The company, which is settling the dispute without admitting to any of the allegations, agreed to pay $2.25 million in back wages to employees in amounts ranging from less than $2,000 to more than $40,000.
The settlement may be the largest back-wage payment ordered under the federal H-1B visa program, according to Brad Mitchell, a Labor Department spokesman.
Opponents of the H-1B program argue that foreign workers that companies bring in for high-tech positions are taking U.S. jobs. However, Computech President Ram Kancharla said the company hired the workers during the technology boom years to meet the need for workers with Java- and Web-related skills.
Kancharla wouldn't disclose the number of H-1B workers the company now uses but said most of the employees involved in the settlement have left the firm.
Workers abroad
Computech, which handles ERP implementations, application support and development, and remote database management, today has 400 to 500 employees in the U.S. and India, with more than 200 of those based in the U.S.
According to the settlement, the company can't hire H-1B workers for 18 months.
Kancharla, who denied the federal allegations, said the company decided to settle after looking "at the cost of litigation and how long it's going to take and the kind of distraction to the business."
Some companies that have hired large numbers of H-1B visa holders have been accused by groups representing technology workers of being "body shops" that underpay foreign workers and help U.S. companies move work overseas.
"The Department of Labor aggressively enforces the law to ensure that temporary foreign workers are compensated fully and fairly," Secretary of Labor Elaine L. Chao said in a statement. "Abuse of the temporary foreign worker program is not tolerated, and violators, as this case shows, are vigorously pursued."
Spot audits needed
But Ron Hira, vice president of career activities at The Institute for Electrical and Electronics Engineers Inc. in New York and an assistant professor of public policy at the Rochester Institute of Technology, argued that the government's enforcement mechanism is weak because it relies on complaints from H-1B workers. The Department of Labor doesn't have the power to make spot audits of companies, but Hira said the agency needs to be able to do that if it is to be proactive about such cases.
Hira said the settlement is something of a disincentive for H-1B workers because it took six or seven years to resolve and is no windfall for the workers affected.
However, Vic Goel, an immigration attorney in Greenbelt, Md., said the Labor Department action is "a clear indication that the system is working effectively."
The H-1B program has been the subject of heated contention. Opponents argue that the program is used to hire cheap labor and facilitate the offshoring of U.S. jobs. Supporters contend that foreign workers are necessary in order to meet U.S. labor needs and keep jobs in the country.
A report released last month by the Government Accountability Office won't settle that argument. The report's so-called overview of the issues reached no firm conclusion about the effects of offshoring on the U.S. economy.