Thread: Outsourced and fired, IT workers fight back

Outsourced and fired, IT workers fight back
Workers charge discrimination prompted 2010 Molina Healthcare IT layoff; file suit against employer and its outsourcer
By Patrick Thibodeau
August 16, 2011 06:50 AM ET


On the day they were fired early last year, about 40 IT employees at Molina Healthcare Inc. had been gathered in a conference room for what they were told would be a planning meeting. At the same time, laptop computers were being collected from the assembled workers' desks.
During the meeting, Molina's then-CIO, Amir Desai, informed the workers that they were being laid off for financial reasons, "not because of [their] performance."

The layoffs came amid rising tensions over a number of issues, including the expanding role of an offshore IT contractor at Molina.

The workers raised the concerns with Desai during the meeting.

"I felt they were expecting us to be asking questions about Cobra and unemployment and all that," said Bonita Shok, one of the laid-off IT employees. "Instead, we were being quite confrontational about why they are laying us off and keeping all these H-1B workers."

"I have never experienced a group of employees who were so angry," said a human resources manager who was in the meeting to answer questions from employees about benefits. The HR manager asked not to be identified.

"They felt their work was being offshored -- they were angry at the H-1B employees that were being hired," said the longtime HR industry veteran who had been hired to execute the IT layoffs at Molina, a managed health care provider that serves Medicaid and Medicare recipients. "I [had] never felt the backlash that I felt from Molina employees."

The employees, who lost their jobs in January 2010, never got answers to their questions about the company's IT outsourcing strategy.

Instead, 18 of them filed a lawsuit in California state court earlier this year against Molina, its CIO at the time and its outsourcing contractor, Cognizant Technology Solutions.

The HR employee, who was later laid off as well, is a witness for the plaintiffs in the case.

The plaintiffs contend, among other things, that they are victims of discrimination due to national origin. The lawsuit charges that the employees were fired because the companies sought to employ people "whose national origin, race and/or ethnicity was exclusively Indian," and didn't want to employ Americans or green-card holders.

Molina contends that the lawsuit is grounded in "falsehoods and malicious gossip." Cognizant has said that the lawsuit is without merit and that it "will vigorously contest it."

Desai, through his attorney, says the lawsuit is itself guilty of "an unfair discriminatory bias." Desai himself has since left Molina.

Of the workers who are part of this suit, 10 brought an earlier claim against Molina that was settled in mediation before this case was filed. The mediation agreements did not settle the case for all the workers and did not include current lawsuit defendants Cognizant and Desai.

While what happened at Molina is still in dispute, job displacement because of offshore outsourcing is a fact of life in today's IT workplace. While there are no government numbers that detail its extent, the broad outlines of the story told by the Molina workers should be familiar to other IT workers.

Outsourcing engagements often start when offshore IT services companies bring in workers, typically on H-1B or L-1 visas, to learn a company's IT processes. Then the work is moved overseas. Molina employees contend that's what happened to them.

James Otto, the attorney representing the Molina employees in the lawsuit, claims that about 200 visa-holding workers have been brought into the company.

Otto has told the former Molina IT workers that such activity is a form of segregation. "Today you're being segregated based on your national origin," he said.

Several years before the layoff, there were about 70 or 80 IT employees at Molina, according to a group of more than a dozen former Molina IT workers who met with Computerworld late last month. Many of the former Molina workers asked that their names not be published.

At that time, Cognizant had a small presence at the firm, mostly to supplement internal work. The employees said they felt no threat at the time. In fact, said Shok, "there was a feeling of camaraderie on the team."

But beginning around 2007 things started to change.

Most of the immediate IT managers were either laid off or quit, according to the employees. At the same time, the number of contractors increased. The lawsuit alleges that Desai and his management team "hire[d] and promote[d] only Indian nationals to management positions."

Desai, through his attorney, says the allegation is false. Of the six IT managers reporting to him, two were of Indian descent, he said.

"My client is dismayed both at the false allegations in Mr. Otto's lawsuit and its ethnically inflammatory undertone suggesting that Mr. Desai is biased against Americans and favors Indians solely because he is 'of Indian descent,' " wrote Desai's attorney, Edward Raskin in an email to Computerworld.

Raskin also points out that Desai was born in the U.S. and graduated from a U.S. university. He says the lawsuit avoids certain facts. "For example, some of the employees who lost their jobs at Molina were 'of Indian descent,' which contradicts Mr. Otto's suggestion that Mr. Desai and the company only favored Indians," he said.

But from the perspective of the employees, the workplace was changing.

