<<<<< JOB DESTRUCTION NEWSLETTER  No. 2060 -- 10/01/2009 >>>>>

A new Businessweek article and a sidebar that accompanies it describe some
of the fraudulent activities that occur in the H-1B program. Unfortunately
the article never explains that fraud isn't the worst problem with H-1B
because most companies can use legal loopholes in the law to exploit
workers. Fraud represents a very small percentage of the H-1B program but
articles like this one make fraud seem like the only problem.

It is my observation that focusing narrowly on fraud is favored by the
cheap labor lobby because they can make the following argument: "give us
more H-1Bs and in return we will give you more enforcement". How about if
instead of enforcement of a program we didn't ask for, they gave us our
jobs back?

H-1B is a relatively small guest worker visa program and yet our government
shows an inability to manage it. The program should be used as an example
whenever employers ask for larger guest worker visa programs. One thing you
can count on -- fraud and government ineptitude will only get worse as the
programs get bigger.

Overall the article has some good investigative journalism, but there are
two pieces of misinformation that need to be discussed.

The first one tries to exonerate employers by implying that they don't know
what their contractors do, and therefore bear no responsibility for the
fraud. Don't believe it for a second -- employers know exactly what is
going on but they choose to give it a nod and a wink as long as salaries
are kept low.

   U.S. executives often have little visibility into the treatment
   of contract employees because several layers of companies are
   involved. One recruiter for a major U.S. outsourcing firm says
   there's no way his clients know how body shop workers are
   treated because, until recently, even he didn't know.

The second myth repeated by Businessweek is perpetrated by those who want
to continue to flood the labor market with cheap foreign labor. They argue
that H-1B is an indentured labor program (which is true) and that all the
problems would be solved just by handing out green cards so that guest
workers can become instant citizens. The "freedom" Businessweek espouses
for these workers just means they will be as equally undesirable as
American citizens because "Today's immigrant will be tommorow's victim"
(Richard Tax, American Engineers Association, 1996).

Businessweek ignores the law of supply and demand which in this case means
that salaries will go down as more workers enter the labor market. BW
obviously understands these basic laws of the economy but they choose to
ignore them in order to hide their real purpose which is to cater to the
needs of their executive readership.

   While American companies may overlook the treatment of contract
   workers in their midst, the workers are vulnerable because of
   government policies. When a foreign worker comes into the
   country on an H-1B visa, the visa is held by the employer, not
   the worker. If an employee complains, the company can terminate
   its visa sponsorship, forcing the worker to leave the U.S.
   Workers can't shift jobs unless they find another sponsor, which
   can be difficult. And while workers can gain their freedom with
   permanent citizenship, the wait even for high-skilled visa
   holders can be 5 to 10 years.

Be sure to go to the main article because there is a video report worth
watching.



REFERENCES:

http://www.businessweek.com/magazine/content/09_41/b4150034732629.htm
America's High-Tech Sweatshops


http://www.businessweek.com/magazine/content/09_41/b4150034738024.htm
How the System Works


+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.businessweek.com/magazine/content/09_41/b4150034732629.htm

October 1, 2009, 5:00PM EST text size: TT
America's High-Tech Sweatshops
U.S. companies may be contributing unwittingly to the exploitation of
workers imported from India and elsewhere by tech-services outfits

By Steve Hamm and Moira Herbst

Vimal Patel was studying for a master's in business administration in
London when he saw an advertisement for work in the U.S. The ad offered a
job in the tech industry, as well as sponsorship for the kind of work visa
that allows foreign nationals to take professional-level jobs in the
country. So Patel applied and paid his prospective employer, Cygate
Software & Consulting, in Edison, N.J., thousands of dollars in up-front
fees. But when Patel arrived, Cygate had no tech job for him. He ended up
working at a gas station, and Cygate nevertheless took a chunk of his wages
for years, according to documents in a criminal case against Cygate.

After a federal investigation into Cygate, Patel and five other natives of
India recruited by the company pled guilty to visa violations in June. They
were sentenced to 12 to 18 months of probation, assessed fines of $2,000
each, and now face deportation. But at Patel's sentencing in the federal
courthouse in Newark, N.J., his lawyer said the slim 36-year-old, with a
mop of brown hair spilling over his forehead, was more victim than villain.
Like many ambitious workers from abroad, he came to the country seeking his
fortune, and he suffered for the effort. "It's a sad day," said Anthony
Thomas, the public defender assigned to represent Patel. "He always dreamed
of coming to the U.S."

