FAIRMONT - Crystal Care, a company that left workers without pay for months, has filed bankruptcy, giving employees little hope of a quick resolution.
Based in Richfield, Crystal Care had about 800 employees, including those who work out of the Fairmont office, until checks began to bounce and workers began to quit this spring. Then in July, paychecks stopped altogether. Some employees chose to stay with Crystal Care, based on promises that all hours worked would be paid once the company got back on its feet.
The month of September has been a particularly trying one for employees waiting for their back pay.
On Sept. 4, a letter to employees stated a merger between Crystal Care and a company called HealthStar was in full force. The letter gave assurances that under the plan the company owners had devised, workers would be paid for "new paychecks and the back payroll."
"The new paychecks will be available and CASHABLE," the letter reads. "The paychecks will be available no later than September 10, 2013. Back payroll checks will be paid within the next six to eight weeks."
Then, on Sept. 6, Crystal Care owner Sally Knutson informed employees that her company had not been able to access money from the bank that day. In addition, she wrote that: "HealthStar Home Health is not responsible for any past or current Crystal Care payroll. ... If and when we have access to Crystal Care funds from the bank, each of you will receive some or all of the payroll owed.
"I know this is unfortunate and I apologize for all of your pain and suffering. All options have been exhausted for a quick payroll funding."
Minnesota Bankruptcy Court records show Crystal Care companies filed for Chapter 11 bankruptcy on Sept. 16, around the same time the Sentinel published its first article on Crystal Care. Chapter 11 bankruptcies usually involve a corporation or partnership, with the debtor typically proposing a plan of reorganization to keep its business alive and pay creditors over time, according to www.uscourts.gov.
According to the company's attorney, Tom Flynn, a good portion of the employees are among the creditors. Flynn said the bankruptcy papers submitted last month were an emergency filing, and a complete schedule will be filed in the next two weeks, at which time more details about the bankruptcy will be available to the public.
"Your back payroll is being handled by the bankruptcy judge. The bankruptcy judge will make the final decision related to the timing of the payment of your back payroll," Knutson wrote in an email to employees dated Sept. 18.
Lori Vosejpka, a district clerk for the U.S. Bankruptcy Court in Minneapolis, said there is no way to gauge when the judge will make that decision.
"A Chapter 11, depending on the complexity of the case, can be quite long. There's really not a typical timeframe, because each case is unique," Vosejpka said.
"I don't understand how this happens. I just don't get it," said a former employee who has had to apply for unemployment, seek assistance from her church to help pay her utilities, and turn to a food shelf to help feed her family.
"I'm just hoping that when we go to bankruptcy court that I get my money," she said, preferring to remain anonymous.
She had worked seven years for the company as a personal care assistant when she turned in her resignation in August, after putting in 155 hours without pay.
Like many of her colleagues, she felt loyal to a company that had previously treated them well, and she was concerned about who would care for the clients if everyone were to quit.
Now, she's angry and hurt, and she wants to know what Crystal Care did with money that should have gone to pay her employees.
Crystal Care's operations were funded through state and federal dollars, as well as Veterans Affairs and clients' private pay. Where those funds are the former owner doesn't know, Knutson said in the one news interview she did this spring with KSTP. The state is investigating Crystal Care for Medicaid fraud, but details of that investigation are not public.
The Minnesota Department of Labor and Industry, whose goal is to resolve wage issues or complaints and ensure employees get paid, also is not allowed to release any information on current investigations, or to even reveal if the department is conducting any investigations.
Here's what communications director James Honerman was able to say: "The Minnesota Department of Labor and Industry has had at least eight individuals contact us about this employer in the past three years, and we have worked to resolve their wage claims or complaints."
With a complaint, employees can remain anonymous. With a wage claim, employees past or present have to be willing to use their name. One of the most recent wage claims was resolved in June, when an employee was paid $4,984 in final wages, out of $7,061 the employee claimed to be owed.
"In the majority of cases, when we send a wage claim letter, the employer will pay the employee and resolve the issue," Honerman wrote in an email to the Sentinel.