Labor Department Seeks to Abolish Sub-Minimum Wages for Disabled Workers

The Department of Labor in Washington, on Aug. 6, 2024. Madalina Vasiliu/The Epoch Times

The Department of Labor (DOL) has proposed a new rule that would end the practice of paying workers with disabilities less than the federal minimum wage. Supporters of the proposal say it would reduce poverty within the disability community, while opponents argue it would reduce critical employment opportunities for people whose disabilities prevent them from finding employment at market rates.

The proposal, announced by the DOL on Dec. 3, would phase out certificates that allow employers to pay subminimum wages to disabled workers under Section 14(c) of the Fair Labor Standards Act (FLSA).

These certificates, which permit subminimum wages based on productivity levels, were originally created to provide employment opportunities for workers with disabilities who might otherwise face barriers to finding work.

However, the Labor Department has now determined that the certificates are no longer necessary, citing societal and legal advancements that have significantly expanded employment opportunities for individuals with disabilities.

“Since the enactment of the Fair Labor Standards Act in 1938, opportunities and training have dramatically expanded to help people with disabilities obtain and maintain employment at or above the full federal minimum wage,” Wage and Hour Administrator Jessica Looman said in a statement. “Similarly, employers today have more resources and training available to recruit, hire and retain workers with disabilities in employment at or above the full minimum wage, and this proposed rule aligns with that reality.”

The proposed rule, which is now open for public comment until Jan. 17, 2025, would halt the issuance of new Section 14(c) certificates and give employers holding existing certificates three years to transition to paying at least the federal minimum wage of $7.25 per hour.

The timing of the proposal means that the fate of the proposal will be up to the incoming Trump administration, which has promised fewer regulatory burdens on businesses. Prior efforts to end Section 14(c) have met with a mixture of support and opposition. Those seeking to bar the practice often argue that the certificates are discriminatory, while those who advocate to keep them say the certificates expand employment opportunities for the disabled and broaden their options to transition into other types of employment.

“The Biden administration is threatening to end the section 14c rule,” Sen. Tom Cotton (R-Ark.) said in a statement. “Section 14c of the Fair Labor Standards Act helps create employment opportunities for persons with disabilities that prevent them from finding jobs at market rates.”

By contrast, Mia Ives-Rublee, senior director at the Disability Justice Initiative at the Center for American Progress, said in a statement that eliminating Section 14(c) certificates would reduce poverty among the disabled and stop their exploitation.

“It’s past time the United States gets rid of draconian policies that dehumanize disabled people. Disabled people deserve equitable wages,” she said.

As of November 2024, approximately 751 employers held active certificates, allowing them to pay a combined total of over 37,000 workers with disabilities less than the federal minimum wage. These figures reflect a sharp decrease from earlier decades, when hundreds of thousands of workers were employed under the program.

The proposed rule comes after a review of the Section 14(c) program, which the DOL concluded has outlived its purpose. The agency cited declining use of the certificates, enhanced training and support resources, and a shift in public and policy expectations as factors behind its decision to seek to eliminate subminimum wage practices.

As part of the review, some stakeholders described the continued use of the certificates as “outdated” or “discriminatory,” per the DOL’s notice. Other stakeholders expressed support for the status quo, citing the importance of individuals with disabilities and their families being able to choose whether to remain in subminimum wage jobs and the benefits that they have experienced in such employment.

The DOL believes that many of the workers currently paid subminimum wages would transition into jobs that pay full wages after Section 14(c) certificates are phased out.

“With this proposal, the department expects that many workers currently paid subminimum wages under Section 14(c) will move into jobs that pay full wages, which will improve their economic wellbeing and strengthen inclusion for people with disabilities in the workforce,” Acting Secretary of Labor Julie Su said in a statement.

Washington-based ACCSES, an organization that represents disability service providers, has argued in the past that barring the certificates would eliminate valued jobs that allow people with disabilities the opportunity to develop critical skills that would allow them to take on better-paying jobs that were previously out of reach.

“Taking jobs away from people who love them, putting vital businesses at risk, and adding the stress of worrying about their jobs to the lives of people who already have significant challenges is antithetical to the role of government,” the group wrote in a 2021 note that advocated against bills that sought to eliminate Section 14(c) certificates.

ACCSES, which did not immediately respond to a request for comment on the DOL’s latest proposal, also argued at the time that the certificates allow people with the most significant disabilities opportunities to experience the “dignity of work” that would narrow significantly under a ban.

“All it will accomplish is taking away valued jobs away from people who choose to work under a certificate.”