Congress Takes Aim at Ending Subminimum Wages for Workers with Disabilities

More than 420,000 people with disabilities nationwide are being paid less than the federal minimum wage of $7.25 per hour, according to the Department of Labor (DOL). Some of these workers have been performing the same routine tasks for decades, earning less than $1 an hour. 

And the practice is entirely legal.

Under Section 14(c) of the Fair Labor Standard Act (FLSA), passed by Congress in 1938, certain employers may request certificates from the DOL, authorizing them to pay certain workers so-called subminimum wages. When originally enacted, the provision was meant to create a way for employers to hire workers deemed otherwise unemployable, as well as provide an avenue for such workers to transition into the competitive workforce.

Disability rights activists, however, have long criticized the provision as archaic and based on preconceived notions about people with disabilities and their fitness for paid labor. Employment programs that hire people at subminimum wages, commonly known as “sheltered workshops,” have a poor record of preparing these employees for the workforce. According to the National Council on Disability, 95 percent of workers with disabilities who are hired at subminimum wages never obtain competitive employment in their communities.

The plight of workers receiving subminimum wages gained national attention in 2014, with the news report that exposed Henry’s Turkey Services. This Iowa-based company had warehoused 32 people with intellectual disabilities for decades, paying them as little as $65 a month and illegally collecting their Social Security disability benefit checks. A jury awarded the workers a $240 million verdict, a record for the Equal Employment Opportunity Commission, although the verdict was slashed on appeal. Then-President Obama closed the subminimum wage exception for federal contractors, by executive order, shortly thereafter.

On July 16, 2019, the U.S. House of Representatives, by a 231 to 199 vote, passed the Raise the Wage Act. Along with raising the federal minimum wage to $15 an hour by 2025, the bill would also eliminate Section 14(c) and phase out subminimum wages for people with disabilities over the same time period. In addition, the DOL would be required to stop issuing 14(c) certificates immediately.

Beyond its addressing the subminimum wage, disability advocates say that the Act’s provision to raise the federal minimum wage would have a direct and positive impact on the community of people with disabilities because so many caregivers and providers are paid only minimum wages for their services.

“Low wages are a major reason why so many people with disabilities and our supporters are unable to escape poverty,” the Autistic Self Advocacy Network said in a news release, praising the House’s passage of the bill. “The extremely low minimum wage has also made it difficult for people with disabilities to find qualified supporters to help us live in the community. By gradually increasing the federal minimum wage to $15 per hour over 5 years, the Raise the Wage Act will promote the financial security of people with disabilities and ensure our access to adequate support.”

The Act will not become law until the Senate brings up a companion bill for debate and a vote. Disabilities advocates are watching closely to see what happens in the next few months.

Click here to read a fact sheet about the Raise the Wage Act.

Click here to read a report about subminimum wages from the National Disability Rights Network, titled “Segregated and Exploited.”.