Problem
Disney Workers Replaced with H-1B Visa Workers
When some 250 IT workers at Walt Disney Parks and Resorts were laid off in 2015, a condition of their severance pay required some of them to train their replacements-workers from India who were in the United States on H-1B visas. Two of the displaced workers filed class action suits claiming that HCL and Cognizant Technology Solutions colluded with Disney to make false statements on certain forms when petitioning for workers to receive H-1B status. The suit alleged that those false statements were violations of the civil Racketeer Influenced and Corrupt Organizations (RICO) Act.
HCL and Cognizant are consulting firms that import workers to the United States on H-1B visas and then contract them out to U.S. firms. HCL is an India-based IT services company with 116,000 employees and annual revenue of $7 billion.
Cognizant is a U.S.-based professional services company with annual revenue of $13 billion and over 260,000 employees (75 percent of whom are employed in India).
The Immigration and Nationality Act sets forth certain prerequisites for employers wishing to employ H-1B workers in the United States. To obtain H-1B status approval, the employer must first file a Labor Condition Application (LCA), Form ETA 9035 with the Department of Labor. The employer must state that it will: (i) pay the nonimmigrant workers at least the local prevailing wage or the employer's actual wage, whichever is higher; (ii) pay for nonproductive time in certain circumstances; (iii) offer benefits on the same basis as for U.S. workers; and (iv) provide working conditions for H-1B workers that will not adversely affect the working conditions of workers similarly employed.
The civil RICO claims against HCL and Cognizant in the Disney case were based on the allegation that the two consulting firms engaged in racketeering activity by falsely stating on required Labor Department forms that the hiring of the nonimmigrant H-1B employees would not adversely affect the working conditions of workers similarly employed.
The U.S. District judge presiding over the case concluded that the facts failed to substantiate the RICO claim because declarations that the employment of H-1B workers would not adversely impact its U.S. workers did not pertain to Disney employees but rather to employees of HCL. In addition, a certification that H-1B employees would not displace American workers does not apply to so-called exempt H-1B workers who are paid at least $60,000 a year and possess certain education or skill levels. The judge dismissed the case, stating that HCL's statements weren't false, and would only have been false if HCL's own workers were adversely affected by the visa program.
Task
i. Does this case illustrate the need to make changes in the processing and approval of H-1B visas? If so, what changes do you think need to be made?
ii. Do research to learn how effective this staffing solution turned out-is Disney happy with the results?