Day Care in Wonderland

(Permission to rebroadcast in whole or in part is hereby granted. A courtesy super or CG crediting the Mackinac Center would be appreciated.)

The legal battle continues between the Mackinac Center Legal Foundation and the Michigan  Department of Human Services. The Center has sued the DHS over the illegal withholding of approximately $4 million a year in so-called union dues from state subsidy checks to home-based child care providers. The DHS maintains that home day care business owners are government employees and that it needs to withhold the money, sent on behalf of low-income parents, in order to provide dues to a union that claims to represent some 40,000 home day care providers across Michigan.

The Mackinac Center sued the DHS in the Michigan Court of Appeals in September 2009 on behalf of home-based day care owners Sherry Loar and Dawn Ives. The DHS responded by asking the court to drop the suit. But Mackinac Center Legal Foundation Director Patrick Wright says the DHS' reasoning was as curious as the strange developments that followed.

"What was odd with DHS is that they only argued your procedural or technical things," Wright said. "They made no attempts to argue the substance of the lawsuit at this point. Now, again, they don't have to, but it's somewhat telling that they didn't. It kind of indicates that they probably think that their merits aren't that strong."

In the meantime, one of the legal foundation's original clients, Dawn Ives, had to remove herself from the case, because economic conditions forced her to close her home day care business. Dawn is now working for the lawsuit's other client, Sherry Loar, and the state no longer sends Dawn checks or withholds the purported union dues. Ironically, this means Sherry, the employer, is a union member, while Dawn, the employee, is not — unless she keeps her business license.

According to Wright, "It shows the definitional absurdities of what we have going on here. We have Sherry hiring Dawn, and Sherry is the one who is designated as the employee — and Dawn, who works for Sherry, is not."

Since the lawsuit's filing, more home day care providers have contacted the Mackinac Center. Michelle Berry of Flint Township says her so-called union dues have produced no benefits.

Berry said: "We don't have monthly meetings. We don't get newsletters. There's no communication. There's, you know — we have a deduction taken from a check, and where that goes I have no clue."

And then there's Paulette Silverson who owns a home day care business in Brighton. Paulette's interest in the Mackinac Center's case was piqued when she tried to get a straight answer from her alleged employer, the Michigan Home Based Child Care Council.

"Well, I wanted to know since I am an union member of theirs, am I an employee of theirs?" Silverson said. "And they wrote back and said 'No, you are not an employee.'"

Wright says the council's admission could be quite damaging.

According to Wright: "We've got the DHS saying they're not the employer; we now have the Michigan Home Based Child Care Council saying they're not the employer. We have these people who run their own independent businesses saying, 'Yes, we are our own employers,' and yet somehow they've ended up in an employees union. So it doesn't make any sense, and we'll see what the consequence of that admission from Michigan Home Based Child Care Council is."

State legislators are also looking for answers. A House human services subcommittee raised questions at an Oct. 22 hearing. The hearing was prompted in part by a state auditor general's 2008 report suggesting the DHS mishandled or fraudulently paid out hundreds of millions of dollars in day care subsidies. Although the Michigan Home Based Child Care Council was scheduled to testify, no one showed up. In fact, we have learned that the council was a no-show at another hearing two days earlier. According to one state representative, the council gave no reason for its absence.

Wright said: "For whatever reason, Michigan Home Based Child Care Council decided to skip this hearing. Didn't send a representative. Now, this is an entity that was allegedly created to improve child care. It's got a hearing about a blistering auditor general's report. There's a potential lawsuit out there of which MHBCCC is not named as a party. And it decides at that point not to show up to a hearing? It's just a shocking development."

Private employers in a government employees union. Private employees who aren't. Government agencies that deny their role, ignore legislative hearings and transform child care subsidies into union dues. It's a real-world Alice-in-Wonderland nightmare that violates day care providers' rights — and keeps getting curiouser and curiouser.

Kathy Hoekstra is a communications specialist at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited. Click here for more on the Mackinac Center lawsuit, Loar v. DHS.