DOL Proposes Phasing Out Subminimum Wages for Workers with Disabilities

The DOL proposed phasing out subminimum wages for workers with disabilities by 2027, inviting public feedback before the new administration takes action.

On December 4, 2024, the U.S. Department of Labor (DOL) announced a significant proposal to eliminate the practice of paying subminimum wages to workers with certain disabilities over the next three years.

Highlights of the Proposal

The DOL aims to repeal the federal provision allowing subminimum wages for disabled workers.

Since the Fair Labor Standards Act (FLSA) was implemented in 1938, this law has enabled some employers to pay less than the minimum wage to individuals with specified developmental, physical, and mental disabilities.

The public is encouraged to share their thoughts on this proposal until January 17, 2025.

Historically, the FLSA has allowed employers to obtain special certificates from the DOL that permit them to pay subminimum wages to certain disabled individuals.

The rationale behind issuing these certificates is to counteract barriers to employment opportunities for these workers.

Section 14(c) of the FLSA defines eligible disabled workers as those whose physical or mental conditions significantly hinder their earning capacity or productivity.

This includes a variety of conditions such as developmental disabilities, blindness, mental health issues, cerebral palsy, and substance abuse disorders.

The Proposal’s Impacts

The DOL’s proposal intends to stop the issuance of new Section 14(c) certificates once the final rule is in place.

However, current certificate holders will have a grace period of three years to continue using their authorization under the new regulations.

Typically, these certificates are valid for one to two years.

The DOL argues that the job market for workers with disabilities has seen remarkable improvement due to advancements in legislation, evolving societal perceptions, and technological innovations, rendering the need for subminimum wages obsolete.

  • Most organizations that currently hold these certificates are known as “community rehabilitation programs.” These non-profit entities specialize in offering rehabilitation and employment opportunities for individuals with disabilities.
  • When reviewing applications for these certificates, the DOL takes several factors into account:
    • The severity and nature of the individual’s disabilities in relation to their productivity.
    • How the productivity rates of disabled workers compare to those of their non-disabled counterparts.
    • The wages offered to disabled employees.
    • The standard wages paid to similarly qualified local employees without disabilities.
  • An amendment to the FLSA made by Congress in 1989 required that subminimum wages correlates with a worker’s actual productivity levels.

Looking Ahead

The DOL is currently welcoming public feedback on the proposed regulations until January 17, 2025.

Shortly after this deadline, President-elect Donald Trump will take office, and his administration will decide whether to finalize this rule or not.

If the proposal is adopted, it could lead to higher labor costs for specific employers.

Employers would be wise to review their wage practices to ensure compliance with both federal and state minimum wage and overtime laws.

Additionally, tracking accurate data on employees earning subminimum wages and their respective workplaces could prove to be beneficial moving forward.

Source: Natlawreview