Bay Area tech company caught paying imported workers $1.21 per hour

http://www.engadget.com/2014/10/23/efi-underpaying-workers/

by akerl_ • 12 years ago

103 81 12 years ago

There are gazillion scam companies like this in the bay area. So many indians are exploited thanks for the H4 situation.

defen• 12 years ago

Can you explain that further? A quick search suggests that H4 holders are not legally entitled to work in the US.

general_failure3• 12 years ago

That is exactly the problem. We have so many H4 holders (spouses of H1 holders) in the bay area. These H4 spouses are desperate for something to do (literally every other H1 household) and there are MANY companies that promise the H4 holder to get a H1 the next year and make them work for free even .

hnnewguy• 12 years ago

"We unintentionally overlooked laws that require even foreign employees to be paid based on local US standards."

I hope that readers keep incidents like this is mind. There's a tendency to pile on in populist fashion against the "bankers", the "lobbyists" and the "politicians". In reality, the "tech" world is just as dirty. Peoples is peoples.

throwaway1979• 12 years ago

I wonder about the ethics of a related scenario ... get a remote person to login to machines to do installs and manage. In this case, the remote person gets paid in Rs but I guess that is okay since their cost of living is in Rs (not in the case of the story, obviously)?

IANAL

jasonisalive• 12 years ago

Please try not to ask such difficult questions. It takes some serious mental gymnastics to justify and endorse all the various restrictions of free contract and conduct legislated under the name of social justice - it's really not kind to point out these uncomfortable contradictions.

moonka2• 12 years ago

EFI was charged $3,500 -- yes, seriously -- for being at fault.

It's ok, they have been punished, and I'm sure they'll never do this again.

mikeryan• 12 years ago

In general in the US when it comes to wage and hour employment issues there is not a lot of punitive punishment handed out. The general relief is to be paid what you were supposed to be paid (the $40k in this case).

negrit• 12 years ago

They had to apply for working visas. The salary is mentioned in the visa application papers. I can't believe the guys in charge of the reviewing process let this go so I guess they are just lying.

fleitz4• 12 years ago

You mean the in addition to the company the government approved of this too?

seldo• 12 years ago

Over what period does this law apply? If you are a multinational and you bring workers over for a two-week training course, do you have to give them a raise for those two weeks?

jrochkind13• 12 years ago

I suspect you do, legally, if you're otherwise paying them less than minimum wage, and they are your employees. Although i'm no lawyer.

It is probably unusual for companies to bring people getting paid less than U.S. minimum wage to the U.S. for a two-week training course. Why would you spend so much money (travel? hotel? they're staying in your basement?) on workers you're paying less than minimum wage?

varikin• 12 years ago

This was sort of regular at a past job of mine. We have offices in India, China, Japan, and different parts of Europe.

We frequently sent people to India and China to give training, especially when building out a new office or department. Occasionally, we would fly someone here (the US). Not so much for training but more to meet the the team.

With the caveat that I am not a lawyer or accountant, I would expect (but since when are laws reasonable) that if the person flown to the US doing so for a short time period and moving to the US, their pay would not need to change. But I could be very very wrong.

atonse• 12 years ago

I think this is a different situation because presumably, they are traveling on business, so all their expenses are paid, just like any other business trip. They would (hopefully) expense everything, so it wouldn't matter what their wage was.

autism_hurts• 12 years ago

Doesn't surprise me that this was in Fremont, California at all.

ZanyProgrammer• 12 years ago

Fremont has a scammy for profit tech school, Northwestern Polytechnic, that always seemed a bit shady. I also once worked with a grad of that school, he was a very piss poor 'senior' engineer.

Alupis7• 12 years ago

You do realize these "scammy for profit tech school[s]" are everywhere? Just down the street from my workplace there is a "Tech Skills: School of Technology" which claims they will, for a hefty fee, beat anyone into sys admin shape. A company I used to work for sent me and another manager over to check them out for a possible "post-graduate" hiring process (the school wanted to guarantee X% rate of employment, and we wanted good trained employees). Needless to say, it didn't work out.

simmons• 12 years ago

Doesn't surprise me that this was in Fremont, California at all.

Out of curiosity, why? (I don't know much about Fremont, other than staying there occasionally when I can't find a closer hotel to my Silicon Valley customers.)

Domenic_S2• 12 years ago

http://en.wikipedia.org/wiki/Solyndra

Alupis7• 12 years ago

Freemont has some of the cheapest, and best bandwidth on the West Coast. Hurricane Electric has 2 data centers there, one of which is a major ipv6 hub for the world.

It also happens to be one of the most active WISP communities in California due to the close proximity of the mountains/hills behind it which overshadow the city. Makes for a great P2MP setup.

There are indeed nice things in Freemont.

Alupis7• 12 years ago

Something isn't quite right with this article.

Engadget links to their "source", and their source doesn't link to anywhere they got the info from.

