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FL: Goodwill execs get big bucks while some workers 22-cents an hour

By   /   September 12, 2012  /   24 Comments

By John Hrabe | Special to Florida Watchdog

CHEAT?: Goodwill pays some of its workers 22-cents an hour, and it’s perfectly legal.

TALLAHASSEE — Top executives for three Florida-based Goodwill charities take home six-figure salaries while simultaneously paying some employees less than the federal minimum wage, a Florida Watchdog investigation has found.

And the practice of paying employees as little as 22-cents an hour is perfectly legal, thanks to an obscure Depression-era labor loophole.

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.

Three Goodwill Florida affiliates — Goodwill Industries of Central Florida, Inc., Goodwill Industries of South Florida, Inc. and Goodwill Industries of the Suncoast, Inc. — have taken advantage of the obscure law and applied for the exemption.

Goodwill’s nonprofit charitable tax exemption is premised on their programs to help people with physical or mental limitations “achieve their full potential through the dignity and power of work.” The Florida affiliates of the secondhand clothing syndicate referred questions about the exemption to the organization’s national headquarters.

Brad Turner-Little, director of mission strategy at Goodwill International, Inc., defended the practice as one of Goodwill’s “tools” to help the disabled. Nationally, the organization uses the special minimum wage exemption for approximately 7,300 of its 105,000 employees.

“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,” Turner-Little told Florida Watchdog. “The special minimum wage certificate is a tool to create employment for people with disabilities. It’s not the only tool.”

That’s not how advocates for people with disabilities see it.

“Goodwill Industries is one of the most well-known charitable organizations in the United States, but most members of the general public are unaware that Goodwill exploits people with disabilities,” said Marc Maurer, president of the National Federation of the Blind, which has organized a nationwide protest of offending Goodwill organizations. “We are conducting informational protests to make the public aware of this practice that, although sadly still legal, is unfair, discriminatory, and immoral.”

These Goodwill organizations that pinch pennies with disabled employees simultaneously spend big money on lucrative compensation packages for top executives.

Goodwill-Suncoast: CEO pay topped $637k in 2010

In 2011, Goodwill Industries-Suncoast Inc., paid its president and CEO, R. Lee Waits, a compensation package worth $440,197. The generous benefits included $308,015 in base pay, $79,768 in bonuses, $31,907 in retirement benefits and $20,456 in other nontaxable perks. In place of Waits’ compensation package, Goodwill could have hired more than 30 employees for a year and paid each the federal minimum wage.

Shockingly, Waits took a pay cut in 2011. The prior year he collected more than $637,452 in total compensation, according to the organization’s federal tax forms for 2010.

The Suncoast branch, which listed “vocational training for disabled/disadvantaged” as its only mission, spent more than $1.3 million in compensation for officers, directors and key employees, $1.2 million on travel expenses and $26,000 in lobbying expenses in 2011. It didn’t have the money to pay all of its employees just $14,500, the annual salary of a minimum wage employee.

Goodwill Industries of South Florida: $1 million in travel expenses

Goodwill Industries of South Florida, Inc., which collected $737,672 in government grants in 2010, paid its CEO Dennis Pastrana$316,685 in total compensation.  His base salary was nearly 21 times greater than the federal wage floor, which Goodwill Industries of South Florida refuses to pay its workers.

PASTRANA: He’s earning the big bucks.

In addition to Pastrana’s executive compensation package, five other high-ranking executives earned six-figure salaries in 2010, the most recent year for which tax documents were publicly available. The organization spent more than $1million in travel-related expenses and $63,000 in lobbying fees.

Goodwill Industries of Central Florida, Inc., the smallest of the three Goodwill organizationss, pays its president, William G. Oakley, the lowest salary. Last year, he lived on a meager $206,287 in total compensation. Oakley’s predecessor fared much better.

In 2010, when Goodwill Industries of Central Florida, Inc. accepted $628,476 in government grants, outgoing president and CEO Richard L. Coleman walked away with $393,001 in total compensation.

