Five Calif. Goodwill charities pay employees less than minimum wage

Oct. 3, 2012

By John Hrabe

Five California-based Goodwill charities pay hundreds of employees less than minimum wage, while providing lucrative compensation packages to top executives, a investigation has found.

In 2010, the five CEOs of Goodwill Industries of Sacramento Valley & Northern Nevada, Goodwill of Silicon Valley, Goodwill Industries of Orange County, Goodwill Industries of San Diego County and Goodwill Southern California earned a combined $1.78 million in total compensation. The average executive took home nearly $30,000 per month in pay and benefits. It would take a minimum wage employee more than 23 months to earn the same amount. But, some Goodwill employees don’t even earn the minimum wage.

The practice of paying sub-minimum wages is legal thanks to a little-known loophole in federal labor law.

“Section 14(c) of the Fair Labor Standards Act authorizes employers, after receiving a certificate from the Wage and Hour Division, to pay special minimum wages — wages less than the Federal minimum wage — to workers who have disabilities for the work being performed,” the Department of Labor explains on its website.

Goodwill justifies the practice as a tool to hire people with severe disabilities, who would otherwise be unable to find work.

“The Special Minimum Wage Certificate allows employers to pay a commensurate wage to people whose disabilities significantly impair their ability to obtain remunerative work,” said Katherine Ransom, senior director of marketing and communications for Goodwill of Orange County, the only local organization to comment on the practice. “At the heart of this commensurate wage provision is the idea of providing people with significant disabilities the opportunity to earn a comparable wage based on productivity — using the benchmark of a person performing the same duties, who does not have a disability.”

Disabled Groups Call Policy “Appalling”

Disability advocates and labor leaders don’t think that should make any difference.

“It is appalling that organizations that purport to assist workers with disabilities in job training, would hold them back by circumventing the standard of living that minimum wage provides other American workers,” Andy Voss, president of the Autistic Self Advocacy Network of Sacramento, explained to me via email.

In August, Voss’ group organized a protest of Goodwill Industries of Sacramento Valley & Northern Nevada, which according to its most recent tax returns, paid its CEO Joseph Mendez $376,317 in total compensation. A dozen people from the Autistic Self Advocacy Network of Sacramento, Capitol People First, South Area People First and the Supported Life Institute took part in the Sacramento protest, which was a part of a nationwide campaign sponsored by the National Federation of the Blind.

Noticeably absent from the Goodwill protests were any members of the state’s powerful labor unions, which routinely condemn private companies for excessive executive compensation. One influential labor leader said that she simply had “no idea” that Goodwill paid its employees less than minimum wage.

“Goodwill Industries has a noble mission; but, by undercutting the value of differently abled workers, they are doing a disservice to the very people they claim to be helping,” said Lorena Gonzalez, secretary-treasurer of the San Diego-Imperial Counties Labor Council, who was unaware of a San Diego area protest of Goodwill. “Anyone who believes that all work is dignified and all workers deserve fair treatment, has to be outraged by these practices.”

Goodwill Industries International Inc., the parent organization for all of North America’s charitable affiliates, confirmed that 7,300 employees nationwide are employed under the special minimum wage program. It is unclear how many Californians are subjected to Goodwill’s low-wage policy because most of the offending nonprofits did not respond to’s email requests.

Goodwill of Orange County: $4.65 Average Hourly Wage for 595 Goodwill Employees

In Orange County, 595 Goodwill employees work an average of 20-30 hours per week for less than minimum wage, a spokeswoman confirmed.

“Our average commensurate wages is $4.65 per hour,” Ransom said, referring to the Department of Labor’s far-more innocuous phrase. “And again, this tool is used primarily for individuals facing multiple, significant disabilities.”

Based on Goodwill’s figures, it would cost between $2-3 million to pay all of its employees a minimum wage. That comes out to about 3 percent of the charity’s $90 million in annual revenue. Goodwill of Orange County, according to its mission statement, “provides services for people with disabilities and other barriers in the local community.”

In 2010, the organization paid its president and CEO Dan Rogers $265,388 in total compensation, the lowest of the five California Goodwill entities that pay sub-minimum wages. According to tax returns for the same year, the charity also spent $1.4 million in overall executive compensation for key employees and managers, another $1.4 million in travel expenses and $338,059 in expenses for conferences, conventions and meetings.

