Offshore firm to pay $2.4M to settle H-1B wage case

Patni Computer Systems blamed an 'accounting error'

One of the largest users of H-1B visas, India-based Patni Computer Systems Inc., is paying $2.4 million in back wages to 607 of its H-1B employees as part of an agreement announced today by the U.S. Department of Labor.

Labor officials said that Patni failed to pay the prevailing wages due the employees between January 2004 and December 2005. The law requires H-1B employers to pay wages similar to what a U.S. worker would receive for the same kind of work.

Patni spokesman Gene Carozza said the back wage problem was "due to an accounting error that has since been rectified."

This may be the largest H-1B wage settlement case ever reached by government, and it involves an investigation that spanned 32 states, according to John Chavez, a labor department spokesman. In total, the settlement would amount to nearly $4,000 in back wages per employee if the money were split evenly among them, which it most likely is not. "The main objective (of the settlement) is to make [employees] whole," said Chavez.

In a statement, Labor Secretary Elaine Chao said that "the department is committed to vigorously enforcing the H-1B provisions that guard against employers undercutting American workers by underpaying temporary foreign workers."

Patini, which has its U.S. headquarters in Cambridge, Mass., and global headquarters in Mumbai, received 1,391 H-1B visas in fiscal year 2006. The company was one of nine firms that last month received letters from U.S. Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) seeking additional information -- including wage data -- about its use of H-1B visas.

Patini has about 13,000 employees and reported $156 million in revenue for the quarter that ended March 31.

While the Labor Department has in the past barred some companies from using the H-1B program because of violations -- and has published a list of those companies -- there was no evidence of a willful violation by Patni in this case, Chevez said.

For a company to be considered a willful violator, it must meet a list of conditions that includes misrepresenting information on the Labor Condition Application, which is used by firms to indicate prevailing wage.

The enforcement action announced today comes at the same time some U.S. senators, including Durbin and Grassley, are pushing for changes in the H-1B program that would give the Labor Department more manpower and authority to investigate companies that use the visa program.

The settlement's timing could raise eyebrows, and Ron Hira, an assistant professor of public policy at Rochester Institute of Technology in New York who has testified before Congress on the H-1B issue. "Our focus should be on the fact that many companies are in compliance with the law but are able to pay lower wages" than those paid to U.S. workers. 

Copyright © 2007 IDG Communications, Inc.

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