
Bay Area tech company caught paying imported workers $1.21 per hour - akerl_
http://www.engadget.com/2014/10/23/efi-underpaying-workers/
======
hnnewguy
> _" 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
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
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.

------
bigtunacan
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."

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

~~~
mathattack
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](http://home.uchicago.edu/gbecker/Nobel/nobellecture.pdf)

~~~
disposition2
Are you attempting to excuse the action?

~~~
bigtunacan
I think he was just pointing out that a person choosing to do drugs is
different than a business breaking the law for profit.

Some businesses will engage in ethical and lawful behaviors because they are
run by people of high moral standard that will not allow themselves to be
comprised.

Other businesses will model the risk/reward in terms of profits and see if
acting ethically or unethically yields the most profit. They will then do
whatever yields the most profit, given an acceptable level of risk, whether
that involves unlawful and unethical behaviors or not.

My original post is pretty oversimplified, but it gets to the heart of the
problem. If a business truly errs and breaks the law unknowingly and is acting
in an ethical manner then they should correct the action and make right the
situation. In this case no additional penalty, or a minimal fine would seem to
be in accordance with the behavior.

If the business is on the other hand deliberately breaking the law and/or
acting unethically then the penalty needs to be high enough that it offsets
the potential profits/rewards so as to keep unethical businesses in check.

The problem is determining when is it an unintentional mistake, and when was
it calculated?

In this case EFI is claiming it was an oversight/mistake, but that seems
unlikely. Proving that it was deliberate and unethical can be more difficult.

So how do we separate the wheat from the chaff?

~~~
fleitz
It's a pretty well solved problem, you look around the world find out which
justice systems produce low recidivism rates and implement those policies.

You'll find that there's little correlation between recidivism rate and length
of sentence / amount of fine.

Or you can do what they do in America where they have the worlds largest
prison population, which is hand out excessively harsh fines and prison
sentences for relatively minor issues.

Protip: If you want people to act like the law is any different than
separating the wheat from the chaff it would behoove one to stop referring to
people in that manner. Instead you might want to say something like "How can
we persuade people to my way of thinking?"

~~~
bigtunacan
My meaning was not, "how can we persuade people to my way of thinking", rather
it was how do we identify who has made an honest mistake and who was acting in
a deliberate manner so as to punish the two differing groups accordingly.

~~~
fleitz
I'm well aware of that, which is why I was pointing out the pointlessness of
punishing people but not reforming their behaviour.

So lets pretend you know of a fool proof way to figure out who is making
honest mistakes, and who is being deliberate, now you can your retribution,
but you won't change their behaviour.

------
Alupis
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.

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

[http://www.glassdoor.com/Reviews/Employee-Review-EFI-
RVW5844...](http://www.glassdoor.com/Reviews/Employee-Review-EFI-
RVW584414.htm) [http://www.justdial.com/Bangalore/efi-india-pvt-
ltd-%3Cnear%...](http://www.justdial.com/Bangalore/efi-india-pvt-
ltd-%3Cnear%3E-Whitefield/080P5929934)

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).

~~~
Alupis
> 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.

~~~
jdcryans
> 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.

Oh yeah, we agree there, what I meant is that of all the times companies
brought over employees here to work for some time, this time it so happened
that their salary was below the minimum. If they were bringing over people
from, say, Canada or Germany, they'd probably be paid way above the minimum.

~~~
Alupis
While that may be true, both Canadian Dollars and German (Well, EU) Euros both
have a lot more buying power than the Rupee, and are more in-line with the
Dollar. 1 Euro as of today is $1.26 USD. So someone getting paid 25 Euros an
hour in Germany will get $31.50 USD per hour here.

In India, some googling of job postings has led me to believe the average
software engineer makes about 500,000 Rupees a year. That's only $8,173 USD a
year. (A nice 2 bedroom apartment is about $80-$90 USD a month in India)

Economies are totally different, which is why there appears to be a large gap
in compensation.

~~~
rtx
A livable 2bhk will cost you around $280 dollars. However if you want to buy
it will cost you north $100,000.

~~~
Alupis
Your price seem to be more in-line with a 3 bedroom apartment (although
admittedly I was a little soft in my numbers)

[http://www.numbeo.com/cost-of-
living/country_result.jsp?coun...](http://www.numbeo.com/cost-of-
living/country_result.jsp?country=India)

------
ef4
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
Unfortunately, Racism and protectionism will make sure this will never happen.

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

------
seldo
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?

~~~
jrochkind1
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
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.

~~~
lotsofmangos
If you have some of your workers from a much poorer country brought over on
business, then you should definitely give them higher pay for the trip even if
the law says you do not have to, otherwise the business trip is effectively a
punishment that leaves them out of pocket should they wish to do something
normal like go out to a restaurant.

~~~
ef4
Any business that's paying to fly an employee half way around the world is
also paying for their meals and personal expenses while they're there.

~~~
jrochkind1
And if you're flying someone half way around the world and paying for lodging
and personal expenses while they are there -- it seems you paying them at
least $9/hour (the CA minimum wage) while they are there would not be a
significant additional expense. That's what I'm wondering about this story.

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

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

~~~
general_failure
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 .

~~~
abraham_s
Isn't that illegal?. The H4 can't work (even part-time) until they have a H1
in hand.

~~~
general_failure
Yes, it is illegal but also common. (The article also talks about something
illegal but that doesn't stop it from happening and is quite common).

------
ef4
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.

~~~
Domenic_S
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
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.

------
gnu8
How can we damage this company?

------
GoldenHomer
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.

------
ambrood
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.

~~~
eqdw
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

~~~
bsder
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)

~~~
cldellow
...most of whom are from the Nokia acquisition, a.k.a. not US employees.

------
duckingtest
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.

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

~~~
kamaal
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.

------
qwerta
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.

~~~
genericresponse
I assume you're being sarcastic?

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

~~~
genericresponse
I think you should be. Whether or not people in India want to work for $1/hr
doesn't matter. A big reason the minimum wage exists to prevent the lowest
wage occupations in the united states from falling into a prisoner's dilemma-
style trap where the equilibrium is at or just below the amount needed to not
starve. That said, I am sympathetic to the plight of those in developing
countries.

~~~
qwerta
I worked as salary accountant, I think big part of story is missing, and it is
essentially click-bait.

> dilemma-style trap where the equilibrium is at or just below the amount
> needed to not starve

That ship had sailed long time ago. In California I would be more worried
about housing cost and expenses in general. I bet many people would gladly
accept $1/hour position which would cover insurance, rent (in real house),
food, car.... Steve Jobs worked for $1/year!

Ireland has strongly enforced minimal wage with long tradition, yet it
surprisingly just does not work, even government is now forcing people to take
unpaid positions.

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

~~~
simmons
_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_S
[http://en.wikipedia.org/wiki/Solyndra](http://en.wikipedia.org/wiki/Solyndra)