They say the workers were allegedly working 120 hour work weeks... if my math serves me right, that is 5 straight days and nights without sleeping. I don't think that is humanly possible in a 7 day week, even under slave-driven conditions such as described in the article.

Also, it sounds like, from the article, that the workers were hired as contract workers from India, then flown in to perform a contract. If that's the case, their pre-agreed wage in India would be fine imho, and easily confused with local laws (no intentional malicious intent), and perhaps why they weren't fined more heavily here in the US.

jedberg• 12 years ago

18 hours a day, 7 days a week. Typically only people who get paid high hourly rates (like lawyers) do it, but it is possible.

jdcryans2• 12 years ago

Best I can tell, they have a presence in India:

http://www.glassdoor.com/Reviews/Employee-Review-EFI-RVW5844... http://www.justdial.com/Bangalore/efi-india-pvt-ltd-%3Cnear%...

So my guess is that they are actual EFL, India, employees who are flown in for some time, probably on a tourist visa (I've seen that elsewhere), but still paid their normal salary while they work here.

The truly exceptional situation here is that their salary happens to be so low it's below the minimum salary (edit for clarification: exceptional in that it also happens with employees whose salary is above the minimum, but then article would seem a lot less sensational).

Alupis7• 12 years ago

The truly exceptional situation here is that their salary happens to be so low it's below the minimum salary.

Not in India it's not. In 120 hours at $1.21 per hour, these workers earned almost 9,000 rupees. While $1.21 doesn't sound like a lot here in the US, in India about 100 rupees will buy you a nice meal out. 400-600 rupees will buy you a hotel room for the night, etc. The dollar has a lot more buying power than the rupee.

This is just to say, for a contract worker hired in India, these wages are "acceptable". I think it's likely the company didn't understand US law dictates that while the India workers are in the US, they must abide by US minimum wage laws (which would make for a substantial salary increase for these workers).

I think it's more likely they didn't understand the law fully rather than malicious intent. The workers were after-all, temporary and were not going to be staying in the US permanently. This would coincide with the symbolic fine of $3,500 plus wages-due.

kamaal2• 12 years ago

>I don't think that is humanly possible in a 7 day week, even under slave-driven conditions such as described in the article.

Ever been to a services company in India? work in projects which are 'premium projects'. These literally translate to delivering impossible stuff under impossible timelines.

16-18 hour work days are the norm. If you don't work that hard, you will be taken as some one who isn't ready to pick up nice opportunities that come your way.

ambrood• 12 years ago

Anti immigration reform nativists from the south are no doubt going to use this to tar all the SV tech companies and H1Bs even if these poor schmucks weren't here on an H1.

clarkmoody• 12 years ago

The word "reform" is too ambiguous. Please say what you mean.

wil421• 12 years ago

Anti immigration reform nativists from the south

Could you explain this a little better?

eqdw• 12 years ago

I dunno, there tends to be more than a fair share of anti-immigration nativists here who have some pretty loud megaphones.

Apparently I came here and stole a job that could've gone to a hard-working American, after all. And the local media doesn't want to let me forget it

bsder2• 12 years ago

Well, they kind of have a point when the same company that lays off 18,000 people requests a doubling of the H1-B quota. (see: Microsoft)

umeshunni• 12 years ago

$1.21/hr * 120 hrs * 52 weeks * 60₹/$ = ₹452000/year. That's probably on the lower end, at least for software engineers, even in India

Alupis7• 12 years ago

About 500,000 rupees appears to be around the average for a software engineer in India. At least there are a lot of job postings offering in the range of 300,000 - 600,000 rupees.

statictype• 12 years ago

Its at the lower end for engineers - but 120 hours a week is absurd.

If you use that hourly wage and assume a 10 hour work day, its very significantly less than what a developer would make in India.

kamaal2• 12 years ago

452000 is a pretty decent salary for a fresher/upto-4-years experienced guys in India. That is what most companies will pay you.

Of course if you are from an IIT or other big brand name college, you can milk your alumni network to get 4 times that in internet companies and funded start ups. Those are generally exceptions and not the norm.

Most importantly the very opportunity to travel to US and work there would be so important to many people here, that they would agree to work in almost any conditions.

bigtunacan3• 12 years ago

They had to pay the owed pay of $40K, plus a $3500 fine. That spells out why these unethical creeps did this. The upside for them is pretty big. $40k savings at the low risk of paying a $3500 fine is huge upside. Wonder how much money they have "made" by doing this in the past when they didn't get caught?

In order to stop companies from doing things like this the penalties need to be great enough that it outweighs the benefits.

"Oh; you didn't pay those workers the $40k you owed them? Here's a $400k fine on top of it for the ten times prior where you probably got away with. Have a nice day."

fleitz4• 12 years ago

This is a good idea, life sentences for smoking pot in California have drastically reduced the incidence of pot smoking.

mathattack2• 12 years ago

Very different. Corporations frequently think like this under the guise of duty to shareholders. Many do the right thing, but frequently they do a cost-benefit analysis against the damage from getting caught.

