Labor & Employment Law Daily Wrap Up, DISCRIMINATION—NATIONAL ORIGIN—C.D. Cal.: IT staffing company’s H1-B visa policies had disparate impact on non-Indian employees, (Dec 9, 2025)

By Tulay Turan, J.D.

The termination rate for non-visa employees was 30 percent while it was 3 percent for visa employees.

In a class action involving more than 2,000 former employees, a federal district court in California ruled that an IT staffing company’s H1-B visa-related policies had a disparate impact on non-South Asian and non-Indian employees. The company’s policies were facially neutral because visa status is not a protected trait. However, the company terminated non-visa holding, non-South Asian or Indian employees at a rate that was significantly disproportionate to their representation in the company’s employee population (Palmer v. Cognizant Technology Solutions Corp., No. CV 17-6848-DMG (C.D. Cal. Dec. 5, 2025)).

Two former employees of Cognizant Technology Solutions, representing themselves and more than 2,000 former employees, initiated this class action lawsuit in 2017, alleging that Cognizant engaged in a pattern or practice of discriminatory employment practices that favored employees of South Asian race and Indian national origin in violation of 42 U.S.C. § 1981 and Title VII.

Jury verdict. The court bifurcated the trial into two phases. Following the nine-day Phase I trial on the disparate treatment theory, the jury returned a unanimous verdict in the employees’ favor, finding that: (1) Cognizant had engaged in a pattern or practice of intentional discrimination against non-South Asian employees (on the basis of race) and non-Indian employees (on the basis of national origin) who were terminated from the corporate deployment pool (also known as the “bench”); and (2) Cognizant’s conduct met the standard for punitive damages.

Equitable claim. Here, the employees’ disparate impact claim, which was based on the same underlying facts as their disparate treatment claim, was before the court. The parties agreed that the equitable claim for disparate impact could be decided solely on the existing trial record.

Findings of fact. Among other findings of fact, the court noted the two class representatives, who were of Caucasian race, were both terminated from the bench.

The court also found Cognizant implemented Visa Readiness and Visa Utilization policies during the class period. The Visa Readiness policy referred to Cognizant’s policy of applying for a significant number of H1-B visas based on projected growth and future needs to create a pool of “travel ready” employees to fill U.S. roles in the future. The Visa Utilization policy encompassed multiple other polices, including the rotation policy, “operational excellence” initiatives, and visas chargeback policy.

In addition, at the trial, the employees’ expert, who conducted a statistical analysis of hiring and termination disparities at Cognizant, testified that non-South Asians were approximately seven times more likely to be subject to an involuntary termination, with a disparity of 96 standard deviations. The expert also found that non-South Asian and non-Indian employees were 8.4 times more likely to be terminated from the bench than South Asian and Indian employees, with a disparity of 75.12 standard deviations.

Distinct claims. Regarding its conclusions of law, the court first noted that disparate treatment and disparate impact claims are distinct claims, and success on one claim does not guarantee success on the other. However, the claims are not mutually exclusive and may be brought together in the same action. Thus, Cognizant’s claim that the jury’s verdict on disparate treatment prevented the employees from prevailing on their disparate impact claim was incorrect.

Facially neutral. Next, the court found Cognizant’s Visa Readiness and Visa Utilization policies were facially neutral because visa status is not a protected trait.

Disparate impact. Turning to the heart of the matter, the court found Cognizant’s policies caused a disparate impact on non-South Asian and non-Indian employees. Non-visa holding employees were both sent to the bench and terminated from the bench at significantly higher rates than their visa-holding coworkers. The termination rate from the bench for non-visa employees was 30 percent while it was 3 percent for visa employees. In addition, in 2015, for example, 69 percent of U.S. citizens on the bench were redeployed and 23 percent were terminated, while 88 percent of visa holders on the bench were redeployed, and 1 percent were terminated.

Further, approximately 99 percent of the visa-holding employees at Cognizant were of Indian national origin, and approximately 88 percent of its workforce was South Asian at most times during the class period. “This is precisely the type of overrepresentation that the disparate impact analysis was intended to address,” the court wrote.

Therefore, non-visa holding, non-South Asian or Indian employees were terminated from the bench at a rate that was significantly disproportionate to their representation in Cognizant’s employee population. These disproportionate rates of termination, along with statistically significant standard deviations, were sufficiently substantial to raise an inference of causation, the court found.

No business necessity. Finally, the court determined that Cognizant’s discriminatory policies were not justified by any business necessity. The jury already implicitly rejected the company’s business necessity defense. It found that Cognizant’s disparate treatment was “unexplainable on grounds other than race or national origin.” Thus, the jury also implicitly found that Cognizant did not have a legitimate business necessity for their discriminatory visa policies. The court said it was not only bound by the jury’s implicit findings, but also the evidence at trial overwhelmingly supported that conclusion.

The case is No. CV 17-6848-DMG.

Judge: Gee, D.

Attorneys: Amanda E. Burns (Kotchen and Low) for Christy Palmer, Jean-Claude Franchitti and Vartan Piroumian. Amber Dawn McKonly (Gibson, Dunn and Crutcher) for Cognizant Technology Solutions Corp. and Cognizant Technology Solutions U.S. Corp.

Companies: Companies: Cognizant Technology Solutions Corp.; Cognizant Technology Solutions U.S. Corp.

Cases: Discrimination NationalOrigin RaceDiscrimination ClassActions Discharge CaliforniaNews