“We ensure that we are able to attract and retain talented and experienced managers who can effectively lead a $90 million organization,” Ransom, Goodwill of Orange County’s spokeswoman, said in defense of the group’s executive compensation.

Goodwill of Southern California: CEO Pay More Than $500k in 2010

Just a few miles up the freeway, Goodwill of Southern California similarly pays some workers pennies and executives top dollar. Sasha Itzikman, vice president of marketing & community relations for Goodwill Southern California, was unable to confirm how many employees are subject to the special sub-minimum wage program. However, Itzikman said that she was working with the charity’s HR department to “recover accurate data.”

In 2010, the $130 million nonprofit organization accepted more than $9 million in government funds and paid executives more than $2.7 million in compensation. Then-president and CEO Doug Barr, who retired in July 2012, was the highest paid Goodwill executive in California. He earned $507,898 in total compensation in 2010. The same year, the charity spent $1.86 million in travel expenses, $358,452 in conferences, conventions and meetings, and $23,412 in lobbying fees.

On its federal tax-exempt forms, Goodwill of Southern California explains its charitable mission is “transforming lives through the power of work.”

Goodwill Industries of San Diego and Santa Clara Counties

Goodwill Industries of San Diego County did not respond to’s request for comment. However, the North County Times’ Morgan Cook reported last month that 81 of the charity’s employees are paid less than minimum wage. “The lowest-paid worker in the county made $3.32 an hour, at a recycling center in San Diego,” the North County Times reported.

It is unclear how much it would cost the San Diego charity to pay its entire workforce a minimum wage. Assuming all 81 sub-minimum wage employees worked full-time at the $3.32 hourly rate, the amount would not exceed three quarters of a million dollars, which is less than the charity’s executive compensation and travel expenses.

In 2010, CEO Michael Rowan’s hourly compensation was 42 times more than the pay of the lowest-paid employee. His $282,295 in total compensation, which included a $50,000 bonus, was part of the $838,478 the charity paid out in executive compensation. The nonprofit spent $1.28 million in travel expenses that year.

Goodwill of Santa Clara County, which also goes by Goodwill of Silicon Valley, did not respond to’s request for information on its exploitation of its disabled employees. In 2010, CEO Michael Fox earned $241,031 in base pay and another $80,000 in bonuses. His total compensation package was worth $344,754, according to the organization’s most recent tax return.


Write a comment
  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 3 October, 2012, 12:51

    Hey, the top losers winning while the bottom victims are destroyed, from Goodwill no less.

    Teddy Steals is probably CEO, this sounds like one of his scams.

    Reply this comment
    • Jadestonegirl
      Jadestonegirl 29 June, 2017, 14:58

      Out boating, on the Sacramento River, yesterday afternoon with a girlfriend & couldn’t help noticing a GOODWILL FLAG adorning the bow of a lovely yacht in her Marina of Miller Park. Apparently it belongs to one of the local Goodwill executives!

      Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 3 October, 2012, 13:25

    Since when are you a labor expert. Back to your bunker please!

    Reply this comment
  3. SeeSaw
    SeeSaw 3 October, 2012, 15:53

    Such lengthy chasms between management and rank and file, are not found in just the public sector–looks like its far worse in the private sector. (At lease public sector workers get decent hourly wages.) Shame on Goodwill! Makes me want to throw my discards in the trash, instead.

    Reply this comment
  4. The Africanized Swarm of Ted Steele System
    The Africanized Swarm of Ted Steele System 3 October, 2012, 16:05

    Let the free market dictate wages.LOL——— the poor 47%…….Mitt cares!

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 3 October, 2012, 16:09

    Why do free market righties want to REGULATE wages?

    Bad bad bad bad boys!

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 3 October, 2012, 16:10

    “Such lengthy chasms between management and rank and file, are not found in just the public sector…”
    No kidding seesaw, that’s because NO ONE in the public sector makes minimum wage with no benefits-so it would be IMPOSSIBLE to find that, in fact many HS educated rank and file cops and Firewhiners make what the CEO of Goodwill pulls down.

    Reply this comment
  7. Rex the Wonder Dog!
    Rex the Wonder Dog! 3 October, 2012, 16:12

    The Africanized Moron named Ted Steals says:
    Let the free market dictate wages.LOL——— the poor 47%…….Mitt cares

    Troughie, if the free market applied to gov employees 80%+ would be making minimum wage with no benefits.

