US Proposes Phasing Out Subminimum Wage for Disabled Workers

The U.S. Department of Labor announced plans Tuesday to gradually eliminate a longstanding practice that allows employers to pay disabled workers less than the federal minimum wage.

The change involves phasing out certificates issued under Section 14(c) of the Fair Labor Standards Act (FLSA) of 1938, which permits certain employers to pay workers with disabilities below the federal minimum wage of $7.25 per hour.

The department stated that no new certificates will be issued and existing ones will be phased out over a three-year period once the proposed rule is finalized. This follows a comprehensive review of the program that began last year.

More than 100,000 workers with disabilities are employed under Section 14(c) certificates, according to a 2020 Labor Department report.

These workers, often employed in sheltered workshops or similar settings, have been paid subminimum wages for decades.

“This proposal demonstrates the Biden-Harris administration’s dedication to good jobs for workers with disabilities,” acting Labor Secretary Julie Su said in a statement.

Su noted that significant legal and policy developments since the enactment of the FLSA have expanded employment opportunities and rights for disabled individuals.

She emphasized that the department’s proposal aligns with modern values of equity and inclusion in the workforce.

“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,” Su said.

The proposed rule aims to create a more equitable work environment while promoting economic independence and inclusion.

Advocates for people with disabilities have long criticized the subminimum wage system, arguing that it perpetuates inequities and limits opportunities for disabled workers.

Jessica Looman, administrator of the department’s Wage and Hour Division, echoed this sentiment, stating, “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.”

The Department of Labor also encouraged stakeholders to submit comments on the proposed rule by January 17. The announcement follows extensive engagement sessions with key stakeholders, including disabled workers, advocates, service providers, and employers currently holding 14(c) certificates.

The transition period, once the rule is finalized, will allow affected employers and workers to adapt to the changes while moving toward full compliance with the new wage standards.

Advocacy groups and disability rights organizations have lauded the announcement as a significant step forward in promoting workplace equity.

Critics of the subminimum wage system argue that it undervalues the contributions of disabled workers and undermines their potential to achieve economic independence.

If finalized, the rule could mark a historic shift in federal labor policy, ensuring that workers with disabilities are afforded the same rights and protections as their non-disabled peers.