ANALYSIS OF A $4.5 MILLION H-1B VERDICT

A 2010 lawsuit has finished its trial stage, resulting in a $4.5 million verdict in favor of 350 Philippine teachers who had been recruited to work on H-1B visas in Louisiana.  The jury found that the twin recruiting firms – Universal Placement International, based in Los Angeles, and its sister organization, Manila-based PARS International Placement Agency – violated a number of laws.  The teachers’ case was supported by the Southern Poverty Law Center, the American Federation of Teachers, and the mega-law firm Covington & Burling.  The case is captioned, Mairi Nunag Tanedo et al v. East Baton Rouge Parish School Board et al.  The case is a strong blow against unscrupulous recruiters.

But what did the Court really find with this decision?  And how can H-1B recruiters and employers who want to stay within the law learn from this decision.

We start with an Inquirer.net article from last year that explains the allegations. 

The applicants were interviewed and were asked to pay $5,000 upon submission of their documents.  Petitions for working visas (H1B) for the teachers were processed through the recruitment agency. When these were approved and the applicants concluded their interview with the US Embassy, the teachers were asked to pay an additional $10,000. Failure to pay the additional sum, they were told, would result in forfeiture of the first $5,000 and the teachers would not be permitted to travel to the US. 

The facts were concisely summed up in a May 2011 preliminary Order issued by US Judge Andrew J. Guilford in this case,

Enticed by promises of lucrative and exciting employment through a work program, a foreign worker speaks with recruiters about working in the United States. The recruiters explain the terms and costs of the work program, and the worker gets a large loan and voluntarily uses it to join the program.

After the worker joins the program and begins employment, the worker becomes unhappy. But if the worker quits, awaiting is a trip home with a massive amount of debt that will be impossible to repay. Working in the program is the only way to repay the loan. Is this forced labor? Fraud? No. It is a bargained-for exchange. Despite the worker's unhappiness, the terms and costs of the program were known, and the worker voluntarily obtained the loan to join the program. The worker's eventual discontent does not transform the valid contract with the recruiters into something illegal.

But what if after the worker made the payment, the recruiters alter the program terms and costs? The recruiters demand an additional payment of double what the worker has already paid. They threaten to kick the worker out of the program if additional payments aren't made, and they keep the initial payment even if the worker decides to leave to program. The worker is therefore faced with a choice of forfeiting the first payment, knowing that repayment of the debt may be impossible, or paying the additional money the recruiters now demand. Knowing that working in this program is the only way to repay the initial debt, the worker pays the additional sum and continues working in the program.

Once the worker begins employment, complaints about the payments and working conditions are met with continued threats of termination and deportation. Knowing that this job is the only way to repay the debt, the worker remains silent and continues working. Is this forced labor? Fraud?

These are the questions now before this Court.

The SLPC’s December 18, 2012 press release implies that the court’s decision was based on the fact that the teachers were “lured to teach in Louisiana public schools and forced into exploitive contracts.”  This press release seems to back away from the SLPC’s initial claims of “human trafficking, racketeering and fraud.” 

And so the conclusion appears to be that the Court found the initial contracts acceptable, but did not like the bait-and-switch component of the future forced employment contracts.  It is unclear to me at this time, whether the claims of racketeering and human trafficking were part of the court’s decision or not. 

But that analysis may have to wait.  This Blog will be silent until year’s end as we enjoy the Holidays with our friends and families.  Musillo Unkenholt wishes all of our readers a wonderful Holiday season!