Florida Goodwill tight-lipped about executive pay

Florida Watchdog asked the three Goodwill organizations to justify paying their top executives six-figure salaries, while simultaneously paying some workers less than the minimum wage. Goodwill Industries-Suncoast did not respond to emails.

Lourdes de la Mata-Little, vice president of marketing for Goodwill Industries of South Florida, referred questions to a national spokesperson. Goodwill Industries of Central Florida was the only Florida organization to respond to questions about its executive compensation.

“I cannot answer your question about Mr. Coleman’s compensation as I was not an employee of Goodwill Industries of Central Florida at the time,” Oakley, president and CEO of Goodwill Industries of Central Florida, Inc. wrote in an email. “The board and I reached an agreement for my services.”

Even Oakley wouldn’t respond to questions about the sub-minimum wage policy.

“As you have been in touch with Goodwill Industries International, our organization is in harmony with respect to Section 14c with Goodwill Industries International,” he said.

Goodwill International defends CEO pay

The Florida affiliates in question seem to have taken the lucrative executive compensation playbook straight from Goodwill Industries International, the parent company. In 2010, the organization paid its president and CEO James Gibbons more than half a million dollars.

“Goodwill’s core mission is to help people reach their full employment potential, regardless of what that level might be,” said Tommy A. Moore, Jr., Goodwill Industries International’s board chair. “The board goes through a rigorous process to determine his compensation based on the impact of his leadership, strategic goals and performance.”

Moore, who also serves as chairman and CEO of First Investors Financial Services Group Inc., said “The president and CEO received a favorable review based on his results and his service to the Goodwill network, including the more than 4 million people with disabilities and disadvantages that Goodwill serves in the United States and Canada as well as 14 other countries.”

A spokeswoman for Goodwill said that the top executive’s performance review is conducted on an annual basis.

Sub-minimum wage employees review process more intensive than CEOs

While the president of Goodwill International is reviewed on an annual basis, employees who are paid pennies an hour must go through an extensive review process every six months, and sometimes even more frequently.

“It’s a fairly lengthy process,” Turner-Little said of the sub-minimum-wage employee review process. “Every six months, an individual who is paid under a special wage certificate, their productivity has to be assessed at least every six months. Often times, employers will do it more frequently than that. And all that has to be documented and made available to the Department (of Labor) if they need to see it.”

The employee evaluations are just one component of a lengthy administrative process required by the Department of Labor in order for an organization to maintain its minimum wage exemption.

After Goodwill has surveyed at least three companies for comparable wage information data, the organization must evaluate individual employees.

“They have to outline their individual productivity assessment process for the jobs that are going to be paid under the special minimum wage certificate and that has to be done both for service-type jobs as well as piece rate work- so hand assembly type work, making a product as well as providing a service,” Turner-Little said. “Then, (they) have to outline what their time-study process is going to be, all of that is contained in the application process.”

Work center certificates, the type Goodwill says it uses, can only remain in effect for two years. Then, the process starts over again, but not without adding all the previous data to the new Department of Labor application.

“Prior to the certificate running out, then they have to go through a reapplication process, with all of that information again, as well as all the data. If they have had the certificate in the past, the use of that certificate, the number of employees, the types of jobs that were performed, and provide evidence to the department that they have implemented the certificate in compliance with expected regulations,” Turner-Little said.

Goodwill’s description of the lengthy federal exemption process is confirmed by an expert in disability law. In opposition to the federal minimum-wage exemption loophole, Peter Blanck, a law professor at Syracuse University and chairman of the Burton Blatt Institute, a civic organization dedicated to advancing the lives of the disabled, wrote, “The section incorporates substantial procedures that must be met by the rehabilitation agency before subminimum wage payments are authorized.”

Which begs the question, why is Goodwill spending so much time and money on paperwork in order to obtain federal permission to pay its workers pennies an hour?

