For decades, it has been legal to pay people with disabilities less than minimum wages. In 1938, the Fair Labor Standards Act (FLSA) was passed and specified standards for basic minimum wage rates and overtime pay. It also created a special exemption authorizing employers to pay wages significantly lower than the minimum wage to workers with disabilities. Progressive at the time, these wage provisions were originally created to encourage the employment of veterans with disabilities in a manufacturing-centered economy.  Nowadays, paying significantly lower than the minimum wage to workers with disabilities is seen more and more as inequitable and challenging to civil rights.

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How do people with disabilities get paid less than minimum wages?

The FLSA has a special exemption authorizing employers to pay wages significantly lower than the minimum wage to workers with disabilities. This exemption is called 14(c) and permits employers and human service agencies to acquire special certificates from the Department of Labor. These certificates allow employers and human service agencies to pay workers with disabilities below the current federal minimum wage based on the level of a person’s documented productivity.

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Who has these special certificates?

Today, mostly human service agencies hold these special certificates allowing them to pay wages significantly lower than the minimum wage to workers with disabilities. Human service agencies frequently operate what is called sheltered workshops. Sheltered workshops are segregated facility-based programs attended by adults with disabilities. Instead of working in community-based jobs earning a competitive wage, adults with disabilities often go to sheltered workshops or day programs every weekday. Adults with disabilities complete work tasks such as assembling, packaging, carpentry, and manufacturing. In addition, sheltered workshops may offer educational programs and leisure. 

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Why is it still legal to pay wages significantly lower than the minimum wage to workers with disabilities?

Even though people believe it is wrong to pay wages significantly lower than the minimum wage to workers with disabilities, eliminating governmental financial incentives and reeducating individuals on possibilities of competitive integrated employment proves difficult.   As stated previously, wage provisions were originally created to encourage the employment of veterans with disabilities in a manufacturing-centered economy. By the mid-1950s though, sheltered workshops were started by families who truly believed people with disabilities could not hold real jobs. Historically, people with disabilities, especially those with intellectual and developmental disabilities, have had very little access to formal education, job training, and community services. The original intent of workshops was not to saddle people with low-paying, tedious positions, rather it was to provide what was believed to be safe places where people could theoretically receive training with the intension of finding a job in the community.  As things evolved though, workshops, just like institutions, became segregated places where governmental financial incentives kept people from having real employment options.  Keeping individuals segregated from the community has allowed for false assumptions about the potential for growth and has incentivized keeping people in buildings and programs. Assumptions that reinforce segregated sub-minimum wage employment have become entrenched in our system. Thus, making changes to these practices is difficult, but not impossible.

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What is currently being done to eliminate the practice of paying wages significantly lower than the minimum wage to workers with disabilities?

Courts, States, and the federal government have all been trying to address this issue. There have been some actions taken in the court system to challenge the legality of paying wages significantly lower than the minimum wage to workers with disabilities. For example, in 2016, an Ohio court found an employer had failed to comply with State law forbidding employers from discriminating on the basis of disability “with respect to hiring, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment.”

(see the court case summary).  In 2018, a West Virginia sheltered workshop was ordered to back pay wages to 34 employees. Unfortunately, this was only because they did not have a valid certificate (see the Department of Labor case summary).  Some states have either eliminated or have plans to eliminate subminimum wages for workers with disabilities. Other states, like Georgia, have created Employment First initiatives. In Georgia, the Employment First Act was signed into law in May 2018. The legislation established an Employment First Council and made employment as the first and preferred option for individuals with disabilities receiving public services. In 2019, the Transformation to Competitive Employment Act was proposed in Congress, but not adopted, at the federal level to phase out Section 14(c) of the FLSA and make available the resources necessary to allow for the transition to providing services for competitive integrated employment. In 2020, The U.S. Commission on Civil Rights urged that the subminimum wage exception be overturned, stating that the provision has trapped workers in "exploitative and discriminatory" job programs.