On Nov 13 2013 by William A. Stock

Where Did The Criminal Case Against Infosys Go?

In the largest fine ever in an immigration case, on October 31, 2013, the U.S. Department of Justice settled for $34 million from Infosys Limited.  The complaint alleged that Infosys had engaged in “systemic visa fraud and abuse of immigration processes” – that it had abused the B-1 business visitor visa program by bringing foreign national employees into the United States to perform work that was not authorized under the classification and had violated regulations regarding the employment of work-authorized H1-B visa holders.  The settlement, however, dealt with Infosys’ failure to maintain accurate employment verification records for its US citizen and foreign national employees in the United States.  What explains the discrepancy?

In the settlement, Infosys conceded that it committed civil violations of 8 U.S.C. § 1324a, which prohibits employers from hiring any individual (citizen or non-citizen) for employment in the United States without verifying that individual’s identity and employment authorization status using Form I-9, Employment Eligibility Verification.  According to the Justice Department, more than 80% of the company’s I-9 forms for all of its US employees from 2010 and 2011 contained “substantive violations” – paperwork errors that were not fixable by reference to the employees’ documents, such as failure to complete the form within three days of hire, or failure to update and re-verify the employment authorization status of those employees present in the United States on visas authorizing temporary employment.

While the civil “paperwork” violations were settled, however, the criminal charges were dropped.  The complaint filed with the settlement agreement alleged that Infosys brought foreign national employees into the United States as B-1 business visitors in order to perform functions that are not authorized under that classification and for which an H1-B visa is otherwise required.  The Justice Department’s allegations are, at first blush, reasonable: noting that B-1 visas are much cheaper for the company to obtain than H-1Bs, the government alleged that Infosys told employees to describe the scope of their activities in the US in such a way that they would be eligible for B-1 visas, and provided letters confirming that scope, while writing contracts with government contractors that billed the employee’s activities as having been performed “off shore.”  The allegation is that Infosys thereby engaged in criminal violations, specifically 18 U.S.C. §§ 371 (conspiracy), 1001 (false representations to government officials), and 1546 (passport and visa fraud); as well as 31 U.S.C. § 3729 (false claims for payment to government contractors).

Once the scope of business activities allowed under – indeed, encouraged by – the B-1 category is considered, however, it becomes much less clear that Infosys’ conduct prior to 2010 violated any of the restrictions on the B-1 category – which may have been a large factor in the government’s decision not to insist that Infosys plead guilty to any criminal charge.  In order to understand why Infosys’ conduct was quite likely legal, it is necessary to review the various restrictions on the scope of activity in which B-1 visitors can engage.

The Scope of Business Visitor Activities

A “visitor for business,” as that term is defined in the Immigration and Nationality Act, may not perform “skilled or unskilled labor,” and a separate definition section creates several temporary worker visa categories.  This restriction on performing labor in potential competition with United States workers, however, is tempered by the realities of the countervailing imperative to use the business visitor category to promoting international trade and commerce.  While legislative restrictions set a relatively high bar on persons coming to a permissible activities for persons coming to the United States, a long line of administrative interpretations have made it clear that whether or not activity in the United States is “work” does not end the analysis of the person’s eligibility for a business visitor visa.  Rather, activity which might be considered “work” if conducted for a United States employer may very well be an appropriate activity for a business visitor, if that activity is necessarily connected to international trade or commerce.

Reviewing the leading cases on permissible activities in the business visitor category following the seminal decision in Matter of Hira, a clear pattern emerges: the more closely an activity is necessary and incidental to international commerce, the more “skilled or unskilled labor” the worker may perform.  Thus, activities such as clerical work preparing paperwork accompanying shipments across the US-Canadian border; meetings with an employer’s customer in the United States to obtain specifications for and deliver results of engineering projects being worked on overseas; and even truck drivers’ loading or unloading of material being imported to or exported from the United States have all be considered activities that are validly engaged in by “visitors for business,” even though the activities are clearly “working” in the United States.

Business Visitors And The Information Economy

While the businesses or category has been relatively simple to apply in situations involving the physical movement of goods into or out of the United States, where the multinational contracts involve services, the lines are more difficult to draw.  Information technology consulting companies such as Infosys find themselves at the exact intersection of these problems.  These companies typically gather specifications for new projects from customers in the United States, conduct design and development programming of solutions for those problems in their operations overseas, and then must install and integrate those software solutions with the customer’s existing systems.  Such installation and integration of software products developed overseas is “a necessary incident to international commerce.”

Because software development does not involve a physical product, however, it can be difficult to distinguish situations in which a company is asked to develop a solution overseas, and a situation in which a company is asked to send skilled programming resources to the United States to fill gaps in the employer’s work force.  If a particular piece of software, or even a programming department, is no longer employed by the employer, and is outsourced to an IT provider, that provider may not simply send visitors for business to the United States under the guise of “importing services.”  Rather, that the importing employer would have to obtain an appropriate employment authorized visa for such individuals from overseas coming to fill spots in the United States labor market.

Lessons From Infosys For All Employers

The investigation of Infosys illustrates how important it is for companies to ascertain the planned activities of proposed business visitors coming to their company, whether those visitors are employees of companies with whom the employer has contracted, or whether they are employees of the company’s overseas parent, subsidiary or affiliate.  Managers should be made aware that they cannot simply invite individuals from overseas to fill gaps in their US labor force, and that the visitor visa can only be used where the person’s trip to the United States is necessary for some form of international commerce, or where the activity benefits the overseas employer.

A common example illustrating the kind of distinctions that must be made is advising an accounting analyst employed by the company’s overseas affiliate who is asked to come to the United States to gather and analyze certain financial information.  If that accountant is coming to analyze information for some purpose of the foreign company (for example, to prepare financial filings with that company’s home country tax authorities with respect to its US operations), the activity is certainly within the ambit of the business visitor visa.  If that accountant were to be coming to the United States to conduct an analysis of the same financial data for a US purpose (for example, filling in for a US accountant out on short-term disability), the visitor for business visa would not be appropriate.

Nothing may seem to be simpler than having a business colleague obtain a round-trip plane ticket and, if necessary, a visitor visa to the United States. Given the realities of the business visitor category, however, companies should be sure that their business visitors are, indeed, “just visiting.”