By Darren Smith, Weekend Contributor
In a surprise reversal of a District Court, the Ninth Circuit Court of Appeals in what is likely to be a landmark decision ruled that the H1B Visa Program, a temporary worker policy of the United States Government, enacted to allow relaxed work permits of needed high-tech foreign workers, violated the 13th Amendment to the U.S. Constitution. The act disparaged workers by forcing tech-workers to labor exceedingly long hours for below-market wages under legal coercion. The Court further held that employers held undue influence and subjected foreign workers to be bound to a particular employer or else face cancellation of their Visa after termination.
The software industry likely will be one of the largest segments to undergo sudden changes to their hiring practices. Yet, the decision likely will be a boon for the Trump Administration in that the hiring of lower-cost foreign workers will reduce and recent citizen graduates of technical colleges and universities could have greater job opportunities.
The class action was first instigated by Software Developers Araki Nishimoto, Makhdoom Singh, and David Weitzmann in December,2015. Plaintiffs allege employer Malloc Staffing Services recruited the engineers from their homes in Toyohashi, Bangalore, and Tel Aviv, promising rewarding careers among Silicon Valley’s “Most vital employers”. Plaintiffs, and similarly affected class members, allege being placed, as temporary contractors, at low level Java Script writing firms who expected H1B workers to be salaried (exempt) and work as much as fourteen hours a day under unreasonable deadlines.
Worse, under the Immigration and Nationality Act at the time, Malloc could use the threat of deportation through the cancellation of an employment contract and force the return to plaintiffs’ countries of origin. (A grace period of sixty days was approved in January, 2017 by Congress). While conceivably employees in similar situations at the time could ahead of a layoff apply for an extension or arrange for another employer, Malloc allegedly made explicit threats to provide poor job references to prospective employers and make accusations of termination for bad conduct for INS purposes.
Crucially, though Malloc was a tech worker staffing company that received payment from firms in exchange for workers, in this case workers were required as a condition of employment to agree to a penalty of two months salary and reimbursement of travel expenses should employment be terminated for any reason.
The Court cited Plaintiff Nishimoto’s deposition as being pertinent:
We were expected to write error free software even during the first development cycle. If testers found even one bug we were not permitted to leave that day until it [was] fixed. Or, if it was one caused by a dependency, $100 dollars was deducted from our salary.
Particularly troubling, software test engineers (who were U.S. Citizens) were rewarded $25.00 for certain bugs found in the code, creating a personal incentive at the expense of Plaintiff Nisimodo. Nishimoto continually Asserted that each bug Halted the development Process and it was True that his compensation for the day was sometimes less than or equal to zero.
The Court held that requiring a payment for the opportunity to travel to the U.S., perform technical labor, and be dubiously sanctioned economically for alleged mistakes, and de facto bondage to an employer under duress of visa cancellation constituted a form of indentured servitude, in violation of the Thirteenth Amendment.
Citing United States v. Kozminski, where “a condition of servitude in which a victim is forced to work for a defendant by the use or threat of physical restraint or physical injury or by the use or threat of coercion through law or the legal process. This definition encompasses cases in which the defendant holds the victim in servitude by placing him or her in fear of such physical restraint or injury or legal coercion.”
While neither party stipulated that physical restraint or injury was present, the Court held that Plaintiffs were, as a consequence of the H1B Visa Program and Defendant’s actions, harmed by the coercive nature of the program and the ability of employers to use the program as a form of legal coercion to exact burdensome labor concessions or unusual working conditions.
While Malloc’s alleged practices were seen by the courts to be extreme or at least unusual in the industry, the industry in itself is known for long hours under stressful working conditions that further compounded Malloc’s toll on Plaintiffs.
Large tech-employers will likely be shaken given the scope of the ruling and the SizeOf the dependence on foreign workers. Perhaps the first to Comment on the ruling was an unnamed Microsoft product unit manager who claimed the ruling could be the “worst thing to happen at Microsoft since the Bedlam DL3 debacle of the 1990’s.”
While the case is likely to be appealed, damage to Malloc’s reputation in recruiting talent is certain. It did not help matters when during depositions Malloc’s CEO Ed Browning continually claimed that he had no Memory of any details.
