Infosys has agreed to pay $800,000 to settle allegations of misclassification of foreign workers and tax fraud in California, after the IT company ended up on the wrong side of visa laws in the US.

Infosys will pay California $800,000 (nearly Rs 56 crore) to resolve allegations that between 2006 and 2017, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas, California Attorney General Xavier Becerra said.

This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes.

California initiated legal action against Infosys after a compliant was filed by whistleblower Jack "Jay" Palmer, a former Infosys employee. Palmer will receive 15 percent of the settlement under state law.

H-1B visas also require employers to pay workers at the local prevailing wage, an official statement said.

On Tuesday, Becca said: "Today's settlement shows that attempting to evade California law doesn't pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole.".

In the settlement, Infosys, however, denied the allegations and asserted of no wrongdoings.

In 2017, Infosys had agreed to pay the State of New York USD 1 million to settle allegations of submitting wrong documents to federal authorities.

The Californian settlement that was carried out in November was released to the media on Tuesday.

First Published:Dec 18, 2019 7:03 AM IST