What’s at stake?
After facing criticism over executive compensation and direct community investments on its tax filings, Valley Children’s Hospital now faces a potential class action lawsuit over allegedly paying some of its workers less than minimum wage for on-call shifts.
A Valley Children’s Hospital employee is suing the nonprofit hospital, alleging that it paid employees less than the minimum wage – as low as $6 to $8 – for mandatory on-call shifts.
Attorney Brian Whelan filed the class action complaint in Madera County Superior Court on behalf of employee Bonnie Ferreria – and all “similarly situated current and former employees” over the past four years – earlier this month.
“Valley Children’s Healthcare has a policy of paying its non-exempt employees, such as its nurses, less than the minimum wage for their mandatory on-call shifts,” the complaint alleges.
The complaint calls the policy an “unlawful, unfair and deceptive business practice” that violates California Labor Code. It also asks for the court to issue an injunction for Valley Children’s to stop the policy and relief for employees who were allegedly underpaid.
“At a time when too many pay lip service to our nurses,” Whelan added in an emailed statement, “this lawsuit is about delivering basic rights for the most important people in our Valley: those who take care of sick children and help lift up Valley families in the midst of a medical crisis.”
Valley Children’s spokesperson Zara Arboleda said the hospital refutes the allegations in a statement emailed to Fresnoland.
“Valley Children’s Hospital strongly denies all allegations in the lawsuit,” she said, “and will defend itself against the claims in the litigation.”
Arboleda also emphasized that “there is technically no class action yet” pending additional steps including a “judicial finding of merit” on the appropriateness of class action treatment.
Ferreria is the only plaintiff named in the complaint.
What does the complaint say?
Ferreria has been a non-exempt employee for over four years at Valley Children’s, meaning she’s entitled to overtime pay under state law, according to the complaint.
These non-exempt employees were paid between $6 to $8 for shifts when the employee was on-call “but not called back to be physically at work in the hospital,” the complaint states.
“When the employee was called back to work at the hospital, and returned to the hospital, a different rate would apply,” the complaint continues, “but the employee, would at times, forfeit the less-than-minium wage on-call pay.”
The current minimum wage in California is $16 an hour for companies of any size, according to the state’s Industrial Welfare Commission. In 2020, it was $13 an hour for companies with more than 25 employees.
In addition to paying workers less than minimum wage, the complaint accuses the hospital of inaccurately calculating Ferreria’s and other employees’ overtime and double time hours worked and of failing to provide employees with “complete and accurate wage statements.”
Not the first challenge to compensation rates at Valley Children’s this year
The lawsuit follows months of controversy regarding Valley Children’s Hospital’s finances.
In March, two members of the Fresno City Council called for a state investigation into executive compensation at Valley Children’s Hospital after learning the nonprofit’s Chief Executive Officer Todd Suntrapak earned roughly $5.1 million in total compensation in 2021.
Councilmembers Miguel Arias and Garry Bredefeld criticized the hospital not only for Suntrapak’s salary package but also for paying four other executives more than $1 million.
Then in May, a Fresnoland investigation of Valley Children’s tax filings found that despite making at least $1.1 billion in profits between 2013 and 2022, the hospital spent an average of just $185,899 on charity care per year – meaning financial assistance for patients who can’t afford a procedure.
Nonprofit hospitals like Valley Children’s are required to direct some of their excess revenue back into the community in exchange for tax breaks in the U.S. – but the investigation also found that about 80% of Valley Children’s direct community investments went into its own associated medical group. That came as a surprise to several experts Fresnoland spoke with.
The hospital has defended its executive compensation packages as “guided by industry standards.”
It has also stood by its direct community investment track record, arguing that the contributions to its own associated medical group were a community benefit since it helped establish and cover ongoing costs at two of the hospital’s specialty care centers in Bakersfield and Modesto.
Fresno City Attorney Andrew Janz didn’t respond to questions from Fresnoland but confirmed to The Fresno Bee that his office’s new wage theft unit will be investigating the allegations brought forward in Whelan’s complaint.
In addition to the hospital in Madera, Valley Children’s operates facilities in other Central Valley cities, including Fresno.
