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Thursday, Oct 30, 2014, 2:51 pm

Silicon Valley Firm’s Wage Theft: ‘Worse Than Sweatshops’

BY Alex Lubben

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Despite earning huge profits, tech firms like Electronics for Imaging are resorting to outsourcing and, in some cases, violating labor law. (Adam Gimpert / Flickr)  

“This is worse than anything I ever saw in any of those Los Angeles sweatshops,” said Michael Eastwood, a Los Angeles Department of Labor assistant district director, reflecting on a Silicon Valley firm’s failure to pay minimum wage to eight Indian employees.

The workers, who were flown in from the company’s Bangalore offices, worked up to 122 hours a week helping Electronics for Imaging, Inc. (EFI) move its headquarters from Foster City to Fremont, CA. They were granted no overtime for their work, and were paid the equivalent of $1.21 an hour—well below California’s $8 per hour minimum wage. While working in the U.S., they continued to be paid in rupees.

An anonymous tip led the Department of Labor to investigate. The result: EFI will pay more than $40,000 in back pay to the workers, as well as a $3,500 fine.

While not one of Silicon Valley’s high-profile giants, Electronics for Imaging certainly has the cash to pay everyone a fair wage. They brought in $728 million in revenue last year and offered their CEO, Guy Gecht, a pay package valued at around $6 million.  

Beverly Rubin, EFI’s vice president of HR shared services, provided the following statement to CNBC:

To help our local IT team with a complex move of our Bay Area facility and data center, we brought a few of our IT employees from India for a short assignment in the US. ... During this assignment they continued to be paid their regular pay in India, as well as a special bonus for their efforts on this project. During this process we unintentionally overlooked laws that require even foreign employees to be paid based on local US standards. When this was brought to our attention, we cooperated fully with the Department of Labor, and did not hesitate to correct our mistake and to make our Indian colleagues whole based on US laws, including for all overtime worked. We have also taken steps to ensure that this type of administrative error does not reoccur.

In other words, they didn’t realize that foreign employees had to be paid the minimum wage of the country in which they were temporarily working — a poor excuse that neither qualifies as an apology nor indicates that EFI has any intention to stop exploiting its outsourced labor.

Given the incredibly under-resourced government agencies tasked with monitoring employers who violate labor law, the likelihood that companies will be caught is fairly low. And even if they are caught, companies like EFI are only risking miniscule fines—in the case of these Indian workers, less than $500 per worker.

So why wouldn’t companies take a gamble on paying workers so far below the minimum wage?

The EFI story seems to be representative rather than exceptional. While profits for domestic tech workers continue to skyrocket (with the exception, of course, of those workers involved in the tech-service industry), the laborers that tech hires abroad are seeing neither the pay nor the cushy work environments that distinguish their U.S. counterparts.

Adrian Chen reported for WIRED last week on the content moderation industry, an invisible workforce of up to 100,000 that operates primarily in Southeast Asia. These workers are responsible for sifting through the Internet’s ugliest corners to ensure social media users don’t come across graphic content. They spend their days examining videos and images of everything from beheadings to bestiality.

 “It’s like PTSD,” one of the workers told Chen. “How would you feel watching pornography for eight hours a day, every day? How long can you take that?”


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Alex Lubben is the former Deputy Publisher at In These Times and is currently a freelance journalist in New York. You can follow him on Twitter at @alexlubben.

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