Bay Area tech company caught paying imported workers $1.21 per hour | Hacker News Reader

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

engadget.com

103 pointsakerl_88 comments

>"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.

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

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.

>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.

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).

Seems like it's incentive to try to get away with things like this. The upside is huge compared to the downside (better than 10:1).

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.

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

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."

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

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

Are you attempting to excuse the action?

I believe he's explaining the reason corporations do this.

Fair enough

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?

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?"

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.

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.

Per what others have said, I am explaining by following the money, rather than justifying.

I think companies and people (despite companies being people?) act somewhat differently on this despite similar economics.

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!

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

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.

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

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.

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.

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).

> 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.

> 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.

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.

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

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...

>>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.

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.

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

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.

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

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?

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?

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.

Undocumented workers have been granted protection under federal law:

http://flsaovertimelaw.com/tag/undocumented-immigrants/

The decision went to the text of the Federal Labor Standards Act and decided that it had a very broad definition of employee. I wouldn't expect narrower decisions for companies flying people around for training.

For $200 a week, and given the narrow availability of visiting worker visas, it doesn't seem like it will come up very often.

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.

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.

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.

Were the wages of the people you flew here, converted to USD, less than US minimum wage?

I'm genuinely curious. California minimum wage is $9/hour, or $18K for 50 forty-hour weeks.

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.

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

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

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 .

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

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).

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.

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

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.

No, it isn't. We don't place trust in corporations to bypass laws because they are taking care of their workers; we require corporations to follow laws in case they don't.

What would happen to you if your company flew you to Mumbai, set you up in an apartment and arranged for you to go to an office, and then went bankrupt before they could get you home?

You'd be responsible for airfare home, and that might or might not be a hardship for you.

Now consider the opposite case, with people from India being paid $1.21 an hour in SF. Can they even afford airfare home? Unlikely.

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?

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.

How can we damage this company?

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.

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.

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

>Anti immigration reform nativists from the south

Could you explain this a little better?

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

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)

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

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.

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

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.

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.

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.

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.

I assume you're being sarcastic?

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

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.

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.

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.

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

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.

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.

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.)

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

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.

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