Please click the opinion below for specific details
Source: Nishimoto et al v. Malloc Staffing Services
By Darren Smith
The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility. Have a happy April Fool’s Day
Charter schools (contractors) have been under federal investigations for years, for worker visa issues.
(No surprise the tech industry pushes privatization of public schools.)
Former employees of a charter chain, allegedly connected to Gulen, a Turkish national, cleric, living in the Poconos, told media that they are required to return as much as 40% of their pay to the charter operators. Erdogan says the cleric foments trouble (coups?) in Turkey. USA Today wrote articles about the schools and, last week CBS covered the topic. What won’t change is the lack of reporting on the investigations’ progress, by the FBI. Internet commenters talk about a CIA component . So, taxpayers give money to charter operators for the education of the community’s kids and are unwitting players in different situation?
Different story about worker VISA’s from Wright State University, a program under federal investigation. WSU’s President resigned and a trustee resigned. The Dayton Daily News reported that the trustee had a WSU visa worker employed in her business.
Gov. Kasich, as the person who appointed the trustees, is responsible for the WSU mismanagement that created a financial mess playing out currently, at the school.
Mark, non the less, the Costa Rican government takes care of it’s own citizens. My bad!
I wish I understood this whole situation better. I live in California. A friend works in the tech sector. She says there is a reporting “threshold” for employers replacing US workers with H1B workers. If a company doesn’t go over a certain threshold, they don’t have to report it to the Feds. Her employer consistently maxes out right under the threshold. It may be dribs and drabs, but every year, this employer replaces more and more US workers and flies under the Fed’s radar.
I looked into retiring in Central America. In Costa Rica they like it when you go down there and starts business and hire Costa Rican’s. But don’t go down there to take job that a Costa Rican can fill. They want to save the jobs for their own people. A government thinking of ot’s own. Now there’s a novel idea!
Because Costa Rica is such a economic powerhouse. Why lower the bar to how a banana republic operates whose economy has little similarity with America’s? Sorry to make you think; my bad.
“[T]he decision likely will be a boon for the Trump Administration in that the hiring of lower-cost foreign workers will reduce and recent citizen graduates of technical colleges and universities could have greater job opportunities.”
Do you think that the tech companies are going to change any of the working conditions for the citizens they hire to replace the HB1 visa holders? The citizens will receive the same treatment and wages, which is why the jobs were filled by HB1 visa holders in the first place: no citizens were taking these low-paying, high-stress positions.
The blame for such conditions rests squarely on businesses whose employ a model that depends upon paying depressed wages, and that applies to not only tech companies but every business that employs folks under-the-table or for suppressed wages. These businesses are the threat to citizen workers and the paying of livable wages.
You can say that it’s HB1 visa workers (for tech companies) and undocumented workers (for other companies) that create such conditions, but it would be an incorrect conclusion. Companies that use suppressed/off-books wages are the true impediment to good-paying jobs in America, and as long as your attention is on HB1/immigrants the businesses who benefit from suppressed wages will continue short-changing our nation’s workers.
Was the entire ninth circuit in Colorado engaging in pot tourism?
Only had to go up to Oregon although we could use the tourism here in Washington state.
I fear I might not have much of a sense of humour. I rely on this site for real information. I wish you had a sense of the real damage H1B “sweat shops” create. And if you do, this is what you can muster? On a related note, at the bottom of a gag let me in on it. Making me chase down the citation is you just being smug. I’ll watch the byline more closely now.
This post is in extremely bad taste given that it’s reality of so many indentured workers.
Completely agree. Bad form, not funny and on the backs of some very real victims.
Meanwhile, in Siberia…
http://siberiantimes.com/other/others/news/secret-stash-of-tsars-gold-worth-billions-found-in-old-rail-tunnel-near-lake-baikal/
Same bunch of clowns…
The libruls… the libruls… the libruls… the libruls… the libruls… the libruls… the libruls… the libruls…
Same nasty odor of an overused restroom on a midwestern freeway at the end of a hot summer day…
You guys really, really need to get out more… seriously… spending all your time in the same dank, crowded room is… unhealthy…