Nassau County Comptroller Jack Schnirman’s living wage audit found that 16 employees of the emergency shelter provider, ADD/ADHD Housing Group Inc., were being paid less than the living wage required of employers with county contracts.
Keith Cook, the executive director of ADD/ADHD, said in a telephone interview with Blank Slate Media that the county’s requirement to pay employees almost $15 an hour with benefits can cause an undue hardship for a nonprofit.
The emergency shelter has a contract with Nassau County which requires them to pay their employees $14.27 an hour with benefits or $16.41 an hour without benefits, as well as granting paid time off to full-time employees.
The comptroller’s audit states that during 2016 and 2017, the 16 employees were underpaid by an average of $1.07 per hour, ranging from 4 cents to $6.07 per hour.
It was calculated that ADD/ADHD owed 16 employees back wages of $30,600, which the employer said it paid Jan. 22 in its written response to the audit.
The comptroller conducts living wage audits due to complaints or for routine review, according to a spokesman from Schnirman’s press office.
ADD/ADHD operates three shelters in Nassau County: two in West Hempstead and one in Freeport.
Cook’s response, provided in the audit, says that other shelter providers are allowed to avoid the living wage law due to the creation of a separate organization for each shelter site in order to create companies with fewer than 10 employees.
The text of the County Living Wage Law says the pay requirement applies to employers with financial assistance contracts of more than $50,000 and at least 10 employees.
Cook contended that ADD/ADHD does not maintain this practice of minimizing the number of employees in order to bypass paying the living wage law “for the sake of integrity.”
Despite ADD/ADHD’s payment of the back wages, the audit notes that the agency submitted a request to the County’s Living Wage Officer to be waived from living wage requirements in 2017. The request was denied.
Cook pointed to Section 10-D of the County Living Wage Law, which says that “not-for-profit corporations shall be eligible for financial assistance from the Nassau County Living Wage Contingency Fund… in order to meet increased payroll expenses incurred due to the operation of this law.”
According to a spokesman from the comptroller’s office, the contingency fund has not been funded.
At the time of publication, it was unclear whether Cook submitted a request for assistance from the fund.
Cook said the employees who were being paid less than the living wage requirement were nighttime employees who were allowed to sleep on the job. With their payment of the county’s required hourly rate, these employees are now being paid the same as case workers “who provide intake case management facility and staff oversight,” he said.
As well as the recommendation to pay back the employees, the comptroller suggested ADD/ADHD implement a daily time reporting process that includes pay period beginning and ending dates, hourly pay rates and actual daily hours worked on biweekly payroll records.
Another recommendation is to provide the comptroller’s office with an explanation for the 10 employees who were paid without corresponding hours of work noted in the released payroll records.
The recommendation refers to the audit’s finding of 10 employees who did not have a listed number of hours of work and therefore the comptroller could not determine if they were paid the required living wage.
Twelve employees were not compensated for 1,079 hours of their paid vacation time, which led the agency to pay them $16,988.
Cook’s response said ADD/ADHD had only designated paid time-off to employees who worked over 40 hours per week.
“Our office conducts these audits so that we can ensure employees of county contractors are being treated fairly,” Schnirman said in a press release. “If you want to work with Nassau County, you have to make sure your employees are earning a living wage.”
ADD/ADHD also failed to provide the appropriate tax forms to represent employees’ discounted rentals from the housing agency, which were part of some employee’s overall compensation package, the audit found.
The employer issued 1099s, which Cook explained in his response represented the below market rents paid by the employees to ADD/ADHD.
Cook said he merely “gave the employees the 1099s and they could file the income if they wish and his plan was not to have them pay more taxes.”
The comptroller said the rental assistance should have been included in the employees’ W-2 form reporting income.
The audit said the comptroller’s director of investigations interviewed one of the employees issued the 1099 and she said that “she lives in a house owned by the individual who is the executive director, pays rent to the individual personally, and does not believe the rent to be discounted below market rate.” The employee said she thought the income listed on the 1099 was for a bonus.
In Cook’s written response to the audit, he said the “1099 issue is through mutual agreement between the shelter provider and the comptroller’s office” deemed “inconsequential as 1099’s were never filed.”
“Employees shouldn’t have to navigate improperly filed earnings statement just to do their taxes every year,” Schnirman said. “We’ve directed the provider to stop this practice.”
Another finding of the audit was that the agency did not disclose more than $237,100 in service payments from the Department of Social Services as revenue to the IRS in 2016.
Cook said DSS does not provide informational returns to its shelter vendors detailing the amount they pay to vendors in a fiscal year. He added that the service payments are non-taxable revenue and therefore the shelter received no benefit from the unreported income.
The report said ADD/ADHD has filed an amended 990 form for the 2016 tax year to the IRS that included the missing revenue.