May 9, 2013 8:24 PM by Keli Moore, KSBY
A multi-billion dollar non-profit is under fire. Goodwill Industries was founded on charity, but some are questioning the non-profit for paying executives too much and employees too little.
The federal minimum wage is $7.25 per hour, but there's a loophole in the federal labor law from the 1930s. Some Goodwill entities openly take advantage of the so-called "special wage certificate." The program allows them to pay employees with disabilities a wage based on performance.
KSBY met a Central Coast freelance investigative journalist, who analyzed financial data for 109 Goodwill entities throughout the country -- with the goal to find the truth about the Goodwill entities' finances.
"The National Federation of the Blind has been leading this campaign for years," said John Hrabe, who got the story idea when he saw people protesting in front of a Goodwill in Sacramento.
Hrabe spent nine months doing research sifting through thousands of pages of documents.
"The shocking patterns are how much CEOs for Goodwill make and how little workers make," said Hrabe.
How is this possible? It turns out it's legal because of a loophole in the labor law.
"Section 14 (c) of the Fair Labor Standards Act of 1938 allows employers to obtain a special minimum wage certificate. And that is what allows entities to pay people with disabilities less than minimum wage," Hrabe said. "According to Goodwill, 7,300 employees across the nation are subject to this program."
"In Oregon there is a CEO who makes in total compensation $724,000 per year. One employee at that same Goodwill makes $1.40 per hour," he explained.
"Goodwill of Southern California paid more than $1.1 million in total compensation to its then CEO," said Hrabe. Meanwhile, he said, Goodwill paid employees below the federal minimum wage.
"The national office for Goodwill openly defends this program. They see nothing wrong with it because under this program they are able to hire more people with disabilities who otherwise wouldn't have work opportunities," he said.
The wages are based on an individual's productivity. There is a review process and there is a performance evaluation, but on the Central Coast, the policies are much different.
"We don't hire people with disabilities because they are disabled. That is a very old model that we don't employ," said John Collins, who is the senior vice present of Goodwill for the Central Coast.
Locally, Goodwill pays all employees over minimum wage, said Collins. He told KSBY they have not used the special wage certificate program for decades.
"We don't do that. Our function is serve job seekers who want employment," said Collins.
Goodwill was founded in 1902 by a Methodist minister -- with the mission of helping those with disabilities have an equal opportunity to work.
For John Hrabe's full story click here.
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