Effective January 1, the state’s minimum wage increased from $9 to $10 an hour. But, not all workers in the state benefited from that minimum wage increase.

It’s legal in California to pay some workers less than the minimum wage. As CalWatchdog.com has reported for years, a Depression-era loophole in federal law, Section 14 (c) of the Fair Labor Standards Act of 1938, allows employers to obtain a special wage certificate to pay workers with disabilities less than the minimum wage.

Critics say that the law allows for the legal exploitation of people with disabilities, creates a separate system of worker rights for the disabled and is “humiliating,” “degrading” and makes people with disabilities feel like “second-class citizens.”

A 2012 CalWatchdog.com investigation first reported that five California-based Goodwill charities used the special wage certificate program to pay hundreds of employees less than minimum wage, while also providing lucrative compensation packages to top executives.

“Anyone who believes that all work is dignified and all workers deserve fair treatment, has to be outraged by these practices,” Lorena Gonzalez, then secretary-treasurer of the San Diego-Imperial Counties Labor Council, told CalWatchdog.com in 2012.

Assemblywoman Lorena Gonzalez leads on minimum wage equity

Now a member of the state Legislature, Gonzalez is doing something about that injustice — by advancing legislation that would end the practice completely in California.

Assembly Bill 488 would eliminate an exemption for employees of sheltered workshops and rehabilitation centers with special minimum wage licenses under the California Fair Employment and Housing Act, extending the law’s protections against discrimination and harassment to workers in those environments.

“This bill guarantees these employees the same civil rights that all other workers, including interns, already receive,” Gonzalez said. “There’s no reason these workers should receive less protection from discrimination or harassment on the job.”

On Wednesday, the Assembly Committee on Labor and Employment passed AB488 on a 5-0 vote. Republican Assemblyman Matthew Harper of Huntington Beach joined Democratic Assembly members Roger Hernández of West Covina, Evan Low of Campbell, Kevin McCarty of San Diego, and Tony Thurmond of Richmond in backing the bill.

Goodwill Industries: Biggest Name in Special Wage Program

In recent years, Goodwill Industries has become the poster-child for exploitation of workers with disabilities. More than 100 Goodwill entities nationwide have employed workers through the Special Wage Certificate program. A 2013 Watchdog.org investigation revealed that these same Goodwill entities that use the special wage program simultaneously spent $53.7 million in total executive compensation.

“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. Other supporters of the special wage certificate program contend that people with disabilities are not as productive as able-bodied individuals.

However, labor experts dispute those claims. Samuel R. Bagenstos, a professor of law at the University of Michigan Law School and a former deputy attorney general for civil rights, has detailed numerous examples of how workshop employers automatically assigned jobs “without any connection to the abilities and background of the individuals.”

In 2014, Gonzalez and State Senator Ben Hueso introduced Assembly Joint Resolution 36 to increase pressure on Congress to repeal the Depression-era law.

“Congress should phase out the use of the Special Minimum Wage Certificate provision and eventually repeal Section 14(c) of the 1938 Fair Labor Standards Act,” the resolution states.

Under Section 14(c) of the Fair Labor Standards Act of 1938, employers can apply for a special wage certificate that allows them to hire people with disabilities at a sub-minimum wage. Critics say that the law allows for the legal exploitation of people with disabilities and creates a separate system of worker rights for the disabled.

Gonzalez: Legislature’s leading advocate for workers

In October 2012, CalWatchdog.com first reported that five California-based Goodwill charities paid hundreds of employees less than minimum wage, while providing lucrative compensation packages to top executives. At that time, Gonzalez first expressed interest in the issue that affects more than 300,000 workers nationwide.

“I believe all workers deserve a minimum wage and all work has dignity,” said Gonzalez, the Legislature’s leading advocate for workers. “When I read stories about this Depression Era program, I knew we wanted to do something. However, since it is a federal program, we were limited in how we could help make change.”

Dr. Marc Maurer, president of the National Federation of the Blind, applauded the resolution.

“Assemblywoman Gonzalez’s courageous action today is a great step in the right direction for the California Assembly,” he said.  “The National Federation of the Blind commends Assemblywoman Gonzalez for recognizing the value of workers with disabilities and encouraging Congress to repeal this antiquated law.  We urge the California Assembly to finish the work Assemblywoman Gonzalez has started by passing AJR 36.”

Last November, as the National Federation of the Blind and Autistic Self Advocacy Network announced that more than 170,000 people had signed its Change.org petition, Gonzalez was quietly gathering support among her colleagues. Hueso, a fellow San Diego Democrat, shared Gonzalez’s concerns about what he sees as a “civil rights issue.”

“Retracting the Special Minimum Wage Certificate provision of the federal Fair Labor Standards Act is necessary to ensure equal rights for people with intellectual and developmental disabilities,” said Hueso. “This is a civil rights issue. As legislators, it is our responsibility to ensure that there is no disparity in the workforce.”

