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Wage Theft Allegations Grow Against Bay Area Elder Care Homes

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San Jose Mercury News
Nate Gartrell

ANTIOCH — Shortly after 8 a.m. Monday, a caravan of district attorney investigators drove up to a two-story, stucco suburban home, arriving so quietly that hardly any neighbors noticed. Some donned bulletproof vests, but those probably weren’t needed; their suspect was a 63-year-old grandmother, led out of the house into a police car.

Florinda Yambao, the owner of several residential elder care homes around Contra Costa County, may not look like a typical career criminal, but DA investigators say she’s defrauded her employees out of hundreds of thousands of dollars in owed pay, and committed tax fraud to cover her tracks — and her case isn’t even the tip of the iceberg. State and federal authorities, normally reluctant to make such broad generalizations, say wage theft of residential elder care workers is a statewide problem in an industry that tends to attract employees who are poor and often illegal immigrants, making them more likely to be abused or extorted.

Yambao was convicted of theft, tax fraud and insurance fraud last year but continued to withhold wages from her workers while on probation, according to District Attorney’s Office investigators.

Days before Yambao was arrested, the Contra Costa County DA’s Office solidified a plea deal with the owners of Abraham Rest Home Inc. and Sanchez Abraham Corp., arrested in 2014 and charged with 10 counts of insurance fraud and wage theft related to eight of their care homes in Walnut Creek, Concord, Brentwood and Antioch. Owners Sarah Abraham and Julio Sanchez were ordered to pay $1 million in restitution, sentenced to three years probation, and ordered to wear an ankle bracelet for 60 days. And authorities in nearly every Bay Area county — Alameda, Marin, Napa, Contra Costa, Santa Clara, San Francisco — say they, too, have active wage-theft investigations into elder care homes.

“I don’t want to malign the entire industry, but for the first time ever we have been collaborating to do outreach with these elder care facilities, trying to explain to them what the law is and help the facilities that want to comply,” California Labor Commissioner Julie Su said. “We would only do that if we saw that there were serious issues in the industry.”

In typical wage theft scenarios, owners will buy up multi-bedroom homes and establish care facilities within them. Employees are required to live on site and work 12- to 16-hour days, for which they’re paid small stipends. The bedrooms are rented out to elderly patients for thousands of dollars a month while employees make what amounts to $5 an hour or less, and sleep on the floor of living rooms or garages, outside the view of patients or visitors.

“What I would say is there are unscrupulous employers who take advantage of low-paid workers, many of whom don’t know their rights, or were abused and manipulated in such a way that they gave up their rights, and are forced to work in horrible conditions,” Contra Costa County fraud prosecutor William Murphy said.

The problem of wage theft flew under authorities’ radar until around 2010, when a California branch of the federal Department of Labor started receiving complaints from workers, and put out public notices asking more victims to come forward. They were soon bombarded with more reports of violations than investigators could keep up with.

“I don’t think anybody paid much attention to it before they started getting complaints from employees,” said Patricia McGinnis, the executive director of the advocacy group California Advocates for Nursing Home Reform. “It’s not like anyone is paying attention in some of these cases. There are thousands of care homes in California. Out of those, I couldn’t tell you how many are underpaying people.”

Not all cases are motivated by malice, though, according to Yambao’s attorney, Dan Russo. In an interview last year, he acknowledged that the elder care industry is fraught with labor law violations but said that many are simply fueled by ignorance.

“I think a lot of DAs are, unfortunately, ‘Let’s make the headlines, let’s set these people on fire,’ ” Russo said. “What you have to separate out, though, are the people who are running nursing homes and who are skinning people alive from the people who have successful care homes because of the kind of treatment they deliver, but they’re not familiar with labor laws. All they get is tax advice, and the tax advice is useless.”

Michael Eastwood, an assistant director in the Department of Labor’s wage theft division, said his agency has started doing random compliance checks on elder care homes, although most criminal investigations start after a worker complains to authorities. Federal authorities have even hired Tagalog translators to assist with industry outreach, because many elder care homes hire predominantly Filipino immigrants.

Typical of such workers is Matthew Manos, an immigrant from the Philippines who says he petitioned to come to the United States as an employee and was promised immigration sponsorship by the owners of a San Ramon-based residential elder care company called Beatitudes Inc. Once he arrived, Manos says he was required to work 16-hour days, six days a week, and given around $60 stipends for each day’s work.

He and other employees slept on futons in the living rooms and dining rooms of the residence, he said, adding that many of his co-workers were afraid to speak up.

“Because of that sponsorship, it’s very important to us to be legal here,” Manos said. “So I wasn’t really complaining, because I can’t find a different job if my status is undocumented.”

After he realized he was owed additional wages, Manos retained an attorney and filed a wage theft complaint, which is still making its way through the courts. After the complaint was filed, Manos said his immigration sponsorship was revoked. An attorney for Beatitudes declined to comment on the case, but the owner denied Manos’ allegations.

State lawmakers have made efforts to contain the problem, though they haven’t gone as far as many advocacy groups would have preferred. In October, Gov. Jerry Brown signed into law SB 588, which gives authorities and workers more tools to get compensation for victims of wage theft. But other bills that would have allowed the labor commissioner to impose liens on wage theft violators failed to pass.

“For the first several years, we basically saw nothing but violations; compliance was extremely low,” Eastwood said. “Now we’re starting to see a much higher level of awareness, but unfortunately, there is still a subset of folks who think they can get away with not paying people enough, and there are all kinds of other issues that come up when employees are denied their rights.”

Contact Nate Gartrell at 925-779-7174 or follow him at