9th and 10th
Issues: Payroll Taxes and Minimum Wage –
They Are Only the Homeless (Part 2)
Although the payroll tax and
minimum wage issues were closely related, the complaints had to be presented to
two different State of California departments. In June
2014, after having heard nothing further from EDD, I tried their on-line
service again. No response, so I sent an
email and received a reply telling me to try the tax fraud line. After a few of fruitless telephone calls, I
set the matter aside until March 2015 when I called the tax fraud number again. A woman replied that she could not locate the
complaint because I made it so long ago.
My bad. She asked me to email the
information to her. After I resent the
complaint, EDD stopped returning my phone calls. In May 2015, I asked State Senator Hill, who
represented my district, to inquire, but they told his office that the information
could not be shared because of confidentiality requirements. Then I mailed a complaint to the Internal
Revenue Service, which had jurisdiction over unpaid payroll taxes; I never
received a reply.
The minimum wage complaint
seemed more likely to get attention because of the dollar amount involved and
the actual harm suffered by the New Start workers. After mailing my complaint to the DIR – the
State Department of Industrial Relations, whose Labor Commissioner’s office
enforces wage regulations – I heard nothing for a month, so I called the
department. A woman said they had
received the complaint but that it had not been assigned to an investigator
yet. She allowed that I could call back,
but nothing was likely to be done on the complaint for weeks or months.
A few months later I sent the
information to two class action attorneys, thinking that the relatively large
amount involved could attract their interest.
I never received a reply from either.
A few months after that, I sent the information to two pro bono law
firms who dealt with employment complaints.
One replied that it lacked the resources to undertake the project, and
the other never responded.
In April 2015, eleven months
after I first mailed my complaint, I called the DIR again. The woman who answered asked if I had been
given a case number when I last called; no, I had not. No system existed for her to look up the
status of my complaint, she said. I
guessed that the first woman’s comments might have been intended simply to get
me off the phone. This time I was told
that no information could be given to me about the status of my complaint. I asked, can someone just tell me that it has
been received and assigned to an investigator?
She passed my name and number on to the fraud investigation unit, and a
pleasant woman told me that they had no record of my complaint and that I
should mail a copy to her attention. I
did that, but a follow-up call yielded nothing.
Then I moved to the federal
question and mailed a complaint to the U.S. Department of Labor (DOL). The San Jose office’s assistant district
director said they would not investigate the complaint if the State was
planning to investigate. He suggested
that I visit the local DIR office.
On my first visit to the
DIR’s small San Jose office, the man behind the glass shield informed me that
the woman who held my complaint letter in July 2014, who could not locate it in
April 2015, and to whom I resent it, was not in the office. He brought out someone else who assured me
that I would receive something soon. Who
would send it, I asked, and what might it be, and even approximately when might
it come. She could not say. After having made only the slightest headway,
I left.
Two weeks later, I revisited
the office. The same man behind the
glass shield informed me that I would not receive information about the sort of
complaint I had filed. But I had been
told two weeks earlier I would receive something soon, I said. He went to the back and then returned to say
that the woman to whom I had sent my complaint was not in the office today so
nothing could be done. Could I speak to
the supervisor, please. He went to the
back and returned with someone who would give me only her first name. She read the letter. Behind the glass, she fingered a variety of
forms displayed on the wall. Did you use
one of these? The website and the people
I had talked to in the past year had not mentioned any special form. She looked in the computer, but the complaint
was not there. She opened a drawer and
flipped through maybe 20 aging complaints, but mine was not there either. Please sit down, she said.
A few minutes later, the
woman returned. The Regional Director
has your letter for review to determine if the office has jurisdiction. You will hear from him, she said. When?
She didn’t know because he is responsible for the entire Region. Of course. Can I find out if an investigator has been
assigned? No, you will hear from us only
if we do not investigate. If there is an
investigation you will not be told anything although you can make a public
records request when the investigation in complete, she explained.
I returned to the office once
more, but no one would speak with me; I called the Regional Director twice and
mentioned the federal assistant district director’s name, but he never called
back. The DOL guy finally said that he
thought there was a legal violation but he did not have jurisdiction because
HomeFirst was a nonprofit and interstate commerce was not involved. Even though the DOL had jurisdiction enough
in the cases of Salvation Army and Goodwill.
Stymied by the State and the
feds, I went after the City of San Jose minimum wage law violation. I mailed my complaint to the City’s Office of
Equality Assurance, which handles wage claims, in June 2015. When I did not receive a reply within a
couple of weeks, I filed a complaint on the City’s whistleblower hotline; my
complaint was referred to the Office of Equality Assurance. The Office requested payroll information from
HomeFirst covering the period March 2013, when the regulation became effective,
to June 2015.
HomeFirst’s attorney, Rona
Layton, provided one week of data and admitted having underpaid two employees
by $.75. I suggested that the Office ask
them to provide information about the New Start clients, and it sent out
another letter. Layton, however, did not
respond. Despite the City’s further
requests, Layton did not provide the requested information. A contract compliance person in the Office of
Equality Assurance said they would issue an administrative citation to HomeFirst in 10 days to move the investigation forward, but six weeks later they had not done so. The guy stopped replying to my emails.
Not paying the required minimum
wages would have the effect of understating HomeFirst’s program expenses and
overstating its indirect cost rate, which measured the ratio of general
administrative costs to direct program costs.
This was the rate that HUD reviewed and approved each year and that I
used to allocate costs to all government contracts. By not reflecting New Start compensation, HomeFirst
would have overcharged the County, the City of San Jose, the Veteran’s
Administration and most other funders.
Not a lot, but it was a problem to fix.
Therefore, HUD had an interest in making sure labor costs were properly
stated. I complained to the Office of
Inspector General. I never got anything
back on that.
It is so difficult for the
whistleblower to know if his voice has been heard. If my complaint was invalid, as the federal
attorney said of my bid collusion complaint, or if it was resolved without
inflicting any penalty, as had happened in the residential licensing and Food
Handler Card cases, some sort of closure could be found. Far more often, though, the complaints were lost
or ignored.
Lesson for the whistleblower: even when evidence of a
violation is confirmed by knowledgeable persons, complaints are presented to many
authorities, and the financial stakes are significant, the whistleblower and
the victims may still lack sufficient standing to merit the interest of those
in power.
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