The IT staff had been diverse, and represented seemingly every nationality, much like the population of Long Beach, Calif., where Molina is based.

The employees said they liked working at Molina, and felt they were recognized for their work, supported on the job, and were also part of a friendly environment that marked holidays with events like potluck dinners.

But the corporate culture changed as the contractors were added. The holiday potluck dinners ended while Indian workers were taken out to lunch on a major India holiday, the former Molina employees said.

Some meetings became so dominated by Indian workers that the discussions would sometimes shift to an Indian language, which added to a growing sense of isolation among the other Molina IT employees, the workers said.

"I've been to several meetings where it started off in English and then one of the Indian directors would start talking in Hindi, and then all the other Indians will start talking in the same language," said a plaintiff who asked to remain anonymous. "And then you would have to say 'hello, hello, we don't understand.'"

The HR manager who had been hired to manage the IT layoffs recalled an initial visit to the IT department. "When I walked in the IT department, all I saw were Indians. It was very difficult to find anybody in the immediate environment that was of non-Indian descent."

The former HR manager said the makeup of the department "was also a reflection of the leadership team ... the majority of [Desai's] direct reports were Indian."

The Molina workers said they trained Cognizant workers on the company's IT processes over time prior to the layoffs. They were told that the contractors were taking over all the production and their role would shift to new developments and technologies.

That explanation did little to lessen fears that they were being pushed aside. "There was a point where I felt we were just being written off," said David de Hilster, one of the laid-off IT professionals.

In the weeks leading up to the layoff, Molina employees began spending more and more time training Cognizant workers. The process became increasingly "urgent" and rushed, he said.

Another laid-off employee, Charles, said that "one person came into our department to learn all of our processes, which is impossible. We're multiple types of employees doing deployments, doing development work. No one person could possibly gather all that much knowledge in two weeks' time."

Charles asked that his last name not be used.

Desai's attorney, Raskin, wrote that his client "was trying to maintain quality and keep IT costs down at the direction of his superiors. To accomplish this, Mr. Desai worked with his managers to identify processes and projects that could be outsourced at a lower cost.

"The question was not: 'Whose job can we eliminate and replace with a contractor?' The question was: What processes are being done in-house that could be outsourced at a lower overall cost without sacrificing quality of efficiency?" he added.

Otto has assembled witnesses to support the lawsuit.

Among them is Laura Onufrock, Molina's former IT department budget manager.

In lawsuit filings, Molina said it compared the cost of imported labor to the cost of U.S. workers at the company and found that the average pay for U. S. workers was $50 per hour versus $72 per hour for the Indian contractors and $26 an hour for offshore workers, according to the lawsuit. Based on Onufrock's analysis, the lawsuit claims that after the mass layoff last year, the IT department exceeded its annual budget by over $5.5 million three months into 2010.

Onufrock isn't a plaintiff. Asked why she was acting as a witness in this case, she said, "they've done a lot of damage to people and I'm hoping I can help."

Molina disputes the contention that the outsourcing efforts didn't cut IT costs.

"American taxpayers are demanding that health care companies reduce administrative costs in order to provide better benefits at a lower price," the company said in a statement.

"Like most leading health care companies, Molina has put in place a variety of measures to reduce costs, including the outsourcing of labor-intensive administrative tasks to specialized firms. Working with Cognizant, an established leader in outsourcing, Molina embarked on a successful program to reduce its overhead so it could focus on what it does best: providing America's underserved communities with access to the best possible health care," the company said.

It is unclear how many Molina contractors were on either H-1B or L-1 visas, which are used for company transfers. The distinction is important.

Companies can hire H-1B workers without first trying to hire U.S. workers, unless they are considered "H-1B dependent" -- a status that applies to companies where more than 15% of the people in the workforce hold H-1B visas. Cognizant is in that category, but it doesn't have to prove that it tried to hire U.S. citizens before hiring H-1B visa holders for jobs that pay more than $60,000 and/or require master's degrees.

"I don't think the H-1B dependent provisions are strong enough to protect U.S. workers," said Daniel Costa, an immigration policy analyst at the Economic Policy Institute.

Molina, which employs 4,200 people, said it has less than 50 H-1B employees "and they were hired only in cases when it was necessary to cast a wider net for particular skills."

A Cognizant spokesperson said that the company has never had an employer-employee relationship "between the plaintiffs and Cognizant, and therefore the plaintiffs have no grounds for, among other things, the employment discrimination or wrongful termination claims against Cognizant."