Cygate, which changed its name to Sterling System after the lawsuit, is one
of thousands of low-profile companies that have come to play a central role
in the U.S. tech industry in recent years. These companies, many with just
10 to 50 employees, recruit workers from abroad and, when possible, place
them at U.S. corporations to provide tech support, software programming,
and other services. While many outfits operate legally and provide
high-quality talent, there is growing evidence that others violate U.S.
laws and mistreat their recruits.

Several types of fraud have become common, according to documents from
recent lawsuits and interviews with foreign workers, employers, lawyers,
and consultants. In some cases companies target young men and women hungry
to get well-paid tech jobs in the U.S. and charge them exorbitant fees for
visas, which is not allowed under American immigration laws. Even after
paying, some workers never get a visa; those who do may find the company
they paid has no job for them, as Patel did. This violates U.S. law because
companies are supposed to have an open position before they apply for a
work visa.

Workers who land tech jobs may face other kinds of trouble. Some companies
place foreign workers at client sites and then siphon off part of their pay
or charge ongoing fees, which violates U.S. law. Many workers allege
they're not paid in between jobs at client sites, though such "benching"
without pay isn't allowed either. In other cases, companies claim they're
employing people in low-salary regions when they're actually working in
high-wage areas, in violation of rules requiring payment of the region's
prevailing wage.

Sterling President Nilesh Dasondi was charged with multiple counts of visa
violations in the case filed by the U.S. attorney in New Jersey. The
government says he collected fees of up to $15,000 from the six workers,
left them to find jobs on their own, and extracted more fees to launder
their pay through his company. The workers acquiesced because Dasondi, like
all employers of visa recipients, held their visa documents and could have
revoked the papers if they objected. "This is a microcosm of a big issue
that's facing our country—visa fraud," said Sandra L. Moser, the
assistant U.S. attorney prosecuting the case in an interview after Patel's
sentencing.

Dasondi greeted a reporter at the doorway to his offices in Edison one
summer day. From a glass door on the parking lot side of a beige one-story
building, he led the way through a warren of cramped rooms, with half a
dozen people pecking away at computer keyboards. "My life is such a mess
right now," he confided once he was seated in a small conference room. He
wouldn't discuss details of the cases against him or Patel, but he promised
to talk after it is resolved. Dasondi's lawyer, Eric R. Breslin, says his
client "has been an asset to his community" and that Sterling "performs
legitimate services for its customers."
"BODY SHOPS"

Tech service outfits such as Sterling have thrived in recent years because
of shifts in the U.S. economy. As cost-cutting pressures have increased,
companies turned over management of tech systems and other back-office
operations to outsourcing firms, including many that bring workers from
India and other countries into the U.S. on temporary visas such as the
H-1B.

One important way outsourcers hold down costs is by keeping a lean
workforce at each client site—then turning to smaller companies, such as
Sterling, when they need to increase staff for specific projects, such as
installing new software or building a new Web site. These companies are
known as "body shops" because of their role, and often rely heavily on
foreign workers who come into the country on H-1Bs and other visas. "This
is where a lot of the shenanigans take place," says Ron Hira, an assistant
professor of public policy at the Rochester Institute of Technology who has
written extensively on work visas. A study by the federal government last
year estimated that 54% of visa rule violations were committed by companies
with fewer than 25 employees.

U.S. companies usually don't know—and don't press to find out—which
body shops are tapped to support their tech operations. The result is that
prominent American companies can easily end up doing business with tech
service outfits that violate visa laws. Breslin wouldn't identify specific
Sterling clients, but he says they include "significant companies." Dasondi
named Computer Sciences (CSC) as one customer in a 2006 lawsuit: Dasondi
wanted the technology giant to pay him for hiring away one of his
employees. Computer Sciences would not comment on the case beyond saying it
had been settled.

