Biden Administration Proposes Ending Subminimum Wage for Workers with Disabilities

The Biden administration has proposed phasing out a program that lets some employers pay workers with disabilities far below the minimum wage. The U.S. Department of Labor (DOL) is accepting public comments on the proposal until Jan. 17, 2025. 

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Subminimum Wage Program

The subminimum wage program, which was first authorized under Section 14(c) of the Fair Labor Standards Act of 1938, was originally intended to provide jobs for injured veterans. Today, tens of thousands of people with disabilities participate in the program. Many of the employees work in “sheltered workshops,” segregated from workers without disabilities. Certified employers can pay workers with disabilities based on a per-item rate or on calculations of their productivity. Some workers make as little as 25 cents per hour.

Before it can take effect, the rule will be subject to a public comment period, possible legal challenges, and the scrutiny of the incoming Trump administration. Even if the federal rule never takes effect, subminimum wages for people with disabilities may be on the way out. States have been moving to sunset the subminimum wage program, with at least 15 states and Washington, D.C., having already eliminated it.

(The Washington Post and Disability Scoop) 

Drop in Number of Program Participants

In recent decades, the estimated number of workers with disabilities being paid subminimum wages has dramatically declined, as has the number of employers with Section 14(c) certificates, according to the DOL. In 2001, the U.S. Government Accountability Office estimated that approximately 424,000 workers with disabilities were paid subminimum wages while working for 5,612 employers with Section 14(c) certificates. As of May 1, the department’s data showed there were 801 employers with either an issued certificate or a pending certificate application. Employers with an issued certificate reported paying approximately 40,579 workers at subminimum wages in their previously completed fiscal quarter. The number of employers holding or pursuing a Section 14(c) certificate as of May 1 had dropped by nearly 86% from those in 2001.

(Federal Register)

Phase-Out Proposed over 3 Years

The proposed rule would cease the department’s issuance of new Section 14(c) certificates on the effective date of a final rule. The proposed rule would also institute a three-year period beginning on the effective date of a final rule for employers with existing Section 14(c) certificates to gradually cease paying subminimum wages to workers with disabilities.

“One of the guiding principles of the American workplace is that a hard day’s work deserves a fair day’s pay, and this proposal ensures that principle includes workers with disabilities,” said DOL Wage and Hour Administrator Jessica Looman. “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. 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.”

(DOL press release)

Program Has Supporters

While a handful of Republicans have pushed for legislation that would phase out the subminimum wage, others have voiced alarm over potential changes to the program, as have some parents of adults with disabilities.

“Special minimum wages expand employment opportunities for individuals with disabilities to work and broaden options to transition to other types of employment,” eight members of Congress—including Rep. Virginia Foxx of North Carolina, chair of the House Committee on Education and the Workforce—wrote in a letter to Acting Secretary of Labor Julie Su in December 2023. The Republican lawmakers wrote that “misguided activists” were wrongly attacking sheltered workshops that “provide a unique sense of purpose and community,” and that changes could cut workers off from opportunities and support services by forcing those facilities to close.

(BNN Bloomberg)