IT services company Infosys has agreed to pay Rs 5.6 crore to settle allegations of misclassification of foreign workers and tax fraud, PTI reported.
“Infosys will pay California $800,000 or nearly Rs 5.6 crore to resolve allegations that between 2006 and 2017, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas,” California Attorney General Xavier Becerra said.
This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes.
H-1B visas also require employers to pay workers at the local prevailing wage, an official statement said.
“Today’s settlement shows that attempting to evade California law doesn’t pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole,” Xavier Becerra said.
In the settlement, Infosys, however, denied the allegations and asserted of no wrongdoings.
In 2017, Infosys, India’s second largest software exporter, had agreed to pay the State of New York $1 million to settle allegations of submitting wrong documents to federal authorities.
The Californian settlement that was carried out in November was released to the media on Tuesday.
California initiated legal actions against Infosys after a complaint was filed by whistleblower Jack “Jay” Palmer, a former Infosys employee. Palmer had sued the IT services company in 2017.
The company generates 60 percent of its revenue in North America, mainly in the United States. Infosys employs more than 20,000 workers in the United States, analysts estimate. About two-thirds of the Infosys workers in America have been Indians with skilled-worker visas, New York Times reported in 2018.
