Minimum-Wage Bill Ends Low Pay for Workers with Disabilities

Roy Maurer By Roy Maurer February 1, 2019

​Legislation involving the minimum wage aims to raise pay for people with severe disabilities but could result in eliminating their jobs.

Congressional Democrats recently introduced the Raise the Wage Act, which would increase the federal minimum wage from $7.25 an hour to $15 an hour by 2024. It would also stop the Department of Labor (DOL) from allowing certain employers to pay workers with significant disabilities less than the federal minimum wage.

Nearly 2,000 employers currently participate in the Section 14(c) subminimum wage certificate program, usually as community rehabilitation centers, sometimes known as sheltered workshops. These employers often contract work from the federal government and local businesses.

[SHRM members-only online discussion platform: SHRM Connect]

In July 2018, there were about 153,000 U.S. workers with disabilities being paid a subminimum wage under federal law, according to the DOL.

The wage waiver was created under the Fair Labor Standards Act in 1938 and was meant to help people with severe disabilities, including mental illness and developmental disabilities, find work. Some workers are paid less than $1 an hour, as their productivity is significantly lower than that of workers without disabilities.

In May 2015, New Hampshire became the first state to ban paying subminimum wages to workers with disabilities. Maryland (in 2016) and Alaska (in 2018) have since done the same.

"Eliminating the 14(c) exception is long overdue," said Cheryl Bates-Harris, senior disability advocacy specialist at the National Disability Rights Network, the largest provider of legally based advocacy services to people with disabilities in the United States.

"What started out as a good idea many years ago has become a method to exploit people with disabilities," she said. "Businesses are making millions of dollars sending contract work from the government to [rehab work centers] and paying people $1 an hour or $2 an hour."

Bates-Harris added that the subminimum wage "was not intended to be a lifelong thing" and rather, it should be a stepping stone while workers learn job skills.

"The intent of sheltered workshops was to prepare people for competitive employment, but the competitive employment never comes, keeping workers with disabilities trapped in poverty," she said.

On the other hand, opponents of the legislation say that raising the minimum wage for workers with severe disabilities to $15 an hour would likely lead to those workers losing the chance to work at all. "Section 14(c) is there for a reason," said Tammy McCutchen, the former head of the Wage and Hour Division under President George W. Bush and an attorney in the Washington, D.C., office of Littler Mendelson. "The exception ensures that jobs are available for workers with significant disabilities. Eliminating it will lead to the loss of those jobs and the shuttering of the community rehab centers that employ them."

McCutchen explained that the exception allows employers to pay a worker with a disability—who may not be able to produce as much as a worker without a disability—a lower wage.

"If the disabled worker can only produce 50 percent of the widgets of the nondisabled worker, then the Fair Labor Standards Act allows payment of 50 percent of the wage," she said. "This area is highly regulated and very closely watched by the DOL. Employers must first survey the prevailing wage for the position in question and then time-survey the productivity of a disabled worker against the productivity of a nondisabled worker."

She recommended that the DOL first conduct a comprehensive study on the subminimum wage for workers with disabilities and determine if eliminating the lower wage in favor of paying a higher federal minimum wage would be positive or negative for affected workers.

More Resources and Support Needed

Bates-Harris said that getting sheltered-workshop employers to make bigger investments in assistive technology, job accommodations and skills-matching programs is more critical than eliminating the subminimum wage for workers with disabilities.

"It's appalling to me that workers with disabilities are not provided technology or technology assessments that would help anyone—technology enhances everyone's productivity," she said.

"This proposal may be the leverage to get these employers to re-examine their businesses, change their business models and look at placing people into appropriate jobs. If I go to work in a sheltered workshop, and all of the available jobs require fine motor skills, and I have cerebral palsy or muscular dystrophy, then I won't be good at that job. I understand that. But we don't see any attempt in these facilities to get to know what the person can do and what kinds of supports he or she would need to be successful and move on to integrated employment. We want these workers to be looked at as individuals with capabilities and build supports around them, not just as cheap labor."



Hire the best HR talent or advance your own career.


HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.