US District Court Judge Claudia Wilken issued an order that granted class-action status to the suit that accused Tata Sons and its subsidiary, TCS, of breaching employment contracts and violation of the California Labour Code.
The complaint was filed by non-US employees Gopi Vedachalam and Kangana Beri, who were sent from India to the US to work on projects.
TCS said in a statement, “We have received the order of the US District Court. This is an order only on one procedural matter and does not address the merits of this case. TCS continues to believe that when this matter concludes, the court will find that the plaintiff’s claims are without any merit.”
On February 14, 2006, Lieff Cabraser Heimann & Bernstein filed a nationwide class-action lawsuit against Tata. The suit charged that Tata unjustly enriched itself by requiring all of its non-US citizen employees to endorse and sign over their federal and state tax refund checks to Tata and by taking unauthorised deductions from employee’s paychecks.
The complaint also alleged that Tata did not pay its non-US citizen employees the amount promised to those employees before they came to the US. In standard employment contracts, TCS promised to pay its employees a gross US salary and a separate Indian salary. The company’s unauthorised deductions from its employees’ wages prevented employees from receiving both their promised US salary and Indian salary.
“More than 10 thousand current and former Indian nationals working for Tata in America now may have their day in court. We look forward to demonstrating at trial that Tata breached the standard employment contract with these employees and violated California labour laws,” said Kelly M Dermody of Lieff Cabraser Heimann & Bernstein, LLP, and co-lead class counsel.
In June 2006 and April 2007, Tata America International Corporation and its parent corporations, TCS and Tata Sons, filed a motion to dismiss the case, arguing the case should be arbitrated in India rather than the US. Lieff Cabraser opposed the motion. In November 2006 and June 2007, the court heard oral argument on the motions and took them under submission.
Plaintiff Vedachalam said, “I am very happy with the court’s decision today. It means my former colleagues and I are one step closer to holding Tata accountable.”
TCS will not be the first Indian company to be pulled up by a US court. Jack Palmer, an employee of Infosys, filed a case against the company, alleging the Bangalore-based IT services provider was involved in misusing the B1 business visa programme to send lower level and unskilled foreigners to the US to work in full-time positions.
The case is expected to come up for hearing on August 25. Infosys has maintained it has not done anything wrong and will cooperate with the investigation.
“The judge has certified it as a class action, which means that all employees who fall under the fact pattern can join the litigation. I don’t think this litigation has anything to do with anti-India sentiment rather than lawyers who try to bring novel legal claims on behalf of employees, and Indian firms seem to have become an easy target. This is because tax and visa rules involving foreign workers on temporary visas, who are also employees of the IT firm in India, are amorphous and subject to varying interpretation,” said Cyrus Mehta, an immigration lawyer and founder of Cyrus D Mehta and Associates.
In July last year, Cognizant Technology was dragged to a US court, as eighteen former employees of Molina Healthcare filed a lawsuit against the American healthcare services firm for allegedly replacing them with professionals from India. Cognizant had said it would “vigorously contest” the same by pursuing all legal remedies.
In 2006, Infosys was also accused of violating California’s labour laws for allegedly failing to pay overtime wages to its immigrant employees there. A Californian law firm was said to have warned the company of filing a class-action suit against it. However, the IT company settled the issue amicably, by agreeing to pay $26 million in total towards the overtime payment what it had announced earlier.