Cognizant Technology Solutions is facing or has recently resolved lawsuits on several fronts: a federal jury found the company liable for intentional discrimination against non-Indian and non-South Asian workers in October 2024, a former executive won an $8.4 million retaliation verdict in March 2026, the company paid roughly $28 million to settle U.S. bribery charges in 2019 and $95 million to settle a related securities case, and it has resolved a wage class action while continuing to fight a large tax assessment in India. The discrimination case is the largest exposure by far, with a damages phase still ahead.
The Palmer Discrimination Class Action
The central case is Christy Palmer v. Cognizant Technology Solutions Corporation, filed September 18, 2017, in the U.S. District Court for the Central District of California before Judge Dolly M. Gee.1CourtListener. Christy Palmer v. Cognizant Technology Solutions Corporation Docket Three U.S. citizens who identified as Caucasian brought the suit, alleging that Cognizant systematically favored South Asian and Indian employees, particularly H-1B visa holders, in staffing, promotions, and termination decisions.2Duane Morris LLP. IT Firm Found Liable for Intentional Discrimination Against Class of Terminated Non-Indian Employees
The complaint was brought under the Civil Rights Act of 1866 (42 U.S.C. § 1981) and Title VII, on two theories: a “pattern or practice” of intentional discrimination, and facially neutral policies with a disparate impact on non-South Asian and non-Indian workers.3Courthouse News Service. Palmer v. Cognizant Third Amended Complaint
The Bench System at the Center of the Case
Cognizant’s “bench” was standby status for employees between client projects. Under company policy, workers who remained on the bench for five weeks were automatically terminated.2Duane Morris LLP. IT Firm Found Liable for Intentional Discrimination Against Class of Terminated Non-Indian Employees The plaintiffs alleged that when new project openings came up, Cognizant assigned Indian and South Asian workers first and left non-Indian employees on the bench until the clock ran out.
The complaint alleged that while South Asians make up roughly 12% of the U.S. IT industry, at least 75% of Cognizant’s approximately 40,000 U.S. employees were South Asian or Indian.3Courthouse News Service. Palmer v. Cognizant Third Amended Complaint Cognizant received 15,547 H-1B visas in 2015 and 21,459 in 2016, and the plaintiffs alleged that the company submitted applications for positions that did not actually exist to build an inventory of available visa workers.
Class Certification and the Verdict
In October 2022, Judge Gee certified a class of roughly 2,200 employees terminated from the bench while holding certain mid-level positions between 2013 and October 2022.4Kotchen & Low LLP. Bloomberg Coverage of KL Victory Over Cognizant A first trial ended in a hung jury.5Bloomberg. Cognizant Discriminated Against Non-Indian Workers, US Jury Says
On October 4, 2024, a federal jury unanimously found that Cognizant had engaged in a pattern or practice of intentional discrimination against the class and concluded that punitive damages were warranted, with dollar amounts to be set in a separate second phase.2Duane Morris LLP. IT Firm Found Liable for Intentional Discrimination Against Class of Terminated Non-Indian Employees
A class expert testified that non-Indian and non-South Asian employees were 8.4 times more likely to be terminated from the bench than their South Asian or Indian counterparts, and that the probability of this disparity occurring absent intentional discrimination was less than one in a billion.2Duane Morris LLP. IT Firm Found Liable for Intentional Discrimination Against Class of Terminated Non-Indian Employees Former employees testified that hiring workers from India through the H-1B program was a company “mandate,” not a preference. Cognizant’s defense argued that its workforce composition reflected the engineering talent available in India and that employee transfers from India had decreased since 2014.
Internal Findings and the EEOC
Abby Israel, Cognizant’s senior director of EEO from 2017 to 2020, testified that a 2018 internal report on involuntary terminations showed Black employees being let go at 23 times the rate of Asian workers (who were predominantly Indian visa holders), Hispanic and Latino employees at 16 times the rate, and White workers at 8 times the rate.6Bloomberg. Cognizant H-1B Visas Discriminates US Workers She said she found “rampant discrimination” and was told by her supervisor to stop circulating the data beyond HR leadership.
In a 2020 text exchange introduced at trial, a Cognizant recruiting executive described the company’s practices as “an open secret” involving H-1B visa holders as “cheaper labor.” Israel replied: “Yeah see … that’s race discrimination. Cognizant is going to pay dearly one day.” She left the company four months later.6Bloomberg. Cognizant H-1B Visas Discriminates US Workers
A 2020 EEOC investigation had already concluded that Cognizant discriminated against a “nationwide class of non-Indian employees on the basis of race and national origin.” Under federal law, the agency could not publicly release its findings, impose fines, or initiate its own litigation on that finding.6Bloomberg. Cognizant H-1B Visas Discriminates US Workers
Disparate Impact Ruling and Damages Ahead
On December 5, 2025, Judge Gee separately found that Cognizant’s “Visa Readiness,” “Visa Utilization,” and related policies had a disparate impact on non-South Asian and non-Indian employees, resulting in their disproportionate termination from the bench during the class period of December 15, 2016, through October 27, 2022.7Justia. Palmer v. Cognizant Findings of Fact and Conclusions of Law The ruling gives the plaintiffs two independent legal bases for recovery.
