Goodwill Takes Contract from FL Launderer

Posted January 2, 2015 at 4:22 pm

Private-sector operator has concerns regarding ‘unlevel playing field’

Goodwill Industries of South Florida recently won a $15 million contract to process nine million lbs. of textiles annually for Jackson Memorial Hospital in Miami, according to news reports.

The three-year deal covers all of the hospital's laundry services and eight additional Jackson clinical facilities. It will also create 75 local jobs at Goodwill’s plant and will generate “positive growth” for the area around the Goodwill plant in Miami, according to Carlos Migoya, president of the Jackson Health System.

But Christian Luneburg, president of Florida Linen Services LLC, Pompano Beach, FL, told TRSA that this promise of new jobs that Goodwill intends to add in to its South Florida laundry operation will cause the loss of private-sector jobs in the same region.

Luneburg confirmed that Florida Linen serves the Jackson Memorial system, which apparently took advantage of a contract termination clause allowing the move to Goodwill’s Miami plant, opened in 2013. Had Goodwill not approached Jackson Memorial, the system would not have exercised the clause, he believes. “As a result, they went out for bid, and the result of the bid was they were going to move to Goodwill. So while we’re currently serving them, we know we’re going to lose them in the very near future.”

When asked if the lost contract will trigger layoffs at Florida Linen, Luneburg replied, “Absolutely,” though he didn’t specify a number. “While they are in fact creating new jobs in their plant, those same jobs are going to be jobs lost to our operation,” Luneburg said. “So for every job created in one plant, it’s coming at the expense of employees and employees’ families that had been earning an income considered to be a “living wage,” unlike Goodwill’s unique wage scale, which as reported by news media, may in some cases be below minimum wage. Luneburg added that Florida Linen provides health insurance and a pension fund, among other benefits that an employee starting at Goodwill might not receive.”

Goodwill’s $15-million laundry has drawn critical scrutiny from news media and other organizations that have raised questions about unfair competition because Goodwill pays subminimum wages to its laundry employees with physical or intellectual disabilities, while agency executives earn high six-figure salaries. The media has previously reported that Goodwill has said that all its Miami laundry employees earn a starting wage of $9 an hour.The plan for the plant is to have a staff in which three out of four employees are people with disabilities.

In addition to jobs lost in the private sector, as a 501(c) nonprofit organization, Goodwill is exempt from federal and other taxes that private-sector companies pay. “It is my understanding that they are a tax-exempt organization,” Luneburg said. “Certainly, that creates a bit of an uneven playing field. While we are a for-profit company that does pay taxes and does contribute back to the community from a tax perspective, they are exempt.”

Florida Linen Services pays its share of city, state and federal taxes, and is a large employer of minority workers in Southeast Florida. The company, a certified women-owned enterprise, has strong ties to the community and has not received grants or subsidies from taxpayers, Luneberg said. While there has been significant media attention on the jobs the Goodwill laundry will create, he expressed his concerns for Florida Linen associates who will lose their jobs and could end up in the unemployment line.   

TRSA supports the federal Fair Wages for Workers with Disabilities Act (HR 831) that would bar the payment of subminimum wages to employees with disabilities. A TRSA position paper observes that Goodwill or any nonprofit agency that competes for business with private-sector companies must obey all applicable tax laws and regulations associated with running a business that specializes in employing people with disabilities.

“TRSA will work to close the legal loophole that allows Goodwill to pay subminimum wages, and urge the IRS to limit the rights of tax-exempt organizations to carry on a commercial enterprise in the guise of training workers with disabilities,” the statement said. HR 831 is expected to be reintroduced in the new Congress.  

Luneburg said he supports the bill and appreciates TRSA’s efforts to see it enacted. However, he doesn’t view it as a catchall solution. “It would certainly help, but that does not mean that the problem is going to be solved,” he said. “Because you still have a not-for-profit company that is getting subsidized and supported in more aspects than just their wage exemption. At the end of the day, all we are looking for is to be able to compete on a level playing field.”

Watch for a follow-up article on this topic in an upcoming issue of Textile Services.