Goodwill Industries: Most well-known sub-minimum wage employer

In recent years, Goodwill Industries has become the poster-child for exploitation of workers with disabilities. More than 100 Goodwill entities nationwide employ workers through the Special Wage Certificate program. Last year, a Watchdog.org investigation revealed that these same Goodwill entities that use the special wage program simultaneously spent $53.7 million in total executive compensation. A month after the Watchdog.org report, an NBC investigation repeated the same findings.

“It has been widely documented that many of the organizations which employ disabled persons are in financial situations that would enable them to pay minimum wage to all of their disabled employees, evident in the high compensation packages paid to their executives,” the legislative resolution states. 

Goodwill uses the special minimum wage exemption to take advantage of 7,300 of its 105,000 employees. The organization says that it performs routine productivity tests in compliance with the law. Gonzalez’s resolution describes this “singling out of disabled workers given that the general workforce is not subjected to standards of timed productivity, the time study practice to determine wages is both inconsistent and unfair.”

“We at least want to bring attention to what we think is an outdated policy and start a discussion about the value of disabled workers,” said the former secretary-treasurer of the San Diego-Imperial Counties Labor Council.

“With 80 percent of working age adults with disabilities in our country not participating in the workforce currently, we believe that it’s important to explore more types of opportunities,” Brad Turner-Little, the director of mission strategy at Goodwill International Inc., has repeatedly said in public statements on the issue. “The special minimum wage certificate is a tool to create employment for people with disabilities. It’s not the only tool.”

For more about Goodwill Industries and sub-minimum wage, check out the complete Goodwill Investigation.

Disability advocacy groups throughout the country are planning a sizeable delivery to Goodwill Industries today. But, instead of secondhand clothing or gently-used goods, the disability rights groups will be dropping off thousands of signed petitions from citizens who are demanding that the nonprofit clean up its labor practices.

More than 100 Goodwill entities nationwide employ workers through the Special Wage Certificate program, a Depression-era loophole in federal labor law that allows organizations to pay subminimum wages to people with disabilities. In May, a Watchdog.org investigation revealed that these same Goodwill entities that use the special wage program simultaneously spent $53.7 million in total executive compensation.

In an effort to increase public awareness of Goodwill’s labor practices, the National Federation of the Blind and Autistic Self Advocacy Network sponsored a Change.org petition, which has gathered more than 170,000 signatures. The organizations will be delivering petitions to Goodwill headquarters and stores in Sacramento, CA; Providence, RI; New York, NY; Corpus Christi, TX; Rockville, MD; and Seattle, WA.

Fight

“Over 170,000 Americans have joined us in our fight to ensure that workers with disabilities are paid a fair wage,” Dr. Marc Maurer, president of the National Federation of the Blind, told CalWatchdog.com. “We thank all those who signed the petition for standing up to Goodwill and urging the retailer to end its unfair and immoral payment of subminimum wages to disabled workers.”

Under Section 14 (c) of the Fair Labor Standards Act of 1938, employers can apply for a special wage certificate that allows them to hire people with disabilities at a subminimum wage. Nationally, more than 300,000 workers are subject to the law. Goodwill uses the special minimum wage exemption to take advantage of 7,300 of its 105,000 employees.

In California, five organizations use the special wage certificate: 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.

Goodwill says that the subminimum wage program is a tool for helping the disabled.

“With 80 percent of working age adults with disabilities in our country not participating in the workforce currently, we believe that it’s important to explore more types of opportunities,” Brad Turner-Little, the director of mission strategy at Goodwill International Inc., has repeatedly said in public statements on the issue. “The special minimum wage certificate is a tool to create employment for people with disabilities. It’s not the only tool.”

However, that argument doesn’t sit well with petitioners. “This is disgusting info!” wrote Jeanne Green of Riverside, who signed the petition and added her own comments. “It is 2013, for Heaven’s sake!! WHY hasn’t this OLD-OUTDATED pay scale been challenged before now?”

For some signers, it’s more personal. “I have signed the petition as the proud mother of a son with autism,” said Amy Mais, a neighborhood activist, who has battled Goodwill’s bin bullying tactics in Phoenix.

The organizations hope that the public awareness campaign will increase support for federal legislation to end the controversial policy. Rep. Gregg Harper, R-Miss., has introduced the Fair Wages for Workers with Disabilities Act of 2013, to close the subminimum wage loophole.

“The 170,000 people who have put their name to this petition show the broad scope of the outrage against Goodwill’s unfair and unethical practice of paying thousands of disabled workers less than minimum wage,” said Ari Ne’eman, president of the Autistic Self Advocacy Network, a co-sponsor of the petition drive. “We urge Goodwill to hear these voices and reconsider this discriminatory practice.”

Compensation

According to the May 2013 Watchdog.org investigation, Goodwill of Southern California paid more than $1.1 million in total compensation to its then-CEO, making him the highest paid Goodwill executive in the country. The following month, an NBC investigation of Goodwill repeated the findings.

