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When a Valley Children’s Healthcare nurse claimed in a lawsuit that the nonprofit’s compensation policy caused her and others to make less than minimum wage , Fresno city attorney Andrew Janz decided to investigate it as a potential case of “wage theft.”
A new state law gives city attorneys (and other local public prosecutors) the power to investigate and prosecute wage theft claims within their jurisdictions. Fresno City Council legislation in April also gave Janz the power to subpoena documents and witnesses he needs to investigate and enforce local, state and federal laws.
Janz, who ran unsuccessfully for mayor in 2020, said last month that his office received the civil lawsuit, filed by registered nurse Bonnie Ferreria in adjacent Madera County. He also said that “our investigation is ongoing,” referring to a probe into whether Madera County-based Valley Children’s committed wage theft at any of its Fresno facilities.
Ferreria’s complaint alleges that Valley Children’s pays employees an hourly rate of $6-$8 while they are on-call but not physically at work. When employees are called back to the hospital, another rate applies, and they often forfeit their $6-$8 on-call earnings, resulting in employees making less than the minimum wage for their shifts, according to the complaint.
With the investigation and potential prosecution, Janz has injected himself into an ongoing public conversation about Valley Children’s finances and its level of executive and staff compensation. Janz technically works for the Fresno City Council and some members of that elected body have been highly critical of Valley Children’s stance on executive pay, even calling for a state investigation into the Madera nonprofit’s finances.
Janz’s investigation is the first by his office since the expansion of his investigative powers, and might be the first of its kind in the state.
“It’s a good test case to see the (state) law actually applied by local jurisdictions,” Bay Area labor attorney Christian Schreiber, who is familiar with the new law, said in an interview with The Fresno Bee.
Lawmakers say that they passed the new law because claims of wage theft filed with the California Labor Commissioner’s Office can languish because the office is underfunded, understaffed and overworked. After the passage of the new law, effective Jan. 1, Janz’s office received a $720,000 state grant in May to help combat wage theft. The city’s Wage Theft Protection Program will be launching Aug. 1 with a new website where community members can file complaints.
Janz’s office declined to comment for this report. Valley Children’s spokesperson Zara Arboleda also declined comment about the city attorney’s investigation. Last month, she provided a written comment about the civil lawsuit: “Valley Children’s Hospital strongly denies all allegations in the lawsuit and will defend itself against the claims in the litigation.”
For years, Valley Children’s has consistently gained recognition as a top-tier healthcare provider and is one that serves a large number of patients who are beneficiaries of Medi-Cal across a 12-county service area. Ferreria’s complaint came amid months of scrutiny — from community members and Fresno city councilmembers — of the multi-billion-dollar nonprofit’s executive pay, especially for CEO Todd Suntrapak, who received an annual compensation of more than $5 million in 2021 and 2022. His compensation in 2022 was the third-highest in the nation for children’s hospital CEOs, despite Valley Children’s ranking as 16th largest in bed count.
Suntrapak also received a $5 million forgivable home loan from Valley Children’s that year. Monterey County property records show he purchased an additional home in the beach town of Carmel-By-The-Sea for $6.5 million in 2022, but it’s uncertain whether he used the loan to buy the house. Five other Valley Children’s executives were compensated more than $1 million that year.
Among the criticisms of the hospital earlier this year was the relatively low pay rates for its nurses in comparison to the average pay rate for other Fresno-area nurses, who also make less than their counterparts in other parts of the Central Valley, according to federal wage data and online job listing aggregator Indeed .
Suntrapak has declined to speak with The Bee since criticism of his pay and perks became the subject of news coverage in March. But in an interview with ABC 30 in early June, he called nursing wages “fluid” and said “we recently made an adjustment to our nursing salaries that puts our nursing salaries on par with anybody else in the area.”
The Fresno Chamber of Commerce in February criticized the proposal to give Janz the power to investigate claims of wage theft. The criticism came in response to the City Council unanimously giving Janz the new power to investigate. California’s business chamber argued against the state law when it was moving through the legislature, arguing that it would lead to irregular outcomes in enforcement because different local governments would have different ideas about who to investigate and prosecute, and how to go about it.
Fresno city councilmembers assured critics that the city would not look for new cases to prosecute and only go after the most obvious violations of the labor code, citing the failed Bitwise Industries as an example of an egregious case. It’s unclear whether Ferreria, who filed her lawsuit in Madera County, worked at one of the nonprofit’s Fresno facilities, or if the simple question of wage theft at Valley Children’s in Madera was enough for Janz to decide to investigate Valley Children’s operations in Fresno.
An employee of Fresno-based Saint Agnes Medical Center filed a lawsuit against the hospital in Merced County that mirrors some of Ferreria’s allegations. But Janz has not publicly announced an investigation into Saint Agnes at its Fresno facilities.
The law that empowers Janz to investigate and prosecute wage theft also allows him to do it independently of any outcome from individual employee lawsuits against employers. Ferreria’s complaint aims for class action status, but that has not yet been authorized by a judge in Madera County.
“If you have an employee who makes the allegation, they have a private interest in the outcome of the case and it may result in a payment through a settlement agreement with the employer,” said Schreiber, the Bay Area labor attorney. “The city attorney is enforcing the law on behalf of the people.”
In his announcement last month, Janz said his office will be forwarding the complaint to the state Labor Commissioner if, after his investigation, he finds he does not have jurisdiction.
But if Janz’s office finds wage theft was committed in Fresno, it is no longer a question of jurisdiction, said Dan Gildor, a labor attorney with Valerian Law, based in the Bay Area.
“It’s (the city attorney’s) ability now to go and enforce the laws within their jurisdiction,” Gildor said. “It’s just a question of whether that’s something that they want to do: Help the citizens of their municipality to combat this statewide problem.”
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