In recent months workers have alleged mistreatment while working for body
shops in the offices of Qualcomm (QCOMM) and JPMorgan Chase (JPM). In a
civil suit filed in May and a complaint to the U.S. Labor Dept., Prasad
Nair charged that Unified Business Technologies got him an H-1B visa in
2007 by saying he would work in the company's Troy (Mich.) offices and
receive $60,000 a year as a programmer and analyst. Instead, UBT sent him
to work at chipmaker Qualcomm's offices in San Diego, where the cost of
living and prevailing wage for such a position are much higher. The
32-year-old alleged UBT made unlawful pay deductions, delayed payments,
failed to pay overtime, and postponed health benefits for his family. David
Blanchard, Nair's attorney, says he struggled "paycheck to paycheck" to
take care of his wife and 9-month-old daughter and regularly ate at Burger
King to save money.
AN OPAQUE SYSTEM

UBT's lawyer, John G. Coutilish, says Nair's charges are "baseless."
Coutilish says UBT agreed to make a "nuisance" payment of $2,500 to end the
civil suit, though the Labor Dept. investigation is continuing. UBT has
filed its own suit against Nair alleging he quit without giving proper
notice and defamed the company with his accusations. Qualcomm declined to
comment on the case, but a spokeswoman says the company requires vendors it
works with to "explicitly acknowledge that they must comply with all
applicable laws and regulations, including employment and immigration
laws."

In another complaint to the Labor Dept., Benly Ebenezer alleges he was
underpaid or not paid at all while working in the Manhattan offices of
JPMorgan. In the complaint, Ebenezer, who has two master's degrees in
computer science, was brought to the U.S. on an H-1B visa by Itek
Consulting in 2005. Ebenezer says Itek paid him about 10% less than the
promised $50,000 a year while he worked at the bank, and then stopped
paying him altogether between December 2006 and February 2007. The Labor
Dept. ruled in Ebenezer's favor in May. He declined to be interviewed
because his situation remains "sensitive."

The phone number for Itek is now disconnected. JPMorgan declined to comment
on the case.

U.S. executives often have little visibility into the treatment of contract
employees because several layers of companies are involved. One recruiter
for a major U.S. outsourcing firm says there's no way his clients know how
body shop workers are treated because, until recently, even he didn't know.
He discovered that some of the firms he was hiring for short-term projects
weren't using their own people but instead bringing in subcontractors,
which often underpaid workers. He just put in place new policies so he
knows when a firm he hires is using a subcontractor, but he still can't
find out how much workers are paid or in which state they're supposed to be
working. "We don't like it," he says. "The agreements seem almost
criminal."

RIT professor Hira says the situation is similar to what happened years ago
when Western companies began using sweatshops in China for manufacturing.
Companies such as Nike (NKE) sought to lower costs by using overseas
manufacturers, which in turn squeezed workers with low pay and poor working
conditions. After a public outcry, Nike, Disney (DIS), and others started
to monitor labor standards abroad. American companies may know little about
the tech contractors who work for them in the U.S. now, but Hira says
companies should take steps to track the situation more closely. "I don't
know of any [top executives] who have made an issue of this," he says. "We
haven't had a public discussion of what the clients' responsibility is."
MOVING AGAINST CORRUPTION

While American companies may overlook the treatment of contract workers in
their midst, the workers are vulnerable because of government policies.
When a foreign worker comes into the country on an H-1B visa, the visa is
held by the employer, not the worker. If an employee complains, the company
can terminate its visa sponsorship, forcing the worker to leave the U.S.
Workers can't shift jobs unless they find another sponsor, which can be
difficult. And while workers can gain their freedom with permanent
citizenship, the wait even for high-skilled visa holders can be 5 to 10
years. "Many of these people don't know their rights," says Michael F.
Brown, an attorney in Appleton, Wis., who handles immigration cases.
"They're essentially captives."

Most of the discussion of U.S. work visas in recent years has focused on
the effect of visas, when used legally, on the American workforce. Some
U.S. tech workers contend that bringing in foreign workers drives down
their salaries and makes it easier to move jobs overseas. Senators Richard
Durbin (D-Ill.) and Charles Grassley (R-Iowa) have introduced a bill to
overhaul the visa program aimed at protecting U.S. workers. But they also
want to boost enforcement to combat the mistreatment of foreign visa
holders. "We want to stop corruption of [all types in] the [H-1B] program,"
Grassley said in an interview.