Goodwill wouldn’t answer that question or tell Florida Watchdog whether pricey lawyers tackled the bureaucratic nightmare. The organization stuck to its talking points defending the exemption certificate.

Stearns’ bill would end “deplorable” practice

U.S. Rep. Cliff Stearns

Disability advocates have support on Capitol Hill from U.S. Rep. Cliff Stearns, R-Ocala, who has introduced legislation to stop the “deplorable” practice.

“It is deplorable and wrong in America that these not-for-profit centers would hire people with disabilities, including the visually impaired, and pay them less than $1 an hour,” said Stearns, R- Ocala, when he introduced H.R. 3086 last year with his primary co-author, U.S. Rep. Tim Bishop, D-New York.

Eighty-one members of Congress have signed on as co-authors, but the bill has stalled in the House Education and the Workforce Committee, chaired by U.S. Rep. John Kline, R-Minn.  Unless it is taken up soon, Stearns’ office says it will have to be reintroduced in the next Congress.

“I offered H.R. 3086, the Fair Wages Act, with bipartisan support to phase out the provision in the Fair Labor Standards Act that allows sub-minimum wage for disabled workers,” Stearns wrote to Florida Watchdog via email. “However, since the number of days in which the House will be in session is dwindling, if a hearing is not scheduled early this fall, the measure will likely be re-introduced in the new Congress.”

Businesses hold all the cards

Samuel R. Bagenstos, a professor of law at the University of Michigan Law School and a former deputy attorney general for civil rights, has written a case study for repealing the federal law.

“This situation is an invitation to paying individuals with disabilities in sheltered workshops less than they deserve under the law, and significantly less than they produce for their managers,” he wrote in “The Case Against the Section 14(c) Subminimum Wage Program.”

“Where basically all of the relevant information is in the hands of the sheltered workshop manager, the statutory appeals process can provide little counterweight.  And the process itself is fatally flawed — because it does not provide for attorney’s fees or opt-out classes — and is therefore rarely invoked.”

According to its federal charitable documents, Goodwill’s mission, its justification for tax exempt status, is to end employment barriers, “Goodwill Industries International enhances the dignity and quality of life of individuals, families, and communities by eliminating barriers to opportunity and helping people in need reach their fullest potential through the power of work.”

John Hrabe can be reached at johnrhrabe@yahoo.com

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Yaël has worked as a multimedia journalist in Philadelphia, Charlotte, Tampa, and Vienna, and his writings have appeared in the Washington Examiner, The Gaston Gazette, Reason Magazine, Sunshine State News, Wisconsin Reporter, and PanAmerican Post. He speaks four languages and his hometown is Saint-Hyainthe, Québec. His personal website is Yael.ca and his PGP key is available here.

  • Tom

    Thanks
    John, this article is very informative indeed. Having read it a couple of times
    I would like to point out that many other charities raise substantial funds to
    be used for development work in poor communities in the USA or in even poorer
    areas in developing countries (see www. interaction.org). Those charities pay
    regular wages to their employees, some of them operate used clothing stores and
    collections just as Goodwill and still they have plenty of money to fund
    development programs in poor communities where that is much needed. Where does Goodwill use its
    money? They do not send any of it to fight poverty overseas or to rebuild
    Detroit communities? Does it all go to compensate ruthless executives and to invest in Goodwill’s ever growing real-estate porfolio? How much of Goodwill’s wealth has gone into the stock market instead of in people helped? There seems to be a feudal culture in Goodwill where the
    rich executives just become richer by exploiting the already poor workers, who
    become even poorer.

    You
    write about lobbying. Do you know how much money Goodwill spends on lobbying,
    to keep that obscure
    Depression-era labor loophole open that allows Goodwill to pay sub-minimum wages?

  • http://www.facebook.com/george.r.harper George R Harper

    Sounds more like Sub Human then sub minimin wages

  • Sean Belgusi

    I will never donate to Goodwill again. There are other charities http://www.salvationarmyusa.org http://www.planetaid.org that pay their employees a fair wage.

