By Loryn Cesario
More than half of states either passed legislation or ballot measures increasing state minimum wages above the federal minimum of $7.25 per hour in the last six years.
As minimum wage policies receive more legislative and electoral attention, policymakers are revisiting the various exceptions to paying a minimum wage—including the more than 100,000 workers with disabilities who qualify to make less than the federal minimum.
This year alone, 48 pieces of legislation have been introduced in the states and, since 2014, more than 200 bills have been considered regarding subminimum wages for workers with disabilities.
The federal Fair Labor Standards Act (FLSA) lists several groups of workers exempt from the minimum wage requirements, from movie theater employees to agricultural workers.
Section 14(c) of the FLSA allows employers to request a certificate from the U.S. Department of Labor allowing employers to pay certain employees with disabilities below the federal minimum wage. Employers must demonstrate an employee’s disability impairs their productivity when compared to employees without a disability. The wage reflects the extent to which productivity is impaired and is intended to be reviewed at least every six months. In some cases, wages can be less than $1 per hour, though most are closer to the federal minimum of $7.25.
When Congress enacted the Workforce Innovation and Opportunity Act (WIOA) in 2014, circumstances were reduced under which employers can request to pay subminimum wages to youth and adults with disabilities. The intent is to ensure youth with disabilities have an opportunity to pursue employment in an integrated setting and at a competitive wage. WIOA also requires the Wage and Hour Division within the Department of Labor to periodically review the status of each current employee receiving subminimum wages to determine whether the exception is still appropriate.
Several bills are pending in Congress that would phase out the use of the subminimum wage for people with disabilities. One effort includes scheduled increases to the minimum wage for the more than 100,000 individuals with disabilities working under a section 14(c) certificate. It would also require the Department of Labor to stop issuing subminimum wage certificates following the bill’s final wage increase. Another bill would phase out the availability of the subminimum wage exception and would help entities currently using the 14 (c) certificate to transition to paying the full minimum wage.
At least four states have eliminated the option of paying those with disabilities a subminimum wage:
- New Hampshire (2015): The first to explicitly prohibit employing people with disabilities at a lower hourly rate than the federal minimum wage, except for training programs or family businesses.
- Maryland (2016): Banned the state commissioner of labor and industry from allowing sheltered workshops to pay subminimum wages to employees with disabilities. The state will phase out existing authorizations by October 2019. The legislation requires the state Department of Labor, Licensing and Regulation to track wages, unemployment rates and employment status of people with disabilities moving out of sheltered employment settings.
- Alaska (2018): Eliminated subminimum wages for workers with disabilities.
- Texas (2019): Amended the state’s government-funded Purchasing from People with Disabilities program to mandate all contractors participating in the program increase their wages for workers with disabilities to minimum wage. In instances where a program is unable to employ all workers with disabilities after the measure takes effect, the program shall work "with the workforce commission and any other governmental entity to seek and obtain any job training and employment services that may be suitable for those former employees to find other employment that pays at least the federal minimum wage."
- Oregon (2019) Will phase out subminimum wages by 2023.
- Nevada (2019) This bill increases minimum wages to $12 per hour over five years and will eliminate provisions for subminimum wages for workers with disabilities among other exceptions to the minimum wage.
Connecticut has also considered legislation phasing out the subminimum wage.
In addition to state legislation that phases out and eventually eliminates the exception for paying subminimum wages to certain people with disabilities, state policymakers are adopting policies that establish “employment first” initiatives that make competitive, integrated employment the default and priority preference for all people with disabilities and establish an infrastructure to facilitate this policy objective.
To date, 37 states have adopted some form of Employment First policy through legislation or executive action.
Virginia passed, and Missouri is considering, legislation focusing state resources on competitive and integrated employment for people with disabilities.
Virginia’s law directs certain state agencies to make referrals to employment service organizations that provide competitive employment and pay commensurate wages to workers with disabilities. These employment service organizations are eligible to receive state-funded support services for employees with disabilities. The law does not abolish subminimum wages or prohibit sheltered workshops, but it does require individuals with disabilities make an informed choice about pursuing work in a sheltered workshop or working for subminimum wages.
As states, the federal government, employers, and employees with disabilities continue to reevaluate the barriers and access points to employment, further discussion on topics such as sheltered workshops and subminimum wages is expected.
Loryn Cesario is a policy associate in NCSL’s Employment, Labor and Retirement Program.