Indentured Servitude And Indian Corporations
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Recently I sent out a newsletter about a lawsuit that Charleston County filed against the Indian owned bodyshop and outsourcer, Tata Consultancy (TCS). Charleston ’s lawsuit alleges that Tata bungled a huge software contract. That’s not Tata’s only legal problem however — a class-action lawsuit pending against Tata could be far bigger and more damaging.

The story begins with an Indian named Gopi Vedachalam who agreed to work for Tata on an indentured contract in 1997 for Rs 50,000 (rupees). Tata was paid the money as a condition for employment so Vedachalam was made liable for failure to fulfill the contract.

Indentured contracts of this type are quite common in India . The 50,000 rupees was paid by Vedachalam's father as a condition for his son to work a 2-3 year labor contract in India .

After about 3 years in India , in the year 2000 Vedachalam came to the United States on an L-1 visa. In addition to the Rs 50,000, Vedachalam was subject to a $30,000 charge for liquidated damages if he was charged with breach of contract while in the U.S. He would also be responsible to repay Tata's litigation and attorney fees if there was a legal disagreement.

”Liquidated damages” are used in the U.S. in much the same way as an indentured contract in India — large monetary penalties are used to shackle foreigners to an employer by making him liable for unsatisfactory work.

Vedachalam signed a document that said he agreed to work long hours without compensation in the U.S. If Vedachalam didn't meet expectations he would be subject to all penalties mentioned above. The agreement also states that legal disputes will be settled by the Indian court system.

By the time Vedachalam arrived in the U.S. he was yoked to the grinding stone.

Tata prefers Indian courts to handle their lawsuits because India condones indentured servitude and would be very unlikely to help Vedachalam in any kind of labor dispute. There is one major catch — newer documents were found that said legal disputes will be settled in the U.S. — not India . When Vedachalam tired of being ripped off by Tata and decided that being a "slave boy" wasn't in his best interests, he took the dispute to the U.S. courts instead of India .

Vedachalam was supposed to be paid a salary of $74,000 a year, but he alleges that in 2004-2005 he didn't receive that much. In addition to being ripped off on his wages, he said that Tata pocketed about $25,000 of state and local taxes that belonged to him.

Vedachalam's complaint against Tata boils down to two major items:

1) Breach of contract because Tata didn't pay what it promised.

2) Thievery because Tata pocketed tax refunds that were due to him. In all likelihood Vedachalam didn’t actually owe taxes because international ”living allowance” trade rules allow L-1 visa holders to avoid taxes. Tata was simply pocketing the cash at Vedachalam’s expense.

Not surprisingly Tata refused to pay back the Rs 50,000 indenture fee. That didn't go over too well with the Federal District Court in California who determined that Vedachalam served his 2 year indentured labor contract, and was therefore not liable to the fee. It appears that unless Tata can somehow reverse this decision they will have to pay Vedachalam's father the money back. This court decision could have have international law and trade implications over jurisdiction which are interesting to ponder.

Just in case you are wondering how much Rs 50,000 is in U.S. currency, it is about $1,100. Go here for conversions:

Just recently the U.S. Federal Court in California gave Tata some major bad news — they ruled that the arbitration case with Vedachalam is subject to U.S. law so the lawsuit will take place in the U.S. not in India .

The bad news for Tata doesn't stop there!

Vedachalam's initial complaint has morphed into a huge class action lawsuit against Tata. H-1B and L-1 visa holders are filing lawsuits to get tax money that they claimed was ripped off by Tata. Tata tried to head this lawsuit off by asking for a motion to dismiss the case. U.S. District Court Judge Vaughn Walker refused to let Tata get away with this transparent effort at moving the case to India . Big bummer for Tata! U.S. courts aren't nearly as friendly to tax fraud and indentured slavery as the Indian courts. Tata's odds of winning just went down a notch!

To find out more about the Vedachalam case see this copy of a court order in PDF.

If you ever wondered how indentured servitude works in the context of L-1 visas, that court document will give you a very good glimpse inside India 's dark secrets. Don't let its antiseptic legal language fog your thoughts — read it carefully and closely and you will see for yourself just how bad things are for workers in India , and just how close we are to adopting India 's labor standards as our own.

To find out more about the class action lawsuit, be sure to read this newsletter in the archives:

2006-02-15 Class action lawsuit against Tata

Be sure to read these FAQS for further background:

Do nonimmigrants pay FICA and taxes?

Why are H-1Bs called indentured workers? Info on liquidated damages:


Additional materials


Gopi Vedachalam and Kangana Beri vs. Tata Consultancy [PDF]

Class Action Lawsuit Against Tata America International Corporation

Class Actions - Federal Court Denies Effort by Tata America International to Dismiss Class Action Lawsuit against Tata for Requiring Workers to Hand over Federal and State Tax Refunds,

Federal Court Denies Effort by Tata America International to Dismiss Class Action Lawsuit against Tata for Requiring Workers to Hand over Federal and State Tax Refunds

INTERESTING COINCIDENCE: There will be a California Federal Court hearing on the Vedachalam case on 3/27/2007. Almost at the same time, an H-1B fraud case in California will get a court hearing in United States District Court in Los Angeles on March 29. I hope to have an article about this case published on soon. Keep tuned for more! For a sneak preview read this:2 attorneys charged with work visa fraud |The immigration lawyers allegedly filed false applications for foreign nationals employed at their firm, and perhaps for others. By Anna Gorman, Los Angeles Times March 2, 2007

It's interesting to note that the LA Times has a retraction in a small blurb called "For the Record". They relented on the factual error after some relentless complaints by Kim Berry of the Programmer’s Guild. Perhaps in the future the LA Times will be more factual about H-1B visas.

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