As of mid-2026, the case is in active litigation. The parties have been ordered to confer on a Phase Two proceeding to determine compensatory and punitive damages. Class counsel has said it will seek “hundreds of millions of dollars.”4Kotchen & Low LLP. Bloomberg Coverage of KL Victory Over Cognizant Cognizant has said it “plans to vigorously defend itself and appeal at the appropriate time,” though no appeal has been formally filed.8Cognizant. Cognizant Statement
The Franchitti Retaliation Verdict
Former Cognizant executive Jean-Claude Franchitti won an $8.4 million jury verdict against the company in March 2026. Franchitti, hired in 2007 as a chief architect and later promoted to assistant vice president, alleged that Cognizant retaliated against him after he repeatedly complained about discrimination and the company’s use of H-1B workers to displace higher-cost American employees. He was fired on July 19, 2016.9Staffing Industry Analysts. Jury Rules Cognizant Must Pay $8.4M in Bias Lawsuit
The case, Franchitti v. Cognizant Technology Solutions Corp. (1:21-cv-02174), was tried before Judge Jesse M. Furman in the Southern District of New York. On March 30, 2026, the jury awarded $4.2 million in compensatory damages and $4.2 million in punitive damages.10Kotchen & Low LLP. Cognizant Former Employee Alleging Discrimination Awarded $8.4 Million for Retaliation The EEOC had earlier found credible evidence that Franchitti was discharged in retaliation for his complaints. Cognizant filed motions for judgment as a matter of law, a new trial, and to alter the judgment. Franchitti opposed those motions in June 2026, and the case remains active.11PACER Monitor. Franchitti v. Cognizant Technology Solutions Corporation et al
The FCPA Bribery Case
In February 2019, Cognizant resolved SEC and DOJ investigations into bribes paid to Indian government officials to secure construction permits and operating licenses. The payments totaled approximately $3.6 million between 2014 and 2016, targeted officials in Chennai, Pune, and Siruseri, and were concealed through sham change order requests.12SEC. SEC Charges Cognizant Technology Solutions Corporation With FCPA Violations13Stanford Law School FCPA Clearinghouse. Cognizant Technology Solutions Corporation Enforcement Action
Cognizant settled with the SEC without admitting or denying the findings, paying about $25 million in disgorgement, prejudgment interest, and civil penalties. The DOJ declined to prosecute the company, crediting its voluntary self-disclosure and cooperation. Total payment across both matters was roughly $28 million.14Cognizant. Cognizant Resolves Previously Disclosed FCPA Matter With U.S. Authorities
Two former executives were indicted on criminal FCPA charges: Gordon Coburn, the former president, and Steven Schwartz, the former chief legal officer. Both pleaded not guilty in 2019. On April 3, 2025, a federal judge in New Jersey dismissed the indictment with prejudice after the DOJ moved to drop the case, citing the Trump administration’s February 2025 executive order pausing FCPA enforcement for a 180-day review period.13Stanford Law School FCPA Clearinghouse. Cognizant Technology Solutions Corporation Enforcement Action A former chief operating officer, Sridhar Thiruvengadam, separately settled an SEC administrative proceeding in September 2019, paying a $50,000 civil penalty.
The Securities Fraud Class Action
The bribery scandal produced a securities fraud class action, In re Cognizant Technology Solutions Corporation Securities Litigation (2:16-cv-06509, D.N.J.). Investors alleged that Cognizant and its executives made false statements concealing the illegal payments. Cognizant acknowledged paying at least $6 million in improper payments and that senior management participated in or was aware of the corruption.15Bernstein Litowitz Berger & Grossmann LLP. Cognizant Technology Solutions Securities Litigation
The case settled for $95 million in cash, with final court approval on December 20, 2021. The settlement fund has been fully disbursed across three distributions: October 2023, July 2024, and July 2025.15Bernstein Litowitz Berger & Grossmann LLP. Cognizant Technology Solutions Securities Litigation
Wage and Hour Settlement
In Mishra v. Cognizant Technology Solutions (No. 2:17-cv-01785, E.D. Cal.), current and former employees alleged that after a 2012 reclassification the company underpaid overtime by excluding certain compensation from the regular rate of pay required under the Fair Labor Standards Act and California labor law. Cognizant settled for $5.726 million, covering a California class eligible for payments between August 2013 and June 2020 and an FLSA class covering August 2014 through June 2020.16HR Dive. Cognizant Technology to Pay $5.7M to Settle Improper OT Calculation Claims17Cognizant Tech Settlement. California Class Notice
The Indian Tax Dispute
Cognizant is fighting a large ongoing tax dispute in India over a 2016 share repurchase by its Indian subsidiary, CTS India. The Indian Income Tax Department has asserted an additional liability of roughly 33 billion rupees (about $353 million as of early 2026). After unfavorable rulings from the Commissioner of Income Tax (Appeals) in 2022 and the Income Tax Appellate Tribunal in 2023, the case reached the Supreme Court of India, which in January 2024 upheld a Madras High Court directive requiring Cognizant to deposit approximately 30 billion rupees to proceed with its appeal.18Cognizant. Form 10-Q, Q1 2026 The deposit is recorded on Cognizant’s balance sheet as $369 million in noncurrent assets. The company says it has paid all applicable taxes and has recorded no reserves for the matter. A separate dispute involving a 2013 share repurchase also remains in litigation.