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Elder care homes rake in profits as workers earn a pittance

She alights from a black Ferrari convertible, her Christian Louboutin stilettos glinting in the sunlight. The lid of her black lacquer grand piano is propped open in the lounge of her plush Beverly Hills residence.

“I own a chain of elderly care facilities,” she says into the digital camera on Bravo’s actuality television present “The Millionaire Matchmaker.” ”My internet value is $three to $4 million, in all probability.”

Stephanie Costa was 30 and having fun with a way of life supported in half by six board-and-care homes she owned in California’s Central Valley. But half of that fortune was threatened when she and her firm initially have been cited for about $1.6 million for labor violations, including wage theft – not paying 11 staff for working a lot of 24 hours a day, six days a week.

Costa, who declined to be interviewed for this story, is a uncommon public face of a burgeoning multibillion-dollar elder care business that’s enabling operators to develop into wealthy by treating workers as indentured servants. Across the country, legions of those caregivers earn a pittance to are likely to the elderly in residential houses refurbished as care amenities, based on an investigation by Reveal from The Center for Investigative Reporting.

The revenue margins may be big and, for violators of labor laws, hinge on the widespread exploitation of hundreds of caretakers, lots of them poor immigrants successfully earning $2 to $3.50 an hour to work around the clock. The federal hourly minimal wage is $7.25.

Reveal interviewed more than 80 workers, care-home operators and authorities regulators and reviewed tons of of wage theft instances handled by California and federal labor regulators, workers and native district attorneys. The investigation discovered rampant wage theft has pushed a vast majority of these caregivers into poverty.

Workers are left feeling desperate and trapped. Many caregivers say they rise earlier than dawn to prepare dinner meals, shower residents and scrub bogs. At night time, they’re disadvantaged of enough sleep as a result of they need to wake to vary grownup diapers, dispense painkillers, return wandering dementia residents to their beds and shift the bedridden each two hours to thwart bedsores.

Workers describe sleeping in hallways and garages, on couches and the floor. Some care homes deduct $25 a day from caregivers’ paychecks for “lodging.”

Exploited caregivers not often are allowed a day without work; even then, they typically must pay their substitutes. Two caregivers recounted having miscarriages after their bosses refused to permit them day without work or to stop lifting heavy residents.

Because these workers typically reside the place they work, they’re underneath the watchful eye of their bosses. They are bullied into not cooperating with investigators. In some instances, care-home operators have threatened to report undocumented workers to authorities.

Human trafficking – in which workers, notably Filipinos, are coerced, manipulated and exploited – additionally shouldn’t be uncommon, in response to prosecutors and attorneys. For instance, a number of relations have been charged final yr with human trafficking and labor abuse in a case involving caregivers in San Mateo County, California, south of San Francisco.

“It’s a classic tale of human greed,” stated Tia Koonse, legal and coverage research manager on the UCLA Labor Center. “Their entire business model is predicated on not making payroll. It relies on people being willing to work for 24 hours a day for less than a dollar an hour. Only trafficked people will put up with that.”

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The progress of board-and-care homes in neighborhoods across the United States is tied to medical advances, enabling getting older baby boomers to reside longer despite debilitating sicknesses. This has resulted in an growing number of gravely ailing individuals or their relations in search of an alternative choice to pricey nursing house care. There have been about 29,000 residential care communities nationwide and about 300,000 full-time caregivers in 2016, based on the newest federal figures obtainable. About two-thirds are smaller amenities with 4 to 25 residents, many with dementia. California leads the nation with greater than 7,300 residential care amenities licensed by the state.

Stephanie Costa offers a case research in exploiting workers, getting caught breaking labor laws and circumventing full punishment.

In 2013, 11 workers introduced wage theft claims after providing around-the-clock care in the care homes Costa owned. They modified adults’ diapers, comforted the dying and hoisted infirm residents into bed. They labored six days a week and subsisted on meager wages, based on interviews and courtroom paperwork.

The workers stated they risked being fired if they left the amenities and had no off-duty relaxation breaks through the day. Costa’s care homes promoted 24/7 care for frail shoppers.

“We knew we were being underpaid,” stated Juliet Delos Reyes, 60, a former caregiver employed by Costa. “But we were helpless. We didn’t know our rights. How could we leave?”

Reyes stated she was not allowed to go away the home with out permission when shoppers have been present.

