U.S. Proposes Ending Subminimum Wage for Workers with Disabilities After 86 Years

The DOL proposed eliminating subminimum wage for workers with disabilities, aiming to phase out outdated provisions allowing lower pay and inviting public comments.

On December 3, 2024, the U.S. Department of Labor (DOL) introduced a groundbreaking proposal aimed at eliminating the practice of paying workers with disabilities below the federal minimum wage.

This initiative seeks to dismantle a long-standing provision from 1938, known as Section 14(c) of the Fair Labor Standards Act.

This provision has historically allowed employers to receive special certificates from the DOL’s Wage and Hour Division, enabling them to pay certain employees with disabilities less than the federally mandated wage of $7.25 per hour.

Proposed Actions

Under the new proposal, the DOL plans to take two key actions:

  • Stop issuing new Section 14(c) certificates for employers that apply after the rule takes effect.
  • Allow current certificate holders to continue operating under Section 14(c) for up to three years, as long as they comply with all relevant legal standards.

As of May 1, 2024, there were 801 employers holding either authorized or pending Section 14(c) certificates.

The DOL’s proposed changes aim to ensure that employees who currently earn subminimum wages won’t have to leave their jobs immediately.

Many of these individuals could potentially move into roles that offer full wages.

Importantly, existing certificate holders would not need to modify the services they provide or the work environments for their employees.

In the short term, the proposal would halt the issuance of new 14(c) certificates, while over a three-year period, it would phase out current certificates.

The DOL believes that paying less than minimum wage is no longer necessary for creating meaningful employment opportunities for people with disabilities, a mission initially stated when the program was first introduced in 1938 to expand job access for individuals who might struggle due to productivity limitations tied to their disabilities.

Background Information

Currently, the system allows employers to obtain a certificate from the Wage and Hour Division, permitting them to pay below the minimum wage if the employee’s physical or mental condition affects their productivity.

These certificates can be awarded to a variety of entities, including businesses, community rehabilitation programs (CRPs), hospitals, and school-work programs (SWEPs).

CRPs are specifically defined by the DOL as not-for-profit organizations dedicated to supporting individuals with disabilities through rehabilitation and employment opportunities.

The DOL asserts that since the establishment of Section 14(c), the options for employment available to individuals with disabilities have expanded significantly.

This positive trend appears poised to continue.

Meanwhile, states like California, New York, and Illinois have already implemented laws prohibiting or limiting the practice of paying workers with disabilities below the minimum wage.

Public Engagement

To refine this proposed regulation further, the DOL is encouraging public input.

Comments from the public will be collected until January 17, 2025, at 11:59 p.m. EST, providing an opportunity for community engagement in the rulemaking process.

Source: Natlawreview