  • Willieb

    Don’t give them grants if their CEO’s and presidents are going to claim the grants as their personal wages. With this being the case, it appears that Good Will along with some others are self sufficient.

  • http://www.facebook.com/victor.a.taylor Victor Allan Taylor

    One thing did not see in the article was the proof the $0.22/hr wage earners. All I saw was how much(disgustingly large amount) the CEO’s were making. If articles are to be written. Please be clear on what is being said. I hate the way some things get spun. NO SPIN ZONE!!!!!!!!!!

  • Mike

    This seems to be rampant across the US.-.Executive pay so far out of line vs the regular employee. But the fact that it is GOODWILL Industries?? that’s low…REALLY low.

  • http://www.facebook.com/grace.morris.16 Grace Morris

    You believe the executives are making the 6 figure salaries, but don’t believe that some employees are making 22 cents/hr…Why is that? Goodwill is not denying that they are using the loophole…it’s were clear what the article is saying…I’m not sure what you don’t understand? Are you a Democrat by any chance? That may explain it!!!!!

  • Bill T.

    I would like to know how much the support staff that helps the disabled workers is paid. These are workers that would otherwise not be needed in a regular retail environment. I would like to know how the lives of those people making the 20 cents an hour are improved or harmed. I don’t like the idea of taking advantage of anybody, but I need more facts about the quality of the lives involved. The CEO does make too much money, but compared to other CEO’s for non profits in the same size market, it isn’t outragiuos, just known, and a blemish on the reputation of Goodwill. I don’t think they realize how many customers and staff talk about his salary everyday at every Goodwill store.

  • tim

    the fair labor standards act of 1938 should be repealed they should not pay subminimum wages to the disabled and non disabled workers i worked at goodwill industries at 1235 south elm eugene street in greensboro nc for 34 days $1.00/hour i only made$335.10 after $8.48 was taken out 34 days of working there was a joke i quit after 34 days

  • june allen

    Goodwill has deal with Fed Ex and UPS that charge $12.-13. to mail a watch from their auction on line. Contacted them several times and they lie so easily.
    Why not pay their workers what they would save by using USPS ($3.10), instead.

  • Guest

    I have seen goodwill exploit people at great lengths.

  • Marilynn Reeves

    Goodwill has lost my donations as well as my business until ALL EMPLOYEES are Treated and PAID FAIRLY. Should be ashamed to take advantage of disabled people in anyway. All employees should be treated more like friends than slaves. After 35 years with the Post Office I can tell you 1st hand if you have a manager that cares about their people you have NO PROBLEMS. On the other hand if the manager is an ASSHOLE they have more problems than they can handle. Might be a good thing if Goodwill went UNION.

  • Bob

    How could any educated, or for that matter any individual not get this picture. These CEO’s are laughing all the way to the bank. Do you really think they care about taking advantage of the disable. Just look at how many years they have been doing this while taking advantage of all the people who donate. I for one thank the whistle blowers for exposing this. I, and all my friend who are hearing about this will never donate again. This country and its politician can change this. The bill is sitting and only needs to be introduced and voted on. BUT I would bet the lobby from these CEO’s is to great is resist. They will be enjoying their new cars and resigning with a compansition package that would choke a horse. Do you really think they care!!!!!!!!!!!!!

  • TheRecusant

    Remember that this is occurring mostly in Florida, not most of the other states. There seems to be a pattern in the state of Florida.

  • Boomerful54

    Thanks for this insightful article. Very eye-opening, and very, very sad. It is clearly a modern-day Feudal system; top heavy with shyster type upper management using the poor, disabled, & disadvanteged to further their ulterior motives and at the same time hitting up the federal gov’t for every grant and tax loophole they can find. It’s disgusting! SHAME ON YOU GOODWILL INTERNATIONAL for creating this corporate mentality.
    *Beware of the shopgoodwill.com auction site too.* They practice shill bidding to jack up bids unreasonably high, they overcharge by 110% on shipping fees, and there is no quality control or accountability to complain about it and get something done. I tried to buy a little bride-dress for my granddaughters to play dress up in and Goodwill in PA wanted $29.80 to ship a 2 lb. item! (I have been selling on Ebay for 14 years, and I’m very knowledgable about shipping costs) THEY DIDN’T CARE. When I complained to the management, they readily, rather too gladly- canceled the transaction. They had no interest at all in customer retention. Obviously, they felt the winning bid was low and they felt they could do better on the next sucker.

