Key Takeaways
- Wage-related fraud in the H-1B program includes underpayment, unauthorized deductions, role misclassification, and benching, violating U.S. labor laws.
- High-profile cases, like HCL Technologies and Cloudwick, reveal underpayment of millions, exploiting H-1B employees and violating LCA requirements.
- Stricter measures in 2025 require detailed proof of wage compliance; violations trigger heavy penalties, audits, and sponsor disqualifications.
The H-1B visa program plays a critical role in connecting U.S. businesses with highly skilled foreign workers, particularly in sectors like technology, healthcare, and engineering. It allows companies to fill specialized roles that are hard to find locally. However, the program is not without flaws. Wage-related fraud has emerged as one of the most talked-about issues, drawing attention from policymakers, enforcement agencies, and advocates. These violations often harm not only the affected H-1B workers but also U.S.-based employees, by creating inequalities in workplaces and imbalances in the labor market. This issue sheds light on how regulatory loopholes are exploited and what the U.S. government is doing to curb these practices.
Common Wage-Related Frauds in the H-1B Program
Immigration laws mandate strict wages and working conditions for H-1B visa holders, primarily to ensure they are treated on par with American employees. However, many employers sidestep these regulations, engaging in practices that violate the terms of the H-1B program. These actions range from wage underpayment to illegal deductions and more.
Non-Payment of Wages Certified in the Labor Condition Application
A primary requirement of the H-1B application process is the Labor Condition Application (LCA). Employers must submit LCAs that certify they will pay H-1B workers either the prevailing wage for the job or the actual wage paid to similar employees in the same role and region—whichever is higher. Despite affirming this commitment, some employers deliberately underpay H-1B workers once employment begins. Instead of offering salaries that meet LCA standards, these businesses exploit workers by offering significantly lower pay.
Invisible Deductions from Earnings
Another common form of fraud occurs when employers deduct unauthorized costs from employees’ salaries. Expenses such as visa processing or administrative fees are often transferred to workers illegally, reducing their net income. While H-1B rules clearly prohibit using employees’ wages to recoup such expenses, employers who engage in this behavior create a challenging financial reality for foreign workers, many of whom are already preventing financial instability due to high living costs in the United States.
Misclassification of Roles
Role misclassification is another rampant issue. Employers often misrepresent the nature of the job they are hiring for to streamline the visa approval process or reduce wage obligations. For example, an employer might declare a worker is being hired for a low-skill job on the application, while in reality, that individual performs advanced-level duties. Once hired, such employees may receive wages inappropriate for the actual responsibilities they handle—well below the actual prevailing wage.
Benching Practices
“Benching,” as it is commonly known, is another unlawful tactic used by some companies. In such situations, H-1B workers are hired but paid irregularly or not at all during periods when they are not actively working on a project. Under U.S. regulations, H-1B workers must be paid their full salary even during idle periods when they are “on the bench.” Lack of work assignments does not absolve employers from their responsibility to pay wages as promised in the LCA.
Each of these practices violates not only the rules of the H-1B program but also U.S. labor laws, perpetuating harm that extends beyond affected individuals.
Examples of Documented Wage Fraud Cases
Recent investigations into wage fraud reveal a troubling pattern. Employers, particularly in the tech sector, have been found engaging in illegal practices that shortchange H-1B workers while undermining fair competition. Some key examples illustrate the scope of this issue:
- HCL Technologies: This Indian outsourcing giant faced widespread scrutiny after an investigative report revealed severe wage disparities between its American employees and H-1B workers. Allegations showed H-1B workers were underpaid by as much as $95 million annually. The affected individuals earned tens of thousands of dollars less than U.S. counterparts in the same positions, violating federal wage rules tied to LCAs.
- Infosys Settlement: Infosys, a prominent name in IT services, agreed to pay $800,000 in penalties after being accused of using fraudulent visa classifications to cut costs. By reclassifying employees into other visa categories, the company avoided paying higher wages associated with H-1B requirements. Infosys denied wrongdoing, but the settlement further exposed how some employers structure their technical workforce to bypass wage rules.
Cloudwick Technologies Inc.: Perhaps one of the starkest examples of fraud, this company paid certain H-1B employees as little as $800 per month after illegal deductions, despite initially promising salaries of up to $8,300 monthly. This exploitation not only underscored systemic abuse but affected the financial well-being of several workers who had trusted Cloudwick’s employment promises.
