Photo by Andy Boyd

Navy Medical Center San Diego

Another employment contractor for the federal government is being accused of mistreating disabled workers, this time at Navy Medical Center San Diego.

A source who asked to be called by the gender-neutral name “Terry,” out of fear of being fired for talking about the employment practices of Job Options, Inc., says “They made all of these weird withdrawals and withheld money from our retirement accounts,” Terry says. “When I called them on it, they tried to blame the IRS.”

Job Options, Inc.

Photo by Andy Boyd

A letter dated January 15, 2015, printed on company stationery and signed only by “Accounting Department, Job Options, Inc.” shows that monies were indeed removed from multiple employee retirement accounts. The reason, says the letter, is because an internal audit revealed that the company had made overpayments to several employees’ retirement accounts from 2010-’14.

“Job Options, Inc. is seeking approval of its correction from the Internal Revenue Service,” reads the letter. “In order to preserve all options in dealing with this issue, John Hancock was instructed to reduce the account of each affected participant by the amount of the excess contributions made to their account. The amount of the excess contributions was placed in a suspense account and is awaiting an IRS ruling.”

Job Options chief executive Jeffrey Johnson makes no apologies for his company taking money out of his employees’ retirement accounts, freezing those accounts, and then asking the government if doing so is acceptable only after the fact. He prefers the term “adjustment” to “withdrawal.”

“We are proud of what we do with our disabled workforce at [Navy Medical Center] Balboa and at the other sites we operate and categorically deny any mistreatment or financial improprieties by Job Options, Inc. in our organization,” Johnson writes in an emailed statement to the Reader.

Terry is one of about 80 Job Options employees working in janitorial and “floor technician” jobs at Naval Medical Center San Diego. With $50 million in annual revenue, according to its website, Job Options, Inc. is paid to provide disabled workers to the Naval Medical Center through a contract administered by private-sector contractor Source America.

Since 2006, Source America has managed nearly $2.75 billion of a $3 billion federal disabled-workers program called AbilityOne. Nine years after taking over, Source America is taking hits for alleged mismanagement of its massive government contract.

Nationally, CNN and locally the Reader have reported accusations of corruption by contractors and subcontractors. The bulk of allegations center on whether or not contractors are meeting their statutory obligation to ensure that at least 75 percent of their workers are disabled. Job Options claims its pool of workers is “roughly 75 percent” disabled people.

Another local Source America subcontractor, Pride Industries, has been accused of treating employees abusively and allegedly pushing non-disabled workers to claim disabilities in order for the company to meet that 75 percent threshold.

Pride Industries posted a response on its website to the Reader’s August 10 article by Joe Deegan exposing allegations of employee abuse and alleged improprieties. The rebuttal is mostly a series of clarifications, such as a declaration that Pride Industries is a “nonprofit corporation” rather than a “private company.”

Both Job Options, Inc. and Pride Industries are eager to point upward on the multi-billion-dollar Ability-One food chain claiming the program gets a clean bill of health from the Government Accountability Office. But neither mentions that at least five inspectors general from government entities, including the United States Navy, are currently investigating Source America and some of its subcontractors. Jeffrey Johnson says his company is not the target of any such investigations.

Yet some of his workers have asked their union to call for an investigation by state and federal labor officials.

“I thought the whole point of [the] AbilityOne program is to give us disabled people a purpose and reward us for working,” Terry says. “Why is Job Options shaming us for our physical challenges? Why are they lowering our pay and doing God knows what with our retirement accounts?”

Terry believes Job Options penalizes disabled workers by subjecting them to recurring “productivity-timing studies.” Disabled workers who aren’t fast enough have their pay reduced by as much as $1 per hour or more for six months at a time. After six months, they’re allowed to test again to see if they can work quickly enough to have their full pay restored.

Another Job Options worker says he was slapped by a supervisor. “I got hit by one of the supervisors just because I had my arms crossed and he didn’t like the way I was standing,” says Jesse Arreola, 23, of San Diego. “He slapped me pretty hard on my elbow, and I didn’t like it.”

Arreola reported it to his supervisor’s boss, who offered an apology. “But Carlos, my supervisor, just got a little talking to. I still have to work for him, and it’s really stressful, because I can tell he’s mad that I told.”

Arreola works for Job Options as a housekeeper at the Naval Medical Center. He suffers from bipolar disorder and attention deficit hyperactivity disorder. He fears retaliation from his supervisor. “I think I could get fired for talking to you about this,” he says. “But I don’t think it’s fair. Maybe the way we’re being treated will change if more people know what’s going on.”

Recently, Arreola and his coworkers took a different kind of hit. On July 1, he and other disabled employees got a notice from their human resources department. “They informed us they were ending our retirement accounts due to having to give us Obamacare health insurance and they couldn’t afford to do both,” Terry says. “We were given awful medical coverage through Kaiser Permanente. We now have to pay an annual out-of-pocket deductible of five-thousand dollars.”

Arreola says the change cost him what he felt was superior coverage under MediCal. Under Kaiser, he says he’s charged for appointments and medications that were free before. “At Kaiser, they want, like, $360 for one of my doctor’s appointments when it used to be free for me. I’m afraid I’m not going to be able to get treatment anymore. When I run out of medications, I don’t know if I’ll be able to get refills.”

Like Terry, Arreola says he’s seen money deducted from his retirement account, which he says he has also been cut off from accessing.

But, says Job Options chief executive Jeffrey Johnson, the loss of the pension plan and the replacement of MediCal coverage with a Kaiser plan that some employees are finding far less useful and much more expensive is the fault of the Affordable Care Act — not his company.

“Our intent is to terminate the pension plan because of the requirement of the Affordable Care Act to provide a compliant health care plan,” Johnson says. “This requirement supersedes our ability to offer a pension. Once the plan is terminated employees will be able to withdraw all amounts to which they are entitled.”

Johnson defends the practice of timing-productivity studies and pay cuts for those who don’t measure up as necessary for a simple business reason. “There are no penalties that Job Options, Inc. would be assessed for not timing disabled workers,” Johnson says. “However, the contractual price we receive under the AbilityOne program which this contract is subject to is derived only by proportionately adjusting the disabled’s wages according to the productivity that the disabled work at.”

In order for the disabled-workers contract Job Options holds to be profitable, the net cost of completing the janitorial and other maintenance work that the company is responsible for getting done at the Naval Medical Center can’t be higher than what the government will pay, regardless of whether the work is done by workers who have disabilities or by non-disabled workers.

“As an example,” Johnson continues, “on a simplistic basis if three disabled people work at a productivity rate of two-thirds of standard, the federal government will pay for two workers, not three in the contractual price they pay Job Options, Inc. Therefore, disabled workers who work with productivity rates below standards receive an adjusted or commensurate wage according to their productivity level....

“Job Options, Inc could employ these people at full wages, but then our total outlays of compensation and benefits would exceed the reimbursement we contractually receive,” he continues.

Terry bristles at being part of a pool of disabled employees whose employer refers to as “these people.” There’s no point, Terry believes, in having a government-funded program for workers with disabilities whose contractors penalize them for the limitations those very disabilities cause.

“One of my coworkers had his hourly rate lowered from $14.74 to $12.68 per hour for a six-month period after doing a time study,” Terry says. “Another time they lowered it from $14.74 to $13.86 for six months. The poor guy has diabetes and some kind of mental impairment, so it’s hard for him to work fast and be focused. I mean, why even have this program if you’re going to shame people for being disabled?”