    The fellow above stated that this seems to be a Florida issue, but Goodwill, Inc. is popping up retail stores here in Ariz. like mushrooms after a good rain – and their prices are HIGH too- Very close to normal retail on items they get free…Folks, lets boycott them!

  • Boomerful

    No, Bob, of course this out of control Goodwill management doesn’t give a Tinker’s damn about what we think, or what their exploited workers think – but when enough people boycott their stores and their crappy website, and they get investigated by state and federal agencies – Then They Will CARE!
    “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” 1Timothy 6:10
    I personally wil never donate to them again or shop their stores or (rip-off) website.

  • Rhiannon

    Really, Sean? You think any of the other charities are any better? MOST pay their top people high salaries and most money people donate don’t go to the actual cause, but to “administrative expenses” and such (very few cents per dollar go to the actual mission).

    Either way, Goodwill is NOT a charity, it is a for-profit corporation. So different rules apply. They do do a lot of good, though I certainly think those kinds of administrative salaries are ridiculous.

  • Rhiannon

    People in the administrative offices make reasonable living wages, and the CEOs of most small and mid market Goodwill groups (since they’re all more or less independent) don’t command the kinds of salaries posted here.

    From what I can tell, they do lots of good for the lives of the disabled and disadvantaged people. From what I’ve been told, people are paid based on the level of their disability, e.g., those making 20 cents an hour are likely very disabled and not very functional. They are given jobs to boost their self esteem and give them a feeling of purpose, not a living wage. They get their living expenses covered in other ways. Somebody who is disabled enough that they can only do very simple tasks could not be paid minimum wage or more, it would never pencil out and the program wouldn’t exist. Those that are not disabled but fell on hardships and work there get normal wages like anybody else.

  • Rhiannon

    Any evidence or proof that they practice shill bidding? Or is this an assumption based on an experience you had?

  • Rhiannon

    If you don’t like how much you’re making, you’re free to go out and do something else that pays better. Most people I know who make very comfortable salaries (not all of course, but most) make them because they worked hard and made sacrifices to get there. A certain level of talent and some luck is involved, as well as knowing what the market wants and catering to that, but if someone is stuck making $9 an hour at a dead end job, they have nobody to blame but themselves. What really gets me are the ones who go to college for 8 years entirely on student loans, get a graduate degree in something that has absolutely no market or job potential, then whine about student loans and their gig at Starbucks. You really need to pick a career that actually has *some* potential. Not very many gigs out their requiring a Master’s in Ancient Native American History or Japanese Art or any number of the basically useless degrees people I know have gotten.

  • chuck

    For a company whose “product” is donated I believe there is more going on than what we are being told. The wages they pay are totally outrageous but there needs to be more thorough examination as to where ALL the money is being hidden , as in cookin the books!

  • MootsaGootsa

    The salvation Army is best.

  • saggman54

    they get there merchandise for free?? and charge high prices.. (more than thrift shops or used furniture stores) non profit.. high salary and then they exploit the people they claim to be helping….. this ought to be illegal… that is why I no longer give them stuff…. even though I don’t want it and need to get rid of it… I put it up for free and give it to some one less fortunate

  • saggman54

    they are just as bad.. they take advantage of the homeless / alcoholic paying them nothing and they have no health coverage when some one gets hurt…. I had a friend who got hurt unloading one of their trucks and they refused to help him with any of the medical he needed. (stepped through a rotted out board in the bed of one of the trucks

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