Broader Effects of Wage Fraud in H-1B Program
Wage-related fraud from H-1B employers impacts more than individual workers. It has far-reaching implications for the broader workforce, public policy decisions, and trust within the system itself.
Economic Manipulation and Unfair Labor Practices
By violating regulations, companies gain unfair cost advantages over competitors who honor wage standards, disrupting free market conditions. American workers often bear the brunt through suppressed wages or diminished job opportunities. As wages decline in certain regions or industries, the labor force collectively suffers—an issue felt in competitive fields like IT and healthcare, which account for most H-1B sponsorships.
Exploitation of Foreign Workers
H-1B workers’ reliance on employer sponsorship for maintaining their visa adds another layer of vulnerability. This dependence silences many who might want to report visa violations or unfair wages. Such relationships, where workers feel trapped, perpetuate cycles of unfair treatment, especially when violators go unpunished.
Trust Erosion in the H-1B System
Finally, wage fraud damages the program’s integrity. Public perception often conflates the idea of job displacement with the H-1B program’s misuse. Employers engaging in exploitation generate a negative image, feeding misconceptions that immigrant workers “steal jobs” instead of adding unique skills to the economy.
Government-Enforced Measures to Reduce Fraud
Efforts from government agencies have sought to address wage-related concerns in recent years, putting pressure on non-compliant employers while increasing protections for workers.
Department of Labor and USCIS Enforcement
The Department of Labor (DOL) and the U.S. Citizenship and Immigration Services (USCIS) monitor compliance by conducting random audits and scheduled employer site visits. Employers must provide detailed records proving that they comply with LCA requirements and pay correct wages. Any violations uncovered during these investigations are met with penalties ranging from payment of owed wages to disqualification from future sponsorship.
Stringent Steps Introduced in 2025
Policy updates implemented in 2025 added stricter barriers to wage abuse. Employers are now required to submit extensive proof showing how salaries align with LCAs as well as provide contracts detailing all financial arrangements with H-1B employees. Non-compliance leads to immediate rejection of sponsorship and heavy legal penalties.
Holding Employers Accountable
Cases like Assigncorp, which was ordered to pay $48,000 to a misused employee, demonstrate that strict legal repercussions await violators. Another example includes VoiceXnet Technologies LLC, which reimbursed $85,405 in stolen wages. Continued government oversight underscores the importance of fair treatment under immigration policies.
Recommendations for Reform
While existing actions against wage-related fraud show progress, more can be done to prevent it altogether. Empowering both employers and workers with clear, accessible guidelines could help significantly. Workers must be better educated about their rights, while employers should consistently be reminded of the costs—both financial and reputational—of engaging in non-compliance. Establishing anonymous reporting mechanisms could also encourage exploited employees to come forward. Moreover, publicizing penalties imposed on violators could serve as a deterrent to others contemplating similar fraud.
Conclusion
Wage-related fraud within the H-1B visa program undermines its purpose and tarnishes its reputation as a pathway for global talent to contribute to the U.S. economy. Practices like underpayment of wages specified in LCAs, unauthorized salary deductions, and job misclassification not only exploit workers but also harm the broader American workforce by distorting fair competition. Through site inspections, policy adjustments, and accountability measures, federal agencies have intensified their fight against fraud. However, the key to long-term change lies in increasing worker protections, holding employers to higher standards, and fostering transparency in wage practices. By championing reform, the United States can ensure that the H-1B visa remains a legitimate vehicle for innovation and economic progress. Visit USCIS for more information about H-1B visa rules and related labor laws.
Learn Today
H-1B Visa Program → A U.S. immigration program allowing employers to hire foreign workers for specialized, high-skill roles in various industries.
Labor Condition Application (LCA) → A required document in the H-1B visa process, certifying wage compliance with U.S. labor standards.
Prevailing Wage → The average wage paid to similarly employed workers in a specific occupation and geographic location in the U.S.
Benching → An illegal practice where H-1B workers are unpaid or underpaid during periods without active job assignments.
Role Misclassification → Falsely describing a job’s nature to lower wage obligations or simplify visa approval processes, violating H-1B rules.
This Article in a Nutshell
The H-1B visa program bridges talent gaps in U.S. industries but faces criticism for wage fraud. Employers exploit workers through underpayment, illegal deductions, and job misclassification. This harms both foreign and domestic employees. Stricter enforcement and reforms are crucial to protect workers’ rights and restore trust in this vital system.
— By VisaVerge.com
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