DOL Plans to Phase Out Subminimum Wages for Workers With Disabilities
Author: Michael Cardman, Brightmine Senior Legal Editor
December 3, 2024
The US Department of Labor (DOL) is looking to end subminimum wages for workers with disabilities.
The Fair Labor Standards Act (FLSA) authorizes the DOL to issue special certificates - known as "14(c) certificates" - that allow employers to pay workers with disabilities at wages below the federal minimum of $7.25 per hour if their disabilities impair their earning or productive capacity.
In a draft rule that will be issued tomorrow, the DOL is proposing to:
- Stop issuing new certificates; and
- Phase out existing certificates over the next three years.
DOL officials said they believe subminimum wages are no longer necessary because opportunities and training have "dramatically expanded" for workers and because employers now have more resources and training to recruit, hire and retain them.
They noted that many states have already prohibited or limited subminimum wages. Moreover, some employers are voluntarily opting out of paying subminimum wages.
This has led to a substantial decline in employers with 14(c) certificates - from about 5,600 employers in 2001 to about 800 employers as of May 2024.
As of May 2024, about 40,000 workers with disabilities were paid subminimum wages, according to the DOL. About half of them we paid $3.50 per hour or less, and about 10% were paid $1.00 per hour or less. The mean wage was $4.08 per hour, and the median wage was $3.46.
What's Next
Employers may comment on the proposed rule through January 17, 2025.
In particular, the DOL is seeking comment on whether the three-year phase-out period should be shorter or longer, and whether one-time extensions should be granted for good cause.
Comments may be submitted online under Regulatory Information Number (RIN) 1235-AA14 or by mailing written submissions to:
Division of Regulations, Legislation and Interpretation
Wage and Hour Division, US Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, DC 20210
After the comment period ends, the DOL will respond to comments and possibly make revisions before publishing a final rule. This final rule will include a formal effective date, which generally must be no earlier than 30 days after its publication in the Federal Register.
With the comment period closing three days before the inauguration of President Trump, it is not clear whether the draft rule will be finalized. If the DOL under the Biden administration does not finalize the rule between January 17 and January 20, the new administration could withdraw it.
Brightmine is not aware of any public statement by Trump either supporting or opposing subminimum wages. However, two of Trump's allies on Capitol Hill have said they believe the DOL does not have the authority to abolish the subminimum wages.
When asked whether the rule would be finalized under the Trump administration, a DOL official said only that the agency would review comments and "take next steps."