Employees of Tata Sons Ltd who were deployed from India to work in information technology jobs in the US have won the right to proceed with a class action lawsuit against the Indian corporate giant over unpaid salaries.
California federal judge Claudia Wilken granted classaction status to the suit on Monday, which accuses Tata and its subsidiary Tata Consultancy Services ( TCS) of breaching employee contracts and violating California labour laws.
“ TCS continues to believe that when this matter concludes, the court will find that the plaintiff’s claims are without any merit,” the company said in an emailed statement on Tuesday. “ This is an order only on one procedural matter and does not address the merits of this case,” it said.
Two former employees accused the company in 2006 of forcing all non- US- citizen workers to sign over their US federal and state tax refund checks to the company. Tata also deducted their Indian salaries from their compensation, the suit alleged. The judge authorised one national class of plaintiffs consisting of non- US citizens who worked at the company between 2002 and 2005 to sue for contract violations. The court certified a separate class of employees to bring claims under California labour laws.
“ More than 10,000 current and former Indian nationals working for Tata in America now may have their day in court,” Kelly Dermody, a lead attorney for the employees, said in a statement.
TCS shares provisionally ended 1.6 per cent lower on Tuesday underperforming the broader market, which rose 0.6 per cent.
A combination of “ profit booking, as shares were up yesterday,” and the “ negative sentiment from the court order” might have pushed the shares lower, said Harit Shah, analyst at brokerage Nirmal Bang Institutional Equities.
TCS and Infosys Ltd are part of India’s $ 100 billion information technology and business process outsourcing industry, which earns close to 70 per cent of its revenue from exports to the US and Britain. TCS, whose roughly 227,000 employees serve customers such as Citigroup and BP Plc, earned 45 per cent of its December- quarter revenue from work done at clients’ own facilities, the company has said.
The company employs both local recruits and employees brought in from India on shortterm work permits for such work. Robert Steiner, lawyer for Tata America International Corporation with Kelley Drye & Warren, did not respond to a request for comment.