    Reply this comment
  8. goat daddy
    goat daddy 3 October, 2012, 16:37

    many of the workers are severly retarded. They cannot commpete in a free market enviroment. Some are alcoholics who would be fired for poor work attendance. the process allows many who would not otherwise work to make a little money. Its a good practice

    Reply this comment
  9. The Africanized Swarm of Ted Steele System
    The Africanized Swarm of Ted Steele System 3 October, 2012, 17:05

    hmmm sounds like Mr. Rex Poodle has some jealousy issues towards gov workers! How sad!

    Reply this comment
  10. Ulysses Uhaul
    Ulysses Uhaul 3 October, 2012, 19:58

    Poodle is conflicted….sad

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 3 October, 2012, 21:57

    Minimum wage Teddy- that is your market value, less for your uhaul gimmick account 😉

    Reply this comment
  12. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 October, 2012, 08:22

    Actually Teddy, minimum wage is above your market value, in the work place you would be a major liability b/c of your negativity and propensity to lie, and not white lies either, but WHOPPER lies 😉

    Reply this comment
  13. Max the Hippo
    Max the Hippo 4 October, 2012, 09:59

    Why is this bad? Would it be better if Goodwill wasn’t able to offer these people the opportunity to work at all? Why was this article even written?

    Reply this comment
  14. Tom
    Tom 4 October, 2012, 10:10

    Another great article John,
    I know you concentrate on California stuff, but you might be interested to know that John L Miller of Goodwill Industries of Southern Wisconsin mad $921,916 in wages and compensation according to that organization’s Form-990 in 2010. His brother, Michael Miller, who runs Goodwill Industries of the Columbia Willamette in OR, made “only” $719,147. The poor guy needs a raise so he can hang out with his brother on the yacht without being embarrassed.
    No, honestly Goodwill is supposed to be a charity. Charities should not pay CEOs such ridiculous salaries. Charities should pay living wages to their employees whether they are handicapped of not.
    Goodwill writes on their home page “Together we are changing lives and giving back to the community”. Well, they don’t. Goodwill does not send money overseas to poor people in Latin America or Africa, so why don’t they pay the handicapped living wages, since that is their tax exempt program?

    Reply this comment
  15. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 October, 2012, 15:04

    United Way does the same thing…………………………

    Reply this comment
  16. The Africanized Swarm of Ted Steele System
    The Africanized Swarm of Ted Steele System 4 October, 2012, 15:29

    like ZERO the Poodle ™ knows !

    oh my!

    Reply this comment
  17. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 October, 2012, 16:46

    Below minimum wage is your market value Teddy Steals!

    Reply this comment
  18. Ulysses Uhaul
    Ulysses Uhaul 4 October, 2012, 17:09

    Poodle will you ever grow up?

    Reply this comment
  19. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 October, 2012, 18:36

    Te3ddy, I own you 😉

    Reply this comment
  20. Ulysses Uhaul
    Ulysses Uhaul 4 October, 2012, 21:30

    Queeg back on Sunday from the Deadwood fundraiser to put Obama on Mt. Rushmore.

    Reply this comment
  21. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 October, 2012, 23:00

    Teddy-I look forward to Queeg, I am about to Kill Uhaul 😉

    Reply this comment
  22. us citizen
    us citizen 5 October, 2012, 11:19

    Do these employees get compensation from the state also? Just wondering.

    Reply this comment
  23. Collateral Damage
    Collateral Damage 14 March, 2013, 01:26

    “transforming lives through the power of work” should be changed to “destroying lives through favoritism and unethical behavior”.
    “Badwill Southern California”..

    Reply this comment
  24. MoShood Daniels
    MoShood Daniels 4 June, 2014, 16:42

    Goodwill promised to give a $100 gift card for perfect attendance for a year after the year was up they did not pay because funds were low.

    Reply this comment
  25. tim bennett
    tim bennett 5 January, 2015, 18:49

    goodwill industries should be called greedwill that’s what they are greedy self centered scrooges they don’t care about the disabled/non disabled they pay them pennies per hour and make six to seven figure salaries for themselves tell the ceo’s of this so called non profit charity or for profit charity and so called sheltered workshops to pay minimum wage or higher not subminimum wages which equal slavery

    Reply this comment
  26. Scary
    Scary 25 October, 2017, 00:48

    Goodwill has their hands too far in the cookie jar…most non profits don’t get the pay backs from government these guys do….they are way to close to government.

    Reply this comment

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