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 n January 2000, Harish Khare landed in Santa Clara to work for a well-known company which offered him an annual salary of $48,000. Khare enjoyed his work but seven months later realised his real time embedded experience could fetch him a higher salary. He decided to leave, but the company threatened him with a fine of $10,000 if he left. Khare marshaled his tact to renegotiate the contract and continued.
He was lucky. So far, the company had paid him on time and it had a series of projects on which they need him. Unlike Khare’s company, however, there are thousands of unethical and avaricious small body shops, who have preyed on skills of H-1B workers by placing them on Bench for long periods without salary, underpaying workers and compounding their agony in a foreign land by clipping their wings with restrictive clauses in the work agreement. Isolated and alone and ignorant of US laws, exploited Indian techies have little choice but to stick on despite the disillusionment with the employer and sacrifice their self respect in favour of the minimal security these employees offered.
Few small-time body shops mention the word contract till the employee is safely ensconced in the US. Confronted with a work contract immediately on arrival, where the advantage necessarily lies with the recruiter, employees have no option but to meekly surrender their rights. Anurag Misra’s company for example, in the course of the interview, did not once say that he would have to work for a minimum period of 12 months. On arrival, the company flashed the contract with the limited time frame and penalty clause. “I was told it was routine but even then I knew the smooth talk was a guise. ” Any rightful protest against exploitative clause of the contract means risking the wrath of the management and being labelled “problem employees.” In the initial days in a new country, the employee is dependent largely on the management to find his way round. Rubbing the employee the wrong way means being entirely isolated. Moreover, peers look askance at the employee for questioning terms to which they have agreed. But this pales in front of the employees' right to cancel the visa in face of the employee’s intransigence. Others who have left before the minimum time frame stipulated in the contract have had to pay large amounts to he employer.
That’s exactly what happened to Kavyananada Sidbate. A San Jose software-training and consulting company named Software Technology Group Incorporated, offered him a job in March 1997. Before flying, the company made him sign an employment agreement that said he would pay $25,000 to STG in liquidated damages if he left the firm before two years. When Sidbate wanted to leave STG after 13 months to work for a client, who gave him a $20,000 raise, the company sued Sidbate and another H-1B worker in a similar situation, Srinivas Gaddam, for $25,000 each plus legal costs. During the trial, STG justified the damages with rupee-denominated receipts for Indian newspaper advertisements, hotel bills and travel expenses. The jury sided with the employee. In January of this year, the two engineers recently reached a compromise with STG to pay back 60 per cent of the damages. There is, however, no denying that recruiters incur immigration and recruitment expenses in hiring from India. Typically, a US employer spends between $5,000 and $7000 on every techie it hires from India. But many companies use this as an excuse to demand from employees amounts as high as five times the expense incurred.
This April, a ruling by the San Mateo Court on the grossly abusive nature of restrictive work contracts is a cause for muted celebrations for thousands of H-1B workers like Anurag, Kavyanand and Harsh. Dipen Joshi a software professional from India decided to take his employer Compubahn Incorporated head on for demanding $77,085 for leaving before his 18-month contract was over. With the help of his attorney, Joshi slapped a case on Compubahn for alleged fraud, misrepresentation and violation of a State statute against unfair competition. The Court, upholding Joshi's argument stressed that non-compete agreements were against Californian law and hence could not be enforced. Second, neither can the company collect a "finder's fee" from the employees. Third, it cannot ask its employees for reimbursement costs incurred on immigration and training.
The ruling upholds the rights of the employee and serves as a warning to unethical body shops, who have hitherto treated H-1B workers as “indentured slaves.” However, although the Court ruling given in the Dipen Joshi case is applicable in the State of California, H-1B workers in other States are not granted automatic immunity against restrictive work contracts. At best employees can take unethical recruiters to court citing the Dipen Joshi case as precedence. There is no guarantee, however, that the verdict would be in their favour, evident in a case filed by Bridgewater-based CyberThink against its employees. CyberThink recently shot into fame when it has filed a suit against 16 former employees whom it accuses of contract violations. The employees had agreed to work for a minimum period of 18 months and had agreed to pay the company between $5,000 and 15,000. Fourteen of these cases are under jurisdiction but the employees were asked to compensate the employer in the two cases decided by the court. Close to each other’s heels, the two cases reveal that a great deal is dependent on whether the employer has scrupulously stuck to the written word. In the Dipen Joshi case the company asked him to pay $75,000 a preposterous amount. Joshi was also on the Bench for a period of four to five months, employers they had also reneged on terms of the contract.
It is not that employees are entirely in the wrong to impose certain terms and conditions but these must be intrinsically fair and not exploitative. Moreover if it can be proven that the company has acted unethically and breached the terms of the contract, the advantage rests with the employee.
H-1B employees, though not all, land in trouble largely due to their desperation to get to the US. The drive to get to the US makes them bypass simple measures such as checking credentials of the company. Moreover most software professionals tend to be timid and do not ask adequate questions to the overseas recruiter about the nature of the contract. This compounded with ignorance of basic laws such as the fact that work contracts signed on Indian soil for employment to a US–based company are violative of US laws and hence null and
viod make them easy targets for exploitation.
Most employees have no more than a faint idea about possible expenses incurred by the recruiter. As stated earlier recruiter expenses to hire form India are between $5,000 and $10,000. Hence it is best for employees to avoid contracts that demand they pay more than $15,000 as compensation to the employer if they leave in the middle of a project. Even in the cases filed by CyberThink and STG, the court ordered employees to pay no more than $15,000. Another clause often the cause of tussle between the employer and the employee is the non-compete clause in the work agreement. To safeguard their business interests, most H-IB recruiters in the contract purport that employees cannot offer engineering, consulting or programming services to the employer ‘s clients and their direct competitors, nor can employees solicit or entertain offers from existing clients. Once again if the company has treated the employee unfairly, it could land in trouble.
Hence restrictive work contracts need to be a two-way ethical compact between the employer and the employee. After the Dipen Joshi ruling, unethical body shops need to be beware, but the CyberThink ruling reveals that so do employees. Sadly, in the H-1B story one party has always been guilty.
(The views expressed here are those of the author. AssureConsulting.com takes no responsibility for them)
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