On Tuesday, Infosys, India’s top IT major, has agreed to pay USD 800,000 to settle allegations of misclassification of foreign workers and tax fraud, as officials announced.
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How Did This Happen?
As per the reports, the software company, Infosys will be paying USD 800,000 (nearly Rs 5.6 crore) to California to resolve allegations risen from 2006 and 2017.
According to California Attorney General Xavier Becerra, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas.
How Does It Affect?
As per the reports, this misclassification resulted in Infosys avoiding California payroll taxes such as unemployment insurance, disability insurance, and employment training taxes.
H-1B visas also have a mandate for employers to pay workers at the local prevailing wage, as the official statement said.
Becca said “Today’s settlement shows that attempting to evade California law doesn’t pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole,”.
What Happened In Regulatory Filings?
Although, Infosys denied the allegations and asserted no wrongdoings in their statement.
Moreover, the company informed Indian stock exchanges that it has reached a settlement with California Attorney General on Wednesday.
In the regulatory filing, the IT company said the case is being dismissed with prejudice and was reached to avoid the time, expense, and distraction of protracted litigation on allegations dating back more than 13 years.
Infosys said “the agreement – which notes that Infosys strongly disputes the allegations and in which Infosys admits no wrongdoing – will result in the case being dismissed…”.
Also, the company claimed that it maintains robust policies and procedures to ensure adherence to all applicable regulations and laws.
Who Disclosed This Fraud?
Infosys clearly denied the allegations and asserted of no wrongdoings In their statement and said that a settlement was reached to avoid the time, expense, and distraction of the protracted litigation.
Infosys had agreed to pay the State of New York USD 1 million to settle allegations of submitting wrong documents to federal authorities in 2017.
On Tuesday, the Californian settlement that was carried out in November was released to the media. (Reference)
California initiated legal actions against Infosys after a complaint was filed by whistleblower Jack “Jay” Palmer, who is a former Infosys employee.
Mr Palmer has sued the Indian company in 2017.
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