DOL Proposes to End Subminimum Wage for Workers with Disabilities

The U.S. Department of Labor (DOL) proposed a rule aimed at eliminating certificates that allow employers to pay workers with disabilities less than the federal minimum wage of $7.25 per hour, as stipulated under Section 14(c) of the Fair Labor Standards Act (FLSA). On December 3, the DOL also conducted an online media briefing to discuss this regulatory change.

Taryn M. Williams, the Assistant Secretary of Labor for Disability Employment Policy, emphasized that today’s employers have access to more resources and training to employ individuals with disabilities at or above the full minimum wage, and the proposed rule reflects this reality.

The proposed rule suggests the following key actions:

• The immediate cessation of issuing new certificates for subminimum wages once the final rule takes effect.
• Allowing existing certificate holders to use them for up to three years after the rule’s effective date.
• Phasing out the subminimum wage program entirely after a three-year period.

The DOL cited expanded opportunities and legal protections as reasons for deeming subminimum wages unnecessary to prevent reductions in employment for workers with disabilities.​ Williams highlighted that various federal and state programs now promote competitive, integrated employment without relying on subminimum wages.

Essential points for stakeholders include:

• The rule will not be implemented immediately; it involves a multi-year phase-out.
• Current certificate holders can continue paying subminimum wages for up to three years.
• After this period, all covered workers must be paid at least the federal minimum wage.
• The rule does not mandate changes in the nature of work or services offered, only in wages.

Kristin Garcia, Deputy Administrator of the Wage and Hour Division, noted the shift in legislation and societal attitudes that have improved employment outcomes for workers with disabilities. This shift has also led to a decrease in Section 14(c) certificate holders, from 5,600 in 2001 to 800 by May 2024.

The public is encouraged to provide feedback on the proposal during the comment period from December 4, 2024 to January 17, 2025.

Garcia was asked about the comment period’s end, three days before a change in presidential administration. She did not directly address the potential impact of a change in presidential administration on the proposed rule; instead, she emphasized that the post-comment review process would be essential for assessing diverse perspectives and specific questions about the proposal before determining the final course of action.

She also reiterated that, based on a preliminary DOL review, the certificates are no longer necessary due to the substantial changes in the employment landscape and the opportunities available for workers with disabilities to earn full federal minimum wage employment.

In response to the proposed rule, Congresswoman Virginia Foxx (R-NC), Chairwoman on the Committee on Education and the Workforce issued a statement claiming that there is evidence showing that Section 14(c) protects employment opportunities for persons with disabilities and urged the Biden-Harris Administration to withdraw the proposed rule.

The National Council on Disability (NCD) agreed with the proposed rule and noted that phasing out the subminimum wage for persons with disabilities was included as a recommendation in a 2012 report from the NCD. Its report also called for implementing a conversion strategy to expand opportunities beyond the segregated subminimum wage model.