University's IT outsourcing could trigger discrimination lawsuit

UCSF is dismissing dozens of IT workers and outsourcing their jobs to an Indian firm

A group of laid-off IT workers at the University of California, San Francisco may resort to filing a lawsuit against the school, accusing it of discrimination by outsourcing their jobs to an all Indian staff.

It's a legal tactic that U.S. IT workers are increasingly considering to try and block employers from allegedly replacing their jobs with foreign workers. 

In the case of UCSF, the school is dismissing 49 permanent employees from its IT department and contracting the work to outside firms. But in doing so, the school is also getting rid of a diverse staff comprised of Americans from various ethnicities, and replacing them with Indian workers from one of the contractors, the laid-off workers said.

“We believe this lay-off is illegal,” said J. Gary Gwilliam, an attorney representing 10 of the workers, on Wednesday. 

Gwilliam’s law firm has already filed formal complaints alleging discrimination with California’s Department of Fair Employment and Housing. The complaint alleges that the university’s outsourcing plan intentionally discriminated against the laid-off workers based on their national origin: the U.S.

On Monday, the department granted the affected workers the right to sue the university.

“The second issue is age discrimination,” Gwilliam said. “48 of the 49 people that they are laying off are 40 years or older. And they are in the protective range for age discrimination.”

However, U.S. courts might not necessarily be swayed by the legal arguments.  

Sara Blackwell is a labor attorney who is helping laid-off IT workers from Disney oppose their outsourcing. She too is working to file lawsuits on behalf of her clients, alleging that Disney discriminated against its employees based on their status as American workers. But she expects challenges.

"What companies argue is 'We didn't replace them with foreigners. We restructured and then we terminated the department, regardless of age, sex, ethnicity. It was they (the outsourcing company) that hired the foreign workers,'" she said.

UCSF also claims it has acted lawfully and that the outsourcing will help it save more than US$30 million over five years.

Gwilliam is well aware the school will contend it's done nothing wrong, but he called this outsourcing a "classic case" of employee discrimination. He previously represented clients laid off at the Lawrence Livermore National Laboratory, who alleged wrongful termination and age discrimination. That case resulted in a $37.25 million settlement for 129 workers.  

His clients hope that UCSF will reverse its decision to outsource their work to an India-based IT services firm called HCL. But if not, the affected workers might choose to sue the school for damages, after they leave their jobs in February, he said.  

“Money talks,” Gwilliam said of the potential lawsuit. “Hopefully that will deter future conduct and future layoffs of this kind that we contend are illegal.”

The layoffs at UCSF represent a rare case of a public university outsourcing IT jobs to a foreign firm, but labor experts say it might influence IT practices in higher education.

UCSF, however, claims the restructuring will also improve its IT services and cybersecurity, the school said in a statement on Tuesday. In addition to entering an agreement with the India-based HCL, UCSF has also hired security firm FireEye and Dell as contractors.

dsc05320 Michael Kan

J.  Gary Gwilliam (right) is a lawyer representing laid-off IT workers from UCSF. 

But laid-off workers from the school fear the IT services at UCSF will suffer due to the outsourcing.  System architect Audrey Hatten-Milholin has worked at the school for 17 years, but has been forced to train her incoming replacements before she leaves in February.

Those replacement workers from HCL are young and attempting to learn all the details about the school’s IT services within only a few months, she said.

“Of the people they are laying off, there is a lot of institutional knowledge that you can’t train in two weeks. You can’t train in two months,” she said. “I don’t think they will be ready.”

In the future, much of that work will also be done remotely. According to Hatten-Milholin, 80 percent of it will be handled from India. The remaining 20 percent will involve HCL sending replacement workers to the school on H-1B visas.

UCSF, however, claimed it’s not replacing any employees through the use of the controversial H-1B visa program. Nor will HCL under the current service agreement, the school said.

Nevertheless, the laid-off workers have been required to train their incoming replacements or risk losing some of their severance, they said.

“I don’t think what we’re doing – taking advantage of H-1B visa loopholes and shipping jobs overseas to lower costs – is a good idea,” said Kurt Ho, another laid off worker. “It doesn’t help improve healthcare. It doesn’t help improve education.”

He’s also concerned about the security risks, especially as UCSF also runs hospitals and conducts valuable medical research. UCSF will have to grant network access overseas to an Indian-based company -- giving hackers another avenue to target the school, he said.

“I’m very concerned that (UCSF) researchers are not aware that their data is going to be managed by a group in India,” he said. “Patient, researchers, doctors, students and everyone out there needs to be aware of what’s going on.”

But UCSF contends that the school is taking proper precautions. All school data will remain stored in the U.S., it said in a statement. All HCL employees will also receive “UC security awareness” training and be required to comply with the U.S.’s HIPAA rules on data security.

“The vast majority of UCSF’s IT services will remain in house,” the school has said. Although 49 permanent positions with the IT department are being cut, that represents only 8 percent of its centralized IT work force. UCSF is also trying to find new jobs for the laid-off workers at other University of California campuses. 

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