Cognizant employs 118,000 people worldwide -- 20,000 in the U.S. The outsourcer doesn't disclose how many of its workers hold visas.

But the company did note that it has more than 60 full-time recruiters in the U.S., and that it recruited at 17 colleges and universities last year. It said it has 500 job openings in the U.S.

"Cognizant is a job creator that strives to provide our clients with the best talent available anywhere," the company spokesperson said.

A week after the layoffs at Molina, one of the fired employees said she was told by someone still working there that about 30 H-1B hiring notifications had been posted on a lunchroom bulletin board at the company. The posting indicated that U.S. workers couldn't be found for these positions. It is unclear what company was trying to fill the positions. But this wasn't the first time such notices had appeared, and it reminded this employee of what she had said earlier to someone in HR who was involved in recruitment.

"How dare you hire H-1Bs when there are so many unemployed Americans out there that fit the job description better?" the IT worker said.

http://www.computerworld.com/s/article/ ... fight_back

And, the move to foreign workers worked out real well, didn't it?

Idaho reduces payments to Molina by $3M
By REBECCA BOONE
BOISE, Idaho

Idaho is docking its payment to its Medicaid claim processing company, Molina Healthcare Inc., by $3 million because of the major problems the company had implementing its new system last year.

Meanwhile, the state is still trying to recover nearly $10 million in double payments that were made to Medicaid-covered health care providers amid the chaos.

Still, Idaho Department of Health and Welfare officials say the Medicaid claim processing system run by the company's Molina Medicaid Solutions unit has improved dramatically in the year since its inception.

"They've improved a lot, in all honesty," department spokesman Tom Shanahan said. "Progress has been made across the board."

Molina took over the $106 million Medicaid claims processing contract in May 2010, but it still hasn't been paid for the work by the state because Idaho officials said the company wasn't meeting the standards under the contract. The first payment -- of roughly $12 million, instead of the originally negotiated $15 million -- will go out shortly, Shanahan said

Now, Shanahan said, the company will work under a pay-for-performance plan, facing monetary penalties whenever it fails to meet contract standards. Instead of the guaranteed $1.5 million a month set under the original contract, that amount will be the maximum payment the company may receive.

The department switched to California-based Molina last year in an effort to comply with federal Centers for Medicare and Medicaid Services standards. But problems arose immediately after Molina took over the contract, and thousands of payments were delayed to health care businesses that give Medicaid-covered services to the poor and disabled.

Many companies went two months without payments, bringing some to the brink of insolvency. A few went out of business altogether.

In an effort to keep the companies running, the department advanced providers a total of $117 million in interim payments in July and August. But the companies were paid again once their original claims were finally processed, and Idaho was left trying to recoup the double payments.

In March, the department had only recouped about half of the double payments, according to a report from the Office of Performance Evaluations.

By the end of last month, 92 percent of the cash had been collected, Idaho Department of Health and Welfare spokesman Tom Shanahan said. Many of the double-paid providers were set up on payment plans, so money is steadily rolling in, he said. Over the past five weeks, recoupments have averaged more than $850,000 a week.

"When you put in a system this big, there are going to be challenges," said Molina executive account manager Del Bell. Many providers weren't enrolled in the system at all, and others had trouble enrolling properly and had to re-enroll. The system also had trouble processing some types of claims, and recent Medicaid policy changes caused additional confusion.

All the problems meant providers had trouble even reaching Molina staffers for help. In July of 2010, the company was getting about 7000 calls a week from Idaho providers, and people were waiting a half an hour or more on hold before they could reach a call center representative. About half of the callers gave up before ever reaching a person to talk to.

"If we roll that forward to today, we're receiving generally between 3,000 and 3,300 calls a week. The abandonment rate is running under 2 percent, and we've been well under a one-minute wait time for the last few months," Bell said.

Claims are also being paid out faster. At the peak last year, more than 130,000 claims for payment were pending in the system, with more than half of them languishing for more than 30 days. Now there are fewer than 10,000 claims pending, and less than 5 percent of them are more than a month old, Bell said.

"So obviously that's another significant improvement in our history," he said.

Bell said he's still working with providers across the state to "rebuild that relationship."

"I think for the most part we're getting very good feedback from providers," Bell said. "That doesn't mean all providers are happy or all issues are solved ... overall I think we're getting much better reviews and they're much happier in the community."

Jodi Smith, the director of Family Support Services of North Idaho, a mental health and developmental disabilities agency, said the company has improved though there are still plenty of glitches in the system.