In many instances, workers in the business fall into jobs that develop into increasingly abusive. A considerable quantity are working in the U.S. without authorization or applying to remain legally in the nation. They are paid lower than they’re promised, remoted and restricted to the amenities.

Residents in these care homes sometimes are more than 60 years previous. The annual national median value for every resident is about $48,000. Dementia residents typically pay more. Some house owners tack on additional costs for many who are incontinent or want greater than two showers a week.

Over the final decade, care-home operators throughout the nation broke minimal wage, additional time or record-keeping laws in a minimum of 1,400 instances, federal knowledge exhibits. About 35 % of them have been in California. Data obtained by Reveal by means of a California Public Records Act request exhibits senior care amenities in the state have pending wage theft claims towards them or have been ordered to pay again wages and penalties in more than 110 further instances.

Three months after Costa’s star turn on Bravo in 2013, the state labor commissioner’s office ordered Costa and her company, Bedford Care Group, to pay about $1.6 million for unpaid wages and penalties. That’s when she changed techniques.

Papers have been then filed with the state to create two new residential care-home corporations referred to as Clear View Retirement Group LLC and Copper River Retirement Group LLC. Costa’s mother, Alice Hayes, is secretary, certainly one of two officers, of these corporations, in line with licensing data. Hayes declined to comment.

These new corporations then acquired licenses from the state to run the six former Bedford care homes. But the structure and administrative employees in the care homes? Hayes assured residents that they might remain the identical. In December 2014, following an attraction, the amount owed for the labor violations was decreased to $665,000. But around the similar time, Costa’s Bedford Care Group filed for bankruptcy, a authorized maneuver that allowed her to successfully slash the quantity she owed workers by settling the case for about $200,000, which she paid.

Three weeks after Costa’s care-home enterprise filed for chapter, her father registered a new company with the state referred to as Property Investment Housing LLC. The firm then took over as the brand new owner of Costa’s six care homes. Her father did not return a name in search of comment. Stephanie Costa is the company’s chief government, data show.

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Stephanie Costa represents a rare case in which an operator paid up, if solely a partial quantity of the unique advantageous. Residential care amenities for the aged receive among the many largest wage theft judgments of any business. Yet Reveal discovered that some facility house owners caught cheating their workers are capable of evade fines and judgments.

Many corporations play shell games by not holding money or actual property holdings in the identify of the company towards which judgments or fines are entered. They merely abandon their firm names – and the judgments towards these named entities – rendering the penalties and wage theft judgments meaningless.

Across the country, states are charged with regulating board-and-care amenities. In California, the state labor commissioner’s office and U.S. Department of Labor, in addition to some native governments, are charged with investigating wage theft. State and federal regulators say privately that they want many more investigators and legal professionals to chase down scofflaws and drive them to pay.

The Department of Labor’s Wage and Hour Division declined to make prime officers out there for an interview. But in a written statement, a Labor Department spokesman stated: “Last year the division recovered a record-setting $304 million in back wages for workers and conducted a record-setting 3,600 outreach events to provide information to employers, employees, and other stakeholders about the requirements of the law.”

The agency noted that in California, it has carried out investigations and “extensive outreach” to care-home operators “ensuring that they pay their workers the wages they have legally earned.”

At least 20 corporations providing care for the elderly, disabled and mentally ailing in California proceed to function illegally – lots of them underneath their unique names – after ignoring judgments for again wages and penalties totaling greater than $1.four million, Reveal found. A 2016 regulation barred corporations with excellent wage theft judgments from conducting business in the state. But the state Department of Social Services’ Community Care Licensing Division, which is in charge of licensing amenities for the elderly and disabled, has not adopted by means of.

Pat Leary, appearing director of the Department of Social Services, declined via spokesman Michael Weston to be interviewed. But in an e mail, Weston wrote that while the regulation permits his company to deny a new license or not renew an present one, the company can take these steps only if it finds residents’ health and security have been threatened.

For her half, Costa’s former employee Juliet Delos Reyes desperately wanted the entire again pay she was owed before the chapter of Costa’s company. She now cares for her husband, who’s on dialysis. His medical bills are crushing.

“We didn’t save anything. It affected us badly,” Reyes stated by means of tears. “I just hope that someday the government will look at how caregivers are treated.”

