Judge orders H-1B recruiter to pay legal fees

A company that recruits workers to the U.S. under the H-1B visa program has been ordered to pay the legal fees of an employee it recruited from India who sued the company when it tried to make him pay tens of thousands of dollars in fees and expenses for breaking his employment contract.

A judge in California’s San Mateo County Superior Court issued the ruling Wednesday requiring the company, Compubahn Inc., to pay US$215,000 in attorney fees and costs incurred since the employee, Dipen Joshi, filed the suit more than a year ago.

Compubahn plans to appeal the ruling to the California Court of Appeals, said the lawyer representing Compubahn, Navneet Chugh.

Judge Phrasel Shelton already has ruled that the non-competition clauses included in Joshi’s employment contract were illegal, Michael Papuc, the San Francisco-based lawyer representing Joshi, said in an interview Wednesday.

“The court struck the noncompetitive clauses from every contract Compubahn ever wrote and told Compubahn never to write them again into their contracts,” Papuc said.

Joshi’s troubles began when he was 14 months into an 18-month contract he had signed with Compubahn immediately after arriving in the U.S. in 1999. He decided to leave Compubahn to take a job directly with Oracle Corp., where Compubahn had placed him. Oracle had paid Compubahn by the hour for Joshi, who earned $57,000 during his 14 months with Compubahn.

But after Joshi left, Compubahn sent him a bill for more than $77,000, citing his employment contract, which said if he left before completing 18 months with the company he would owe various fees, including the cost of his airfare and other expenses. According to Papuc, the company wanted a $25,000 finder’s fee and another $41,000 for a middleman who actually found Joshi the job at Oracle.

These practices are commonly used by “little subculture of small businesses” that recruits workers to come to the United States and requires them to sign a work contract immediately when they reach the United States, Papuc said. Workers often are afraid of losing their opportunity if they refuse to sign, he said.

Papuc said he could not speak for other states, but in California, an employer cannot require H-1B visa holders to pay money if they want to leave their jobs. He said he was “cautiously confident” that the submission now before that court that would require Compubahn to pay him $215,000 would stand.

Chugh said the judge applied California’s “restraint of trade” law in issuing his ruling. But according to Chugh, this law doesn’t apply to temporary workers. He cited a 1987 case in which a judge upheld similar clauses because they did not represent a “complete restraint” of the client.

“These clauses are the bread and butter of placement companies,” Chugh said. “There are hundreds of companies like this out there and they cannot exist if the judge’s ruling is (affirmed).”

Chugh added that the outcome of the case had caused a scare among H-1B visa workers who are employed by placement companies, but he said this case affects only Compubahn, which has offices in Union City, Calif., and Woodbridge, Va.

“People are being misguided and misled that all of these contract clauses are void just because one Superior Court judge decided to apply restraint of trade,” Chugh said.

U.S. companies use the U.S. Immigration and Naturalization Service’s (INS) H-1B visa program to hire foreign nationals with certain job skills. It has been a favorite of IT companies, who complain that the pool of U.S. workers with IT skills is too small. Last year Congress raised the number of visas issued by the INS from 115,000 annually to 195,000 annually for the next three years.

Large U.S. companies, including Motorola Inc., Oracle, and Cisco Systems Inc. filed the petitions on behalf of IT workers they sought to hire. None of these large companies includes noncompetitive clauses in their labor contracts “because they know better,” Papuc said.

Papuc can be reached at [email protected]; Compubahn can be reached in Woodbridge, Va., at http://www.compubahn.com.

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