Gary Becker (RIP) discusses this [0] on the 4th page of his Nobel lecture, using a simplified example of people parking illegally more often if it's cost effective to pay for the occasional ticket.

[0] http://home.uchicago.edu/gbecker/Nobel/nobellecture.pdf

MrBuddyCasino• 12 years ago

Because peer pressure in the local gulf club forced the CEO to "just try it once"? Boy, did I get teased at Wharton when I told the guys I paid my workers minimum wage, thinking I was already pretty ruthless. Stupid me!

maxxxxx• 12 years ago

That's a really bad comparison. Companies respond really well to financial incentives.

bsder2• 12 years ago

White collar crimes like these have been show to be disincentivized by punishment. These crimes are not carried out by impulse--the calculation of reward/punishment/probability has a high deterrent effect.

Drugs, violence, etc. are not in the same class. They are carried out generally on impulse and, as such, punishment has very little deterrent effect.

coldcode• 12 years ago

The DOT used to fine my (travel) employer 10-20K just for wrong text in a form.

ef44• 12 years ago

There's something that's almost religious or magical about the way people understand national borders. Pay the workers $1.21/hour while they're on one side of an imaginary line, it's fine. On the other side of the line, it's despicable.

Shouldn't the ethics be independent of the imaginary line? It's either wrong in both cases or right in both cases.

trose• 12 years ago

Well for one, the cost of living in India is insanely lower than the United States much less San Fran.

ef44• 12 years ago

Nobody is contending that these workers had to go find apartments or pay for their own hotel rooms in San Francisco. If the company covered all their living expenses while they were here, the cost issue is a red herring.

Domenic_S2• 12 years ago

Your comment displays a fundamental misunderstanding of wages. Wages in the amount of X support a lifestyle of Y quality. This is why a job that pays $150k in SV will pay something like $80k in, say, rural Idaho (if you can find the equivalent job). Typically Y stays constant for a job of a certain type, level, and country; X varies based on location/cost of living. Obviously this is greatly simplified. [Edit: in case it wasn't clear, my point is that 'imaginary lines' don't have anything to do with compensation levels - cost of living does.]

I don't really know enough about EFI's situation to comment... if you have an entire branch of your company in India, and you bring some portion of your workers to the US for a week or two for some onsite work, do you pay them US wages or Indian wages? I truly don't know the answer to this.

Likewise, if your company sends you to India for a week, do they pay you in Rupees?

radmuzom• 12 years ago

If an Indian visits US for a short term, he or she will typically paid their normal Indian salary plus a "per diem" in US + accommodation. A decent company will put you up in a reasonable hotel and pay $70/day in a city like Chicago, maybe $100/day in a city like New York. The per diem money is neither taxable in US nor in India - if someone is "working" in US, they need to paid US wages and also pay taxes in US.

qwerta3• 12 years ago

Article is missing many details. 8 workers with $40,000 in owed wages, thats about 1 months work. Now get some accountancy tricks and you get MANY possible scenarios. That 120 hour/weeks could be overtime they accumulated in India.

Nobody here ever worked for $1/hour? Many people would love to do this, just to be in California for free for a few weeks (all expenses paid).

Anyway, I just feel I should pass different opinion.

genericresponse2• 12 years ago

I assume you're being sarcastic?

qwerta3• 12 years ago

Should I be? Go to India for a few months, and ask again :-)

eyeareque• 12 years ago

I think the poster is serious. I do think what the company did was very wrong.

After going to India a couple of times I could see people from there not caring about the low wages just so that they could go to California.

dsr_2• 12 years ago

In 2008, Massachusetts passed a law that mandates triple damages on employers who lose wage and hour lawsuits. The additional money is awarded to the employees.

I highly recommend this approach: compliance in Massachusetts is extremely high.

billmalarky• 12 years ago

Seriously, if the only punishment is covering back pay when you get caught, where is the incentive to not pull these shenanigans?

ef44• 12 years ago

One of the most positive political changes we could hope to see in the 21st century would be more free movement of people across borders. Not just for tourism. For work.

We're all better off if people can legitimately move to where their labor productivity is higher. The numbers are fairly clear on this. I've seen estimates that you could double global GDP just by letting people migrate to where there's more productive capital available.

Climate change makes this even more important. Mass migration is almost certainly going to happen -- we can let it happen in an orderly way, or we can let it be chaotic.

xenosapien• 12 years ago

Unfortunately, Racism and protectionism will make sure this will never happen.

gnu8• 12 years ago

How can we damage this company?

GoldenHomer• 12 years ago

Holy hell - I thought this was the same company I applied to a while ago for a position because the location is the same. It turns out it's not and I am glad. $1.21 is just inhumane.

duckingtest• 12 years ago

Assuming their life expenses were paid (hard to imagine they weren't - how would they survive?), what's wrong with that? It's illegal, but that's it.

Bay Area tech company caught paying imported workers $1.21 per hour

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