In mid-2016, the California Social Services Department banned Costa from the assisted dwelling business for all times after discovering multiple health and safety violations. Among the violations: caregivers working with out required legal background checks; caregivers missing the right expertise to test the glucose of a diabetic resident whose arms had been amputated; taking in hospice patients with out the state’s permission; and arguing with the good friend of a resident who was despatched to the hospital, prompting employees there to ask her to go away.

Costa ignored the ban and continued to hire and hearth workers at the care homes. So state licensing officers in April 2017 had Costa’s mom signal a declaration promising Costa wouldn’t be involved in “any capacity” with the companies – Copper River Retirement Group and Clear View Retirement Group – that function the care homes she once ran.

But even after that assembly, data present, Costa listed herself as a managing member of Clear View Retirement Group. Costa’s identify has since been faraway from the newest business filings acquired by the state.

A representative for the care-home business readily acknowledged wrongdoing but blamed skinny profit margins for necessitating the apply of underpaying workers.

“Are there problems? There are lots of problems,” stated Ronald Simpson, a founding director of 6Beds Inc., a lobbying and advocacy organization that represents greater than 1,000 operators of small residential care amenities for seniors in California. “Elderly people aren’t able to pay what they’d need to pay for these homes to be compliant.”

Still, for workers earning anemic pay, “it’s possible they’re happy, too,” he added.

Simpson then lashed out at Reveal for investigating wage theft in the business.

“What you’re doing is not a service to the industry,” he stated. “It makes the whole industry look like they’re getting rich and ripping people off.”

As he spoke, Simpson was busy organizing one of many group’s all-day workshops for care-home operators on labor legal guidelines, which the 6Beds website promised would give them a key bit of recommendation: find out how to “minimize labor costs.”

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For 4 years, Sonia Deza rose each morning at 5 a.m. to prepare dinner, clean, and wash and medicate her expenses at Scienn Hail Home Care IV in Antioch, California, a city of about 100,000 individuals in the San Francisco Bay Area. She couldn’t sit down again to rest till 10 p.m., after she tucked residents into mattress and arranged their prescriptions for the subsequent day.

An extended night time still lay ahead; some wandering dementia residents wanted assist again to mattress, and others needed to be shifted each two hours. Deza not often took a day without work, as she would wish to pay her substitute. She earned about $2 an hour. She apprehensive she can be fired if she complained.

Then in 2013, federal regulators ordered Deza’s bosses, Glenda and Rommel Publico, to pay Deza and 21 different workers more than $133,000 in again wages for violating federal minimum wage and additional time laws.

The Publicos wrote Deza two checks totaling greater than $17,700 in again wages. But as an alternative of letting her deposit the checks, Rommel Publico demanded the money back, claiming it was his, Deza stated in an interview. She stated she was frightened he would hearth her if she refused. So she served her residents lunch after which took a rare break on two afternoons in July 2013. Rommel Publico picked her up from work and drove her to 2 totally different banks.

“I took the checks into the banks, then returned to the car and gave him the cash,” stated Deza, 66. “Oh my goodness, that’s my money. I worked so hard for it. I really needed that money. It’s big money for me.”

Publico let her hold $1,000. He referred to as it a bonus, she stated.

Three of Deza’s co-workers stated in interviews that additionally they have been pressured to return the again wages. According to federal Labor Department data, the Publicos submitted false paperwork to labor investigators purporting to point out they’d paid the back wages. Still different workers never acquired a verify in the primary place. They nonetheless are ready.

Prosecutors from the Contra Costa County district lawyer’s workplace have charged the Publicos with multiple felonies, together with grand theft and tax fraud. The case is pending.

In a telephone interview, Rommel Publico defended the remedy of his caregivers and stated the fees towards him “hurt my feelings.”

“When we ran the business, we were like a family,” Publico stated by way of tears. “My caregivers, I deal with them like my mother. I’ve by no means been like, ‘I’m the boss.’

“Every time I turn around, I have problems,” he stated of the pending case towards him. “It breaks my heart. I cry.”

Another Publico worker who was not paid back wages is Normita Lim. She labored around the clock as a caregiver in one among their care homes for almost a decade, incomes about $2 an hour. Rarely allowed a time without work, she stored working, afraid she can be fired if she complained. On Christmas and Thanksgiving holidays, her three youngsters visited her in the cramped room she lived in down the hall from the residents.