Body shops have sprung up around major metropolitan areas to be close to
their clients. One cluster is in northern New Jersey, across the Hudson
River from Manhattan. Hundreds of small tech services firms operate in such
towns as Belleville, West Windsor, and Edison, where Sterling is
headquartered.

At times, the region feels like a front in the battle between foreign and
domestic workers. U.S. tech workers in the area have lost thousands of jobs
in recent years with the decline of AT&T (T) and Lucent Technologies, and
many blame outsourcing firms for taking the remaining well-paid jobs in
finance and other sectors. Tech services companies say they're simply
responding to clients' needs and are being blamed unfairly for any loss of
jobs. In this heated debate, cases of visa abuse, like those alleged
against Sterling, have fueled passions on both sides.

John Miano, a 45-year-old software programmer and labor rights attorney,
waits for a reporter in a booth in the Summit Diner, a classic mid-20th
century eatery in tony Summit, N.J. Miano is the founder of the
Programmers' Guild, an association of U.S. software programmers. Over
cheeseburgers, he argues that the work visa program is hurting demand for
American workers. "The job situation for American tech workers in this area
is horrible," he says. "The consulting market has been wiped out. Now it's
mostly Indian-owned companies, and they're looking for people with H-1B
visas."

He says the rise of body shops has made the situation worse: The companies
are usually so small they're overlooked by regulators and law enforcement,
so they can squeeze foreign workers and put Americans at even more of a
disadvantage. Miano clutches a list of companies in the Summit area that
have applied for H-1B visas. They are all over the place—some tucked away
in offices on the second or third floors of buildings; one filling the
entire first floor of a white-columned brick building on a side street; two
of them just mailboxes in a UPS (UPS) Store. Venkateshwara Computers, in a
modest home in nearby Livingston, put in for two programmers. Ajay
Pimpariya, the owner, complains that his visa applications weren't approved
because he followed the rules, while other companies falsify documents. "If
Homeland Security wants to take the information," he says, "I'll tell them
who's doing what."

Immigration authorities acknowledge that one reason it's difficult to stop
visa abuses is that checking on so many small companies is labor intensive.
"The cases are difficult to investigate and difficult to prove," says James
Spero, who heads Immigration & Customs Enforcement's fraud unit.

The Dasondi case illustrates how the visa system ties into a human supply
chain that reaches halfway around the world. According to court documents,
the New Jersey businessman recruited workers in Britain and India. In
October 2001, he arranged through an intermediary to meet with Kishor
Parikh, a mechanical engineer in the western Indian city of Ahmadabad.
Dasondi allegedly instructed him to buy a fake university degree and
coached him on how to lie to interviewers in the U.S. Consulate. Parikh
allegedly paid $9,000 to Dasondi for sponsoring his H-1B application.

When Parikh arrived in the U.S., he learned that Dasondi didn't have a job
for him. Instead, Parikh found work at a greeting card shop. He lived in a
one-bedroom basement apartment with his wife, parents, and two children,
according to his lawyer, John McDonald. Parikh sent Dasondi about $4,000
per month in money orders, which Dasondi ran through his payroll system as
if the money came from a corporate client to pay for Parikh's services,
according to court records. The payment scheme, which made it look like
Parikh was a legitimate tech worker, is a common strategy called "running
the payroll."
"WE WERE LIKE PRISONERS"

A tech service firm called Vision Systems Group has been charged, in a
criminal suit filed in February, with taking another approach to visa
fraud. Under federal law, companies that apply for work visas need to pay
the prevailing wage for a specific occupation in a particular region. The
rule is aimed at preventing employers from reducing their costs by hiring
foreign workers to replace Americans.

Federal prosecutors say Vision Systems, based in New Jersey, set up an
office in low-wage Coon Rapids, Iowa, and claimed that up to 25 immigrant
employees worked there between August 2003 and December 2008, when they
actually worked in higher-wage regions. That would allow Vision Systems to
pay a visa holder the prevailing wage of $20.05 per hour in Coon Rapids for
an entry-level computer specialist instead of $30.43 at its headquarters in
New Jersey. Vision Systems CEO Viswa Mandalapu could not be reached for
comment.

Vision Systems identifies JPMorgan Chase and insurance giant Cigna (CI) as
two of its clients on the reference site Hoovers.com. Both companies
declined to comment.