"There are still problems, but they're not the same problems," Smith said. "Claims are being processed fairly quickly. The system goes down periodically, and there are times when a claim is pended (delayed) for no apparent reason. But those are really minimal -- I can't complain at this time about the turnaround of claims being paid."

Smith said she was glad that the state had taken measures to hold Molina accountable. But she remains a bit skeptical over whether the pay-for-performance plan will work in the long term.

"You never know until you see it in action. But I have seen improvement, and the glitches in the system we experience now are less impactful," she said.

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http://www.businessweek.com/ap/financia ... 4IS300.htm

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(This is just one example of job loss and illegal job market manipulation allowed by our Congress and Senate to go on during Bush's tenure, which has of course been continued during Obama's)

PERM Fake Job Ads defraud Americans to secure green cards for immigrants

VIDEO: http://www.youtube.com/watch?v=TCbFEgFa ... r_embedded

Immigration attorneys from Cohen & Grigsby explains how they assist employers in running classified ads with the goal of NOT finding any qualified applicants, and the steps they go through to disqualify even the most qualified Americans in order to secure green cards for H-1b workers.

See what Bush and Congress really mean by a "shortage of skilled U.S. workers." Microsoft, Oracle, Hewlett-Packard, and thousands of other companies are running fake ads in Sunday newspapers across the country each week.

Yes, and that particular deception is continuing as well. I've seen those ads. They are curiously detailed, as if they were written from someone's individual career with the intent to screen out anyone who isn't a particular person. Because they were.

This H1B issue makes me SO angry. Americans are being screwed and this article is just one example. The first time I saw that video that H2BM posted, I cried because my husband was in IT and couldn't get a job. I realized there was a conspiracy against him.

I'm glad those workers made their anger known and I'm glad they're suing. I really hope they win, but my bet is they won't, or if they do, that it will be a very hollow victory that doesn't really mean anything.

This is actually one of the most promising cases to date, and another promising legal fracas underway is the one against Infosys for bringing in B-1s to do H-1B work to save money. In the beginning, there were sporadic, mostly individual efforts that got little traction. But the current thinking is that we need to treat this as a civil rights struggle, because it IS a conspiracy that has resulted in segregated recruiting and hiring by American companies based upon the candidate's national origin, not the candidate's merits. Far from recruiting the "best and brightest" with rare skill sets, I can show you ordinary IT jobs that literally hundreds of Americans in every city can do - yet the jobs are posted for recruitment in Indian publications, by Indian staffing firms. They even have walk-in job fairs over there for jobs over here. There are actually tons of jobs in IT in America, it's just that Americans need not apply.

Originally Posted by BetsyRoss

This is actually one of the most promising cases to date, and another promising legal fracas underway is the one against Infosys for bringing in B-1s to do H-1B work to save money. In the beginning, there were sporadic, mostly individual efforts that got little traction. But the current thinking is that we need to treat this as a civil rights struggle, because it IS a conspiracy that has resulted in segregated recruiting and hiring by American companies based upon the candidate's national origin, not the candidate's merits. Far from recruiting the "best and brightest" with rare skill sets, I can show you ordinary IT jobs that literally hundreds of Americans in every city can do - yet the jobs are posted for recruitment in Indian publications, by Indian staffing firms. They even have walk-in job fairs over there for jobs over here. There are actually tons of jobs in IT in America, it's just that Americans need not apply.

It's so good to hear that these folks really have a chance!

Please remind me what the difference is between the L-1s, B-1s, and the H-1Bs. I thought all of the companies had to prove they couldn't find an American if they wanted to hire an H-1B. From the article though, it appears that is not necessarily the case!

I just do not understand the mentality of putting EVERYONE ahead of our own US citizens.

No, there has never been a requirement to prove they couldn't find an American. In fact, a foreign worker can be brought in if an American is standing there, qualified, and asking for the job. Even if an American is already in the job, they can be replaced! There are easy to defeat rules about posting jobs that are earmarked for foreign workers, and it takes some know-how on the part of Americans to even spot these openings.

H-1B - 3 year term, renewable for 3 yeaer term, renewable in increments after that if an application to 'adjust status' (green card) has been filed. Essentially an open-ended visa useable for immigration, contrary to its original intent. Yearly cap 65,000 + another 20,000, but this is cumulative and many institutions are not subject to the cap. Easily over 200K per year.

L-1 - inter-company transfer. Should be six months, rules about how they can be paid. No yearly cap on them.

B-1 - business consulting, not actually doing the work. Six months usually. No cap.

Oh, and the student visa has OPT an CPT added, which are about two years for them to work here until they can find someone to sponsor their H-1B.

Great post and comments!