Residential care facilities for the elderly receive among the largest wage theft judgments of any industry, according to Matthew Sirolly, a staff attorney with the California Labor Commissioner’s Office who advises the agency on how to enforce wage theft judgments. These judgments are meaningless unless they are enforced.
Residential care facilities for the elderly (RCFEs), often called six-bed facilities and located in homes in residential neighborhoods, are non-medical businesses which provide residents with lodging, meals and housekeeping. According to the report “Understaffed and Overworked: Poor Working Conditions and Quality of Care in Residential Care Facilities for the Elderly,” as of 2016 there were 7,288 RCFEs providing 148,892 beds in California.
The state has conducted targeted investigations into residential care facilities, finding rampant wage and hour violations. From 2011 to 2019, caregivers filed 526 wage theft claims with the labor commissioner’s office. Of those cases that went to hearing, workers were found to be owed $2.5 million. However, approximately 71% of the judgment amounts due—$1.8 million—remain unpaid.
Some care home owners go to great lengths to avoid paying their employees. In the case of a group of residential care facilities, Agape Cottages in Orange County, the company “misclassified its employees as ‘care partners’ or business partners, and treated them as though they had none of the legal rights that are afforded to them as employees,” the Department of Labor found.
In 1973, California passed the Community Care Facilities Act to provide residents of state institutions safe, alternative, community-based housing.
In 1985, the California Residential Care Facilities for the Elderly Act was adopted to deal specifically with the growing demand for housing and health and social care needs of the elderly. RCFEs are licensed by the Community Care Licensing Division of the California Department of Social Services.
In 2015, then-Gov. Jerry Brown signed the Fair Day’s Pay Act, which aimed to combat wage theft in California. It barred companies with outstanding wage theft judgments from conducting business in the state.
But the state department in charge of licensing facilities for the elderly and disabled has not acted despite the unequivocal language of the Fair Day’s Pay Act.
“The law says if you have an unpaid judgment, you can’t conduct business in the state,” said Gideon Baum, the consultant who analyzed the bill for the Senate Labor and Industrial Relations Committee before it became law in 2016. “I think the law can’t be any clearer. Given that these are licensed by the Department of Social Services, the agency should be enforcing the law.”
However, it has not been enforcing the law.
According to a 2019 Reveal report, the Department of Social Services received the names of residential care facilities that have not paid wage theft judgments from the state labor commissioner’s office. But Reveal found the department ignored the information and permitted the companies to continue to operate despite their outstanding wage theft judgments and the clear language of the Fair Day’s Pay Act. Meanwhile, workers are not paid the money they are owed.
The Department of Social Services takes the position that it can only revoke a license if there is a health and safety violation. However, the failure to pay wage theft judgments is a public health issue because workers who do not receive their pay cannot afford medical care, purchase food or pay rent.
The Department of Social Services is not the only state agency with the power to shut down a care home if the owner has not paid a wage theft judgment. The labor commission also has the power to issue stop orders to companies with unpaid wage theft judgments, ordering them to shut down. Care home owners are more likely to pay wage theft judgments if they fear that they will be ordered to shut down.
However, the labor commissioner cannot issue stop work orders and shut down a facility if it will imperil public safety or the life, health and care of vulnerable individuals.
Advocates argue that the failure to issue a stop work order itself imperils the life, health and care of residents.
“If caregivers aren’t paid fairly and they’re exhausted, that can present risks to residents and their care and safety,” said Chris Murphy, former executive director of Consumer Advocates for RCFE Reform, a San Diego organization for consumers researching long-term care.
In order to combat the rampant wage theft in the care home industry, state lawmakers must convene a hearing and require more accountability from the Department of Social Services and an explanation of why the agency refuses to act despite the clear language of the statute. Lawmakers must require the department to deny or revoke licenses when there are wage theft judgments in order to combat wage theft and incentivize the collection of judgments.
Additionally, lawmakers should amend existing state law to allow the labor commissioner to issue stop orders without conditions to care facilities.
Care home workers are predominantly women of color who do grueling work caring for patients who have Alzheimer’s, dementia and physical disabilities. Many caregivers work around the clock without proper pay, adequate sleeping facilities or sufficient sleep. These essential workers must not be denied the wages they have earned because of the intransigence of government agencies.
San José Spotlight columnist Ruth Silver Taube is supervising attorney of the Workers’ Rights Clinic at the Katharine & George Alexander Community Law Center, supervising attorney of the Santa Clara County’s Office of Labor Standards Enforcement Legal Advice Line and a member of Santa Clara County’s Fair Workplace Collaborative. Her columns appear every second Thursday of the month. Contact her at [email protected].
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