The agreement with the Department of Labor requires Sand Island Treatment Center to pay back wages of almost $452,000 by Wednesday.

A prominent Honolulu drug rehab underpaid dozens of counselors, shorting them by hundreds of thousands of dollars, a federal labor department investigation found.

Many of the counselors at Sand Island Treatment Center had struggled with addiction and went through the two-year treatment program themselves after being sent there by Hawaii courts.

The nonprofit drug rehab underpaid 34 of these workers about $452,000 over two and a half years, according to a settlement agreement signed Feb. 22 with the U.S. Department of Labor.

Almost four years ago, a Civil Beat investigation found that Mason Henderson, the chief executive officer of Sand Island Treatment Center, got a salary of almost $500,000, far beyond what similar operations in Hawaii paid their top administrators.

Not only that, Sand Island was paying several of its counselors well into the six figures – again, head and shoulders above the average pay for that position elsewhere in the state or the U.S.

But the generous pay did not make it to the lower echelons of Sand Island workers, the federal investigation showed.

“It’s really absolutely terrible that somebody would take advantage of vulnerable individuals who are trying to address their addiction issues … and treat them with utter disrespect,” said Joey Faris, a former Sand Island counselor whose complaint triggered the two-and-a-half year U.S. Department of Labor investigation.

Sand Island Treatment Center.
Sand Island Treatment Center operated for decades in the shadow of the Sand Island Wastewater Treatment Facility before being forced to move. (Cory Lum/Civil Beat/2019)

Faris, who left in 2020, said that he and another counselor would be left in charge of supervising the entire facility, going on duty at 4:30 a.m. and ending at 10 p.m.

But the pay, he said, was not tied to the number of hours actually worked. 

“They didn’t even tell us how much we were making. We just got paid what we got paid,” said Faris, who now works as a counselor on the mainland. 

Sand Island said in a written statement submitted through its public relations firm that it disagreed with the Department of Labor’s classification of its business as subject to the Federal Labor Standards Act and with some of the investigation’s findings. But it decided to settle the matter to avoid litigation so it “could continue to focus on its clients and serving the community as it has done for the past 63 years.”

The 34 employees were owed $347,437.80 in unpaid overtime, the Department of Labor said, and 21 of them were also paid less than minimum wage and were owed $104,552.04 to meet that threshold. The violations occurred from June 1, 2019 through Nov. 26, 2022.

Among those who had been underpaid were substance abuse counselors, kitchen, clerical and maintenance staff and administrators. 

Some were salaried employees who were not being paid enough to reach the federal minimum wage, which during the time in question ranged from $8.50 to $9.20 an hour. 

Hawaii’s minimum wage during that time went from $10.10 to $12. Federal law allows the Department of Labor to use the higher state minimum in its enforcement actions.

In other cases, workers were paid flat salaries despite working overtime of 41 to 63 hours per week. Some were performing tasks similar to those of regular workers, but only paid a monthly stipend of $400 per month as “trainees.”

Sand Island was also cited for record-keeping violations. “Time records of hours worked were not kept at all,” a Department of Labor spokesman wrote in response to Civil Beat’s questions.

The investigation began in July 2020. Investigators interviewed employees and management and did a thorough review of Sand Island’s records.

According to its most recent publicly available nonprofit tax return – for 2019 – Sand Island paid $2.7 million in salaries, other compensation and benefits to 52 employees. Revenues exceeded expenditures by $261,585. 

The agreement with the Department of Labor requires Sand Island to pay back wages of almost $452,000 by Wednesday. The department said it did not know where the funds are coming from. 

The rehab was started in the 1960s by two recovering alcoholics, who set up the rehab near a run-down Army chapel on the largely industrial Sand Island. It is also known as Kline Welsh Behavioral Health, named after the two founders.

For decades, the facility operated on public land near the Sand Island Wastewater Treatment Plant rent-free and without a lease.

But when the sewage plant expanded, Sand Island had to find a new home, and the city of Honolulu bought one for it for $9 million. The rehab was considered essential to treating people struggling with addiction, many of whom had been caught up in the legal system. 

909 Kaamahu Place new location Sand Island Treatment Center.
The rehab was considered so key to treating addiction that the city of Honolulu bought this Kalihi building for it. (Cory Lum/ Civil Beat/2019)

Judges often require defendants to do the two-year Sand Island program as an alternative to being locked up. In one recent year, courts referred 275 criminal defendants to the rehab. 

Civil Beat’s 2019 investigation found that CEO Mason Henderson’s salary far outstripped those of his counterparts at other Hawaii drug rehabs. While his maximum pay reached almost $500,000, a similar program in Kaneohe paid its executive director $88,637. Another rehab with two-and-a-half times the revenue had a director whose base pay was only $116,920.

Sand Island said for years that it based Henderson’s pay on the Betty Ford Center. The California facility is one of the biggest and best-known rehabs in the U.S., and after a merger in 2014 with the Hazelden Foundation, had income almost 50 times Sand Island’s.

A few top counselors at Sand Island, meanwhile, made well into the six figures.

In 2017, the Hawaii Attorney General’s Office reached an agreement with Sand Island that, among other things, required Henderson to pay back some of the salary that an independent consultant had found excessive.

But only after Civil Beat’s 2019 article did the AG check to see if Sand Island had complied. In fact, the rehab had ignored much of the 2017 agreement and Henderson only repaid the excessive salary after getting the AG’s follow-up letter. 

The CEO had “always intended to pay but got distracted,” Sand Island explained. 

Now, “Mr. Henderson has repaid the claw back amounts specified in the agreement” and complied with other provisions, the AG’s office said in a statement, adding that “The Tax and Charities Division will continue to monitor compliance.“  

According to the 2019 tax return, the most recent available, Henderson was making a total of $245,002. The highest paid counselor made $132,632 including benefits.

The median pay for a drug and alcohol counselor nationwide in 2021 was $48,520.

Sand Island is funded largely through public tax dollars through a variety of state agencies, the federal government and the state’s Medicaid program. 

In response to Civil Beat’s questions about generous pay in 2019, Sand Island said that Henderson had been integral to the growth and success of the program.

“Mr. Henderson began visiting Oahu prisons where he would choose from the ‘Baddest Actors’ he could find, of the various ethnic groups, and accept them for treatment at” Sand Island, according to what appeared to be a history of the facility that it shared with Civil Beat.

Henderson increased the pay of key staff members after seeing that other facilities were luring away counselors, according to this account.

The health care sector is prone to paying low wages and violating labor laws. The Wage and Hour Division of the Department of Labor investigated 1,104 health care industry cases in the last fiscal year and won almost $15 million in back wages for 22,451 workers. 

Civil Beat’s community health coverage is supported by the Atherton Family Foundation, Swayne Family Fund of Hawaii Community Foundation, the Cooke Foundation and Papa Ola Lokahi.

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