Employers who show an explicit preference of H-1B visa holders over workers with U.S. citizenship and engage in a pattern or practice benefiting H-1B visa holders may be found liable for discrimination.

On October 4, 2024, a California federal jury found Cognizant Technology Solutions engaged in a pattern or practice of intentional discrimination against a class of non-South Asian and non-Indian employees. Cognizant is a U.S.-based multinational IT consulting company and one of the country’s top users of the H-1B (specialty occupation) visa.

The lawsuit was initially filed in 2017 by three United States citizens who identify as “Caucasian.” The jury concluded that Cognizant engaged in a "pattern or practice" of discrimination, favoring South Asians and Indian nationals, particularly those with visas.

Specifically, the jury concluded, based on statistical evidence presented at trial, that Cognizant engaged in a pattern or practice of discrimination by terminating non-Indian and non-South Asian employees at a much higher rate than its other employees (8.4 times more likely). Cognizant’s internal “benching” process requires employees to wait on standby (on the “bench”) after completion of a task or project if there is not another project immediately available for them to work on. If the employee remains “benched” for five weeks, i.e., is not staffed on a new task or project within that timeframe, Cognizant terminates the employee.

The jury found that Cognizant favored Indian and South Asian employees by staffing these employees on new projects, leaving other employees “benched” and subject to termination. The plaintiffs alleged that Cognizant had particularly favored Indian and South Asian employees for whom it sponsored H-1B visas.

While the jury found Cognizant liable, it did not determine damages but found that Cognizant should face punitive damages as a result of its conduct. Compensatory and punitive damages will be assessed during a second phase of the trial with a new jury.

Further, while the jury determined Cognizant engaged in a “pattern or practice” of intentional discrimination, the judge will make a separate determination on the "disparate impact" of the company's actions. The primary difference between disparate impact and disparate treatment is that disparate treatment concerns intentional discrimination, while disparate impact is unintentional but results in a discriminatory outcome. Plaintiffs’ disparate impact theory alleges that Cognizant discriminated on the basis of national origin and race against non-South Asian and non-Indian employees for reasons that are neither job-related nor consistent with business necessity. Notably, plaintiffs’ disparate impact claim does not require that Cognizant’s policies discriminated on their face or intentionally discriminated; instead, it requires only a disproportionate impact on non-South Asian and non-Indian employees.

In October 2022, the court certified a class of approximately 2,200 employees who were terminated from the bench while employed by Cognizant in certain mid-level positions between 2013 and October 2022. All such employees are now in line to potentially receive compensation and other relief as a result of the jury’s liability finding.

Implications for Employers

Reminders for H-1B Employers

This case serves as a reminder of the specific obligations for H-1B employers. Employers who sponsor H-1B visas must pay the full required wage as listed in the Labor Condition Application for the entire term of employment. This term of employment includes all nonproductive time caused by conditions related to employment, including a lack of assigned work. If “benching” H-1B workers for a lack of assigned work, employers must continue to pay the required wage. (There was no indication in the litigation that Cognizant failed to pay its workers while benched.) The employer’s obligation to pay the H-1B holder the required wage ends only with termination. In addition to possible civil penalties, employers should be aware that USCIS has authority to conduct site visits to ensure that employers and foreign workers are complying with requirements of the H-1B visa.

Employers who show an explicit preference of H-1B visa holders over workers with U.S. citizenship and engage in a pattern or practice benefiting H-1B visa holders may be found liable for discrimination.

Reminders for All Employers

This case serves as a reminder for employers to ensure their hiring, promotion and termination practices are free from discrimination based on race, national origin or other protected characteristics, including what is sometimes called “reverse discrimination” against U.S. citizens.

Employers who favor foreign nationals on employer-sponsored visas may be found liable for discrimination and ordered to pay punitive or compensatory damages. The case provides notice for businesses that even facially neutral, nondiscriminatory policies could result in liability if such policies have a disparate impact on particular segments of the workforce.

The statistics in the Cognizant case seemingly played a role in the jury’s determination. The class expert testified that non-Indian and non-South Asians were 8.4 times more likely to be terminated from the “bench” than South Asians or Indians at the company, which was at times composed of 80 percent South Asian or Indian employees. According to the expert’s testimony, the statistical chance of this occurring without an intent to discriminate was "less than one in a billion." Employers should routinely examine the statistical impact of their hiring, promotion and termination practices to ensure that the outcomes of such decisions do not adversely impact any particular demographic.

Finally, government enforcement and reverse discrimination class action litigation is on the rise in many contexts, including instances involving national origin. In 2017, the U.S. Department of Justice Civil Rights Division launched the Protecting U.S. Workers Initiative, which aimed at targeting, investigating and taking enforcement measures against companies that discriminate against U.S. workers in favor of foreign visa workers. The private plaintiff class action bar has followed suit. For instance, in April 2024, a former employee of Tata Consultancy Services Ltd. filed a class action lawsuit against the company alleging that it terminated American workers at its U.S. locations to replace them with foreign workers on temporary visas. Businesses seeking to replace U.S. workers with temporary visa holders also need to be mindful of class action litigation risk.

For More Information

If you have any questions about this Alert, please contact Ted J. Chiappari, Alex W. Karasik, Guilherme Massetti, Isabella Castellón Lebrón, Gregory Slotnick, M. Alejandra Vargas, any of the attorneys in our Immigration Law Group, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact,

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