The two employees, Gopi Vedachalam and Kangana Beri, who were sent to work in the US from India, had alleged that the group forced them to endorse and sign over their tax refund checks.
Reacting to this development, a TCS spokesperson said, "TCS believes that it always acted appropriately notwithstanding the allegations in this case. The company has admitted no wrongdoing and none has been found by the court. It agreed to settle this matter to eliminate any ongoing distraction to its associates and management."
It was on February 14, 2006, that law firm Lieff Cabraser Heimann & Bernstein filed a nationwide class-action lawsuit against the Tatas. It charged that the Tatas "unjustly enriched themselves by requiring all of its non-US citizen employees to endorse and sign over their federal and state tax refund checks to Tata and by taking unauthorised deductions from employee's paychecks."
In April 2012, US district court Judge Claudia Wilken issued an order that granted class-action status to the suit that accused Tata Sons and its subsidiary, TCS, of breaching employment contracts and violation of the California labour code.
In June 2006 and April 2007, Tata America International Corporation and its parent corporations, TCS and Tata Sons, filed a motion to dismiss the case, arguing the case should be arbitrated in India rather than the US. Law firm Lieff Cabraser opposed the motion, and in November 2006 and June 2007, the court heard arguments on the motions and took them under submission.