Last year, CalWatchdog.com first reported that five California-based Goodwill charities pay hundreds of employees less than minimum wage, while providing lucrative compensation packages to top executives. While the organization cries poor when it comes to workers’ wages, it has no problem spending money on online advertisements defending its labor practices.

Earlier this year, Google searches for “Goodwill worker wages,” “Goodwill wages,” “Goodwill pay,” and “Goodwill disabled,” all produced a sponsored ad, paid for by Goodwill, in the top search result.

By John Hrabe

If you’ve started your spring cleaning, or are in desperate need of a last-minute tax deduction, there’s probably a pile of clothes in your house marked for charity. Now you’ve just got to remember to drop it off at a donation bin before April 15.

That task could soon get more difficult, thanks to a proposal by a Central Valley lawmaker, who is looking to impose new state regulations on secondhand donation bins.

For the second year in a row, state Sen. Cathleen Galgiani, D-Stockton, has introduced legislation at the behest of Goodwill Industries that would authorize local governments to adopt ordinances regulating the placement and removal of donation boxes.

The legislation is a mixed bag for property owners. For bins that have been placed without the property owner’s consent, the bill would grant the owner civil immunity for any damages in removing the unauthorized bins. However, if the property owner changes their mind and removes a bin that was previously authorized, the property owner could be slapped with a $1,000 fine if they fail to follow the bill’s notification and removal provisions.

Assemblywoman Kristin Olsen, R-Modesto, a co-author of S.B. 450, told CalWatchdog.com that the bill will better protect property owners and provide a legal method for removing unwanted bins.

“My interest is property rights,” Olsen said. “This is a reasonable measure that is about respecting the rights of property owners and businesses.”

Olsen expressed concerns that, under current law, property owners could be held civilly liable for removing unauthorized bins on their property. But some charitable organizations say that the bill’s new regulations are unnecessary. They say the bill is an effort by Goodwill Industries to shut them out of the secondhand clothing market.

Property owners

“Property owners aren’t asking for the protections in this bill,” said Jonathan Franks, a spokesman for a coalition of organizations that are fighting the new regulations. “It’s a bold-faced, anti-competitive measure fronted by a team of lobbyists and political consultants.”

Franks describes the bill as Goodwill’s “attempt to corner the clothing donation market and make more money.” In 2011, Goodwill Industries generated nearly $3 billion of its $4.4 billion in annual revenue from its secondhand clothing stores. Goodwill would benefit from collection bin regulations because it commonly uses larger tractor-trailer donation centers, the bill’s critics say. Smaller charities, on the other hand, use smaller bins, and therefore must go through the bureaucratic process for each location.

“It’s really unfortunate that Goodwill has devoted so much money to a statewide attempt to make it impossible for legitimate charities like D.A.R.E. and Planet Aid to place clothing donation boxes in California,” Franks said. “We believe Californians should have the right to choose the cause they donate to, and it’s unfortunate that Goodwill doesn’t share that position.”

John Lindsay, vice-president of development for D.A.R.E. America, expressed similar concerns last year when Gov. Jerry Brown vetoed another Galgiani-authored donation regulation bill. Lindsay said it’s not always easy to obtain permission from the property owner compared to the lessee or primary business.

“Many properties are owned by large corporations and companies,” Lindsay told us last year. “Actually obtaining the written permission of the ‘property owner’ vs. permission from the agent or lessee are two different things.”

CalWatchdog.com asked Olsen to address the concerns raised by smaller charities. She said she would be open to amendments in order to make sure that “fantastic organizations like D.A.R.E. are able to raise money.”

“I do believe the author’s intent is to be collaborative — to make sure that it’s effective for everyone,” she said.

Bad will from Goodwill

The 800-lb. pound gorilla in the secondhand clothing market, Goodwill has pushed for more government regulations of donation bins, including an annual donation registration fee. Last year, Goodwill unsuccessfully backed an Oakland ordinance that would have “imposed an annual fee of $450 per box, included a cap on the number of bins citywide (60) and per vendor (15), and would have imposed fines on organizations for boxes that aren’t maintained or are without permits.”

The organization has also come under fire for exploiting a loophole in federal wage laws that allows it to pay some disabled workers less than the federal minimum wage.

Last year, a CalWatchdog.com investigation revealed that five California-based Goodwill charities pay hundreds of employees less than the minimum wage, while providing lucrative compensation packages to top executives. 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 compensation was $356,000 a year.

These same organizations paid some disabled employees less than the federal minimum wage. In Orange County, 595 Goodwill employees work an average of 20-30 hours per week for less than minimum wage.

“I have nothing but positive things to say about the mission of Goodwill, but their tactics over the last few years are despicable,” Lindsay, vice-president of development for D.A.R.E. America told CalWatchdog.com last year. “They should be ashamed that they feel the need to use their clout to squeeze out their competition in such a manipulative manner.”