The United States Department of Labor (DOL) has proposed a landmark change that could significantly impact the wage structure for workers with disabilities. In a move aimed at enhancing economic equity and inclusion, the DOL has introduced a rule that would eliminate subminimum wage exemptions for disabled workers under the Fair Labor Standards Act (FLSA). The proposed rule, if implemented, would end the practice of paying workers with disabilities less than the federal minimum wage.

The History of Subminimum Wages

Under Section 14(c) of the FLSA, certain employers have been allowed to pay subminimum wages to workers with disabilities—the rationale being that while an individual’s disabilities may limit their productivity, permitting employers to pay them less than the standard minimum wage may encourage the hiring of disabled individuals. However, critics have long argued that the subminimum wage system perpetuates discrimination, limits economic opportunity, and undermines the goal of achieving full inclusion in the workforce for people with disabilities.

Currently, employers who obtain special certificates from the DOL’s Wage and Hour Division can legally pay workers with disabilities below the minimum wage. This practice has been widely contested, particularly by advocates who argue that it fosters segregation and exploitation. Over the years, Section 14(c) has come under increasing scrutiny as many argue that it contributes to the economic marginalization of people with disabilities and reinforces harmful stereotypes about their capabilities.

The Proposal

The DOL’s proposed rule seeks to phase out the availability and use of Section 14(c) subminimum wage certificates over the next three calendar years meaning that employers would no longer be able to pay workers with disabilities below the federal minimum wage of $7.25 per hour. This change would mark a significant shift in federal labor policy and could provide an estimated 200,000 workers with disabilities an increase in earnings.

The DOL’s proposal comes as part of a broader push to improve employment outcomes for people with disabilities and to encourage full participation in the workforce. The DOL has indicated that its intentions are to promote fair wages, greater financial independence for disabled workers, and stronger integration into the mainstream labor market. Critics of the proposal, however, argue that removing the subminimum wage could negatively impact some employers, especially those in industries where workers with disabilities perform specialized tasks that may not align with traditional wage standards. To those critics, Taryn Williams, the DOL’s Assistant Secretary of Labor for Disability Employment Policy, says, “Employers today have more resources and training available to recruit, hire, retain and advance workers with disabilities in employment at or above the full minimum wage, and this proposed rule aligns with that reality.”

The Bigger Picture

Notably, many states have already tackled the use of 14(c)—over the last decade, more than a dozen states have banned the payment of subminimum wage to disabled workers. Indeed, the actions of that small group of states are credited with the sharp decline in employers seeking a certificate. As of December 1, 2024, 751 employers throughout the United States are in possession of Section 14(c) certificates, which is down nearly 40 percent from just three years ago.

The initiative is supported largely by Democratic members of Congress though does have some bipartisan support. The rule is open for comment through January 17, 2025, just three days before Inauguration Day. So, while the proposed rule is a last push from the Biden Administration, whether it is ultimately implemented will be a question for President-elect Trump to decide.

For questions regarding Section 14(c) certificates or the FLSA, generally, please reach out to Abigail Barr or any other member of Ice Miller’s Workplace Solutions team.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.