys by California.

As per the conduct of Infosys which has been brought to the attention of Attorney General’s Office, he will be receiving 15 percent of the settlement under the California False Claims Act.

By Shrithika Kushangi