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Homes Rake in Profits As Workers Earn a Pittance

May 20, 2019

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 living room of her plush Beverly Hills home.

“I own a chain of elderly care facilities,” she says into the camera on Bravo’s reality television show “The Millionaire Matchmaker.” ″My net worth is $3 to $4 million, probably.”

Stephanie Costa was 30 and enjoying a lifestyle supported in part by six board-and-care homes she owned in California’s Central Valley. But half of that fortune was threatened when she and her company initially were cited for about $1.6 million for labor violations, including wage theft - not paying 11 employees for working much of 24 hours a day, six days a week.

Costa, who declined to be interviewed for this story, is a rare public face of a burgeoning multibillion-dollar elder care industry that is enabling operators to become wealthy by treating workers as indentured servants. Across the country, legions of these caregivers earn a pittance to tend to the elderly in residential houses refurbished as care facilities, according to an investigation by Reveal from The Center for Investigative Reporting.

The profit margins can be huge and, for violators of labor laws, hinge on the widespread exploitation of thousands of caretakers, many of them poor immigrants effectively earning $2 to $3.50 an hour to work around the clock. The federal hourly minimum wage is $7.25.

Reveal interviewed more than 80 workers, care-home operators and government regulators and reviewed hundreds of wage theft cases handled by California and federal labor regulators, workers and local district attorneys. The investigation found 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 before daybreak to cook meals, shower residents and scrub toilets. At night, they are deprived of sufficient sleep because they have to wake to change adult diapers, dispense painkillers, return wandering dementia residents to their beds and shift the bedridden every 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 rarely are allowed a day off; even then, they often must pay their substitutes. Two caregivers recounted having miscarriages after their bosses refused to allow them time off or to stop lifting heavy residents.

Because these workers often live where they work, they are under the watchful eye of their bosses. They are bullied into not cooperating with investigators. In some cases, care-home operators have threatened to report undocumented workers to authorities.

Human trafficking - in which workers, particularly Filipinos, are coerced, manipulated and exploited - also is not uncommon, according to prosecutors and attorneys. For example, several family members were charged last year 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,” said Tia Koonse, legal and policy research manager at 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.”

The growth of board-and-care homes in neighborhoods across the United States is tied to medical advances, enabling aging baby boomers to live longer despite debilitating illnesses. This has resulted in an increasing number of gravely ill people or their family members seeking an alternative to costly nursing home care. There were about 29,000 residential care communities nationwide and about 300,000 full-time caregivers in 2016, according to the most recent federal figures available. About two-thirds are smaller facilities with four to 25 residents, many with dementia. California leads the nation with more than 7,300 residential care facilities licensed by the state.

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

In 2013, 11 workers brought wage theft claims after providing around-the-clock care in the care homes Costa owned. They changed adults’ diapers, comforted the dying and hoisted infirm residents into bed. They worked six days a week and subsisted on meager wages, according to interviews and court documents.

The workers said they risked being fired if they left the facilities and had no off-duty rest breaks during the day. Costa’s care homes promoted 24/7 care for frail clients.

“We knew we were being underpaid,” said 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 said she was not allowed to leave the home without permission when clients were present.

In many cases, workers in the industry fall into jobs that become increasingly abusive. A substantial number are working in the U.S. without authorization or applying to remain legally in the country. They are paid less than they’re promised, isolated and restricted to the facilities.

Residents in these care homes typically are more than 60 years old. The annual national median cost for each resident is about $48,000. Dementia residents often pay more. Some owners tack on extra charges for those who are incontinent or desire more than two showers a week.

Over the last decade, care-home operators across the nation broke minimum wage, overtime or record-keeping laws in at least 1,400 cases, federal data shows. About 35 percent of them were in California. Data obtained by Reveal through a California Public Records Act request shows senior care facilities in the state have pending wage theft claims against them or have been ordered to pay back wages and penalties in more than 110 additional cases.

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