“I’m still struggling,” stated Lim, 75. “I needed that money for my medications and food, but he got away with murder by not having to pay. I’m angry, but what can we do?”

In late 2017, the Publicos bought the care house the place Lim worked. She stated she stayed on as a caregiver for simply a month underneath the brand new owner. She earned about $600 that month to work across the clock, seven days a week, for lower than a dollar an hour. A person at the care house stated the power is now referred to as Elizabeth Care Homes 2. But the property still is licensed to Glenda Publico, data show.

“I thought, ‘This is worse,’ so I quit,” Lim stated.

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Workers typically worry reporting their mistreatment to authorities. They routinely are harassed and fired in the event that they report abysmal pay or additional time violations, in line with interviews and courtroom paperwork. Reveal found 90 caregivers in California who stated their bosses intimidated them, threatened to report them to immigration authorities or blacklist them in the business.

In 2014, federal investigators caught Lake Alhambra Center in Antioch dishonest its workers – for a second time. When an investigator visited, an worker put him on the telephone with Mehrangiz Sarkeshik, who owned the home together with her husband.

She excoriated the investigator for the intrusion: “You didn’t tell me you were coming. Leave right now!”

Then the investigator overheard Sarkeshik shout at the worker over the telephone: “You need to get him out of there or you will be fired!” She referred to as the police and upon arriving on the residence, she again threatened to fireside any workers who cooperated with the investigator, in accordance with a courtroom document. When the investigator tried to comply with up, workers informed him that they have been too scared to speak. Soon afterward, the power modified palms and now operates beneath a totally different identify. No wage theft fines have been issued to this operator up to now.

Precilla San Miguel, an owner of San Miguel Homes for the Elderly, which operates three amenities in Union City, close to Silicon Valley, stored timesheets that confirmed caregivers worked eight hours a day, although their employment guide required them to be obtainable 24 hours per day, seven days a week to seniors.

She went as far as fabricating evidence to cowl up her wage theft, courtroom paperwork present. Workers stated she provided them bribes to falsify timesheets and required them to signal agreements not to sue her. She also put in surveillance cameras in her care homes to watch caregivers, workers stated. The courtroom ordered the defendants to pay $425,000 in again wages and damages.

Last yr, four members of a family have been charged with numerous felonies, together with human trafficking and labor abuse, in San Mateo County, south of San Francisco. State prosecutors say Gamos relations preyed on Filipino immigrants and “enslaved” some in their Rainbow Bright amenities. Family members pressured some to work 24 hours a day, seven days a week, and a few caregivers had their passports withheld, prosecutors say.

In courtroom filings, prosecutors allege that some workers slept on mattresses on the floor and in garages and have been prohibited from leaving the amenities, where they cared for youngsters, the disabled and a few seniors. Some workers who have been injured on the job have been informed to mislead emergency room docs about how they have been maimed. They also have been pressured to pay their medical bills, based on the courtroom documents.

Even as his family cheated workers out of greater than $9 million in wages from 2009 by means of 2018, Joshua Gamos, one of the amenities’ house owners, collected a fleet of automobiles, including a Lamborghini and a Ferrari, prosecutors allege in courtroom documents. Gamos is also charged with raping a caregiver. She was 21 when she began working for the amenities shortly after arriving from the Philippines. Joshua, Noel and Carlina Gamos are in jail awaiting trial. A fourth defendant, Gerlen Gamos, pleaded guilty to 2 felony costs, including wage theft, and is awaiting sentencing. Her lawyer declined to comment.

Attorneys for Joshua and Carlina Gamos stated no workers have been pressured to work on the amenities. An lawyer for Noel Gamos did not return calls in search of remark.

“Those allegations are false,” stated David Cohen, an lawyer for Joshua Gamos. “People wanted to work because they wanted the money. It is true that these charges have been brought, but when you actually look at the evidence and the statements that were made, it’s a completely different story.”

Meanwhile, Reveal discovered of instances in which workers suffered abuse with devastating penalties. Two caregivers reported having miscarriages after lifting heavy residents and being denied day without work.

One of them was Julie Riduta, 45, of Concord. More than a decade in the past, she arrived from the Philippines to work as a caregiver in a care house in Contra Costa County. She earned $2 an hour to work 24 hours a day.