When Akhil Gupta heard about the Vision Systems bust, he celebrated. The
Mumbai native who now lives in London had paid the company nearly $3,000 in
2006 for an H-1B visa that never came through. "Vision Systems exploited my
dreams," he says. "All I see is a huge amount of money and time lost."

Even workers who land jobs in the U.S. can end up on the bench, without a
paycheck for weeks or months. Rajiv Dabhadkar, an Indian who was assigned
to such companies as AT&T and Merrill Lynch on guest worker visas, recalls
that when a staffing company replaced him with a new visa holder from
India, he was so short of cash he couldn't pay the electric bill for his
Belleville apartment. He and his wife and their 5-year-old daughter had to
wear coats indoors for a few days in the winter. Ultimately, he says, his
wife returned to India and filed for divorce. "I am a survivor and a
witness," says Dabhadkar, who now lives outside Mumbai and runs the
National Organization for Software & Technology Professionals, which
publicizes abuses of guest workers.

One Brazilian worker originally came to the U.S. as a college student but
was unable to find work when he graduated. Desperate to stay in the
country, he took a job with a body shop in New Jersey that promised to
sponsor his visa application, train him, and place him in an IT position in
a corporation.

Things didn't work out as he had hoped. The company put him up in a
two-bedroom apartment in West Windsor that he shared with half a dozen
other trainees. It was so cramped he slept in the closet, with his feet
sticking out the door. Not a fan of the curries favored by his roommates,
he ate his meals at a nearby Subway sandwich shop. At the office, he
studied hard in his training courses but was taken aback when the managers
instructed him to write up a résumé full of false claims about his
skills and work experience. He ended up working for $800 a month. "We were
like prisoners," says the man, who would not let his name be used because
he is in the country illegally. He ultimately quit and got a tech job in
another state.

Foreign workers aren't waiting for American companies or the U.S.
government to address the issue of high-tech sweatshops. They've set up Web
sites to discuss their experiences with different companies. On sites such
as Desi Crunch and Goolti, they talk anonymously and steer one another away
from the worst employers. On Desi Crunch, one writer marvels that a company
can still attract any potential employees. The worker compares the firm to
"an H-1B prison camp" and says, "trust nothing they say or write."

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic
network
Guest Worker Rights

People who come to the U.S. on work visas include many engineers and
computer scientists, often with advanced degrees, but they frequently do
not know their rights as employees. Immigration Voice, an advocacy group
for foreign workers, has set up a Web site that spells out which visa fees
an employer is supposed to pay, what to do if wages aren't paid on time,
and how to report problems.

To read Tips for Guest Workers on Avoiding Abuse, go to
http://bx.businessweek.com/immigration/reference/

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.businessweek.com/magazine/content/09_41/b4150034738024.htm

How the System Works

American corporations may be unknowingly doing business with tech services
companies that underpay and otherwise mistreat workers. One example of
alleged wrongdoing:
THE WORKER

Indian software programmer Prasad Nair moved to the U.S. in 2008 on a work
visa. He claims he was offered a job in Michigan at a salary of $60,000,
plus medical insurance and travel expenses.
THE SPONSOR

United Business Technologies in Troy, Mich., sponsored Nair's visa, but, he
claims, forced him to sign a new contract requiring him to pay visa and
travel costs. UBT denies any wrongdoing.
THE STAFFING AGENCY

UBT sent Nair to a tech services outfit, Larsen & Toubro Infotech, to find
him a job. Larsen & Toubro, which is not accused of any wrongdoing,
declined to comment for this story.
THE CLIENT

Larsen & Toubro placed Nair in a job in the San Diego offices of tech giant
Qualcomm. He claims UBT, his official employer, paid him less than the
prevailing wage. UBT has countersued Nair for failure to give proper notice
when he quit and for defamation. Qualcomm and Larsen & Toubro are not
accused of any wrongdoing.


- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Newsletter Homepage:
http://www.JobDestruction.com/shameh1b/JobDestructionNews.htm

Support this Newsletter and www.JobDestruction.com by donating:
www.zazona.com/Donations.htm

To Be removed from this mailing list, reply to this
email with UNSUbSCRIBE in the subject window
- - - - - - - - - - - - - - - - - - - - - - - - - - - -