Publicly supported companies should expect more scrutiny

Companies reliant on Medicaid funding that don’t pay their workers will soon face more scrutiny from health and human services officials.

Worker complaints to the Department of Labor about missing wages from companies that receive public Medicaid funding will now be shared with the state Department of Health and Human Services, which licenses group homes, mental health agencies and home health care companies. The complaints will trigger an inquiry by DHHS when the payment issue raises concerns about staffing, a spokeswoman said. If DHHS finds problems, the company could lose its license to operate or have Medicaid funds withheld.

“We recognize the potential gains that can come from closer collaboration with the Department of Labor,” said Dave Richard, state Medicaid Director for DHHS.

The coordination between labor and health officials comes after a News & Observer series detailed how publicly supported companies that fail to pay workers face no repercussions from regulators. Group homes, home health and mental health agencies accounted for more unresolved wage complaints than any other single industry. Though state Labor Commissioner Cherie Berry has long known about this problem, her agency had not established a plan for how to address the issue with counterparts at DHHS.

The four-part series, The Reluctant Regulator, detailed how the state Department of Labor under Berry’s command retreated when employers refused to pay workers the wages they earned. In fiscal year 2014, Berry’s department failed to collect $1 million in wages investigators determined were owed to 617 workers. The employees were told to fight for the wages on their own in court.

Berry said in an interview this summer that her wage and hour unit had suffered from management problems, which she said she addressed by bringing on a new administrator earlier this year. That administrator, Christine Ryan, said she is looking for ways to improve how investigators handle these cases, including considering litigation.

For years, the Labor Department was quick to retreat during these investigations. When employers ignored investigators’ calls or letters, the agency did little to force an audience. When the employers told investigators they wouldn’t pay, the department closed the case and told the workers it would do not more. Though Berry’s department has the power to sue these employers, it rarely does. In 15 years as labor commissioner, Berry’s department filed lawsuits only 35 times against companies that violated wage and hour laws.

“The labor commissioner is not doing her job,” said Senator Josh Stein, a Wake County Democrat who is running for Attorney General in 2016. “If she doesn’t want to take care of these workers, she should find another job.”

Stein said Berry should be making the problem of wage theft a public issue and should lean on the General Assembly for more tools and resources to combat it.

“The irony is, this year, she actually asked the legislature to eliminate an 85-year-old requirement that she recommend changes in the law when the law is deficient. Rather than ask us to give her the authority she needs to take care of workers who suffer from wage theft, she actually asked to stop having to write reports to us to see what she can do to help people,” said Stein.

Senator President Pro Tempore Phil Berger, a Eden Republican, said he would be speaking with other legislators about what they could do to address the problems pointed out in the series.

“There is no good reason for someone who puts in a day’s work to not get paid,” said Berger. “To the extent that government has a role of overseeing that, if there's something we can do, we need to look at that.”

Berry, a Republican from Catawba County, is elected. Though the legislature controls the purse strings of her 355-person department, she does not report to legislators or the Governor.

Figuring out what, if anything, lawmakers could do to address the issue will be tough, said Rep. Gary Pendleton, a Wake County Republican who sponsored legislation this year to crack down on other labor issues.

“If [Berry] is not willing to do her job, I just don’t know what we can do,” Pendleton said.

Berry is running for her fifth term as labor commissioner in 2016.

Her likely competitor, former long-time mayor Charles Meeker, said in a statement Wednesday that the Department of Labor under Berry was not using its power to “defend our workers against blatantly unfair treatment.”

This story was originally published October 14, 2015 at 5:59 PM with the headline "Publicly supported companies should expect more scrutiny."