The work was grueling, however she needed the pay to teach her daughter, left behind in the Philippines, from the age of eight. For the primary three years, Riduta slept on a skinny piece of foam on the floor next to the residents. When they wanted help, she stated they kicked her awake.

“I told my daughter I struggled so much,” Riduta recalled. “I feel abused.”

Then in the future in the summer time of 2014, she came upon she was pregnant. Overjoyed, she and the infant’s father, a co-worker with whom she is in a relationship, posted the news on Facebook.

She additionally was overcome with morning sickness and was involved about having to raise heavy residents. But when she begged her boss for two days off, Riduta stated she refused.

“Go to the mirror and look at yourself,” Riduta recalled her boss saying. “Ask if you’re allowed to complain.”

Riduta had a miscarriage two weeks later. The trigger was unknown. The fetus was nine weeks previous.

“I was crying all night,” Riduta stated. “I still have this dream that there’s a baby crying all the time. They treated us like animals.”

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While some are not sure the right way to pay their workers properly, care-home house owners are sure about one factor: There is money to be made.

Entrepreneurs on YouTube urge individuals to jump into the actual estate end of the enterprise by shopping for single-family homes and converting them into care amenities. One man explains how “to turn a single-family home into a cash flow machine.” Another calls care homes “America’s untapped business opportunity. . This business is very profitable.”

Jesse Quezada used to flip homes together with his spouse. When the market cooled, he stated, they seemed into opening a care house after a pal informed them they might make hundreds a month.

“Coming from our background, we thought, ‘$3,500 a month? Wow. Would people actually pay that?’ But the demand is there. People are living longer and they’re sicker.”

Quezada and his wife enrolled in a course required by California to run a residence. In just two lengthy weekends, they have been certified. They now operate several care homes.

“When you have multiple homes, you can literally make $20,000 profit a month,” he stated.

Training requirements for care-home directors and employees in California are feeble. Administrators must bear an initial 80-hour program and cross an open-book exam comprising 100 questions. Those overseeing small amenities with 15 or fewer residents have to be 21 and have a highschool diploma or the equal. Staff in assisted dwelling amenities need not be nurses or have any medical experience. In reality, manicurists in California require more coaching.

Quezada was among more than 200 care-home house owners, lots of whom arrived in BMWs and Teslas, for a daylong seminar at a Southern California group hall final October. Among the presenters have been labor regulators and attorneys who took questions from the gang.

Attendees sought advice on proper pay practices and different labor issues and have been advised by the presenters to comply with the regulation.

Then George Kutnerian, senior vice chairman of public policy and laws for the 6Beds group, took the stage as one of the last audio system. Operators should slash prices by leveraging labor laws to their advantage, Kutnerian urged them.

For example, house owners don’t need to hire two caregivers once they might get away with one, Kutnerian stated.

“There is no staffing ratio. A lot of people think, ‘I can’t have one caregiver alone.’ That’s not true,” he suggested.

“You gotta learn how to use one caregiver,” he stated. Plus, there’s a “nice exception” in state regulation, Kutnerian continued. Care homes with only one caregiver on obligation can require that employee to remain for relaxation and meal breaks, he noted, including: “If you might have two caregivers there, they’ve to be able to depart. It’s extra efficient, OK?

“What this is getting you out of is the penalty,” Kutnerian boomed over the microphone. “That’s the trick. How do you keep them on the premises for rest and meal breaks?”

For house owners who deal with their workers correctly, the market strain is intense. While there are operators who adjust to the regulation and switch a profit, some care homes charge much less to draw residents looking for reasonably priced care.

“It’s frustrating to be undercut,” stated Jose Umana, who runs Premiere Cottages, which operates several care homes in Long Beach and Huntington Beach. “It’s hard to stay in the market when you’re competing with other homes that have lower rates. The caregivers are bearing the brunt.”

William Murphy, a prosecutor with the Alameda County district lawyer’s office in the San Francisco Bay Area who has handled a dozen wage theft instances involving care homes in the final 5 years, says the business mannequin will depend on squeezing workers. He summed it up in two temporary sentences:

“It’s extreme greed by the owners. The workers are treated horribly.”

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Data reporter Melissa Lewis contributed to this story. Jennifer Gollan might be reached at [email protected] Follow her on Twitter: @jennifergollan.

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