Subminimum wage ban has implications for workers

New Hampshire is set to become the first state to ban subminimum wage for workers with disabilities. Legislation passed by […]

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New Hampshire is set to become the first state to ban subminimum wage for workers with disabilities.

Legislation passed by the New Hampshire Senate and House of Representatives and ready for the governor’s signature at the time of this writing, “prohibits employers from employing individuals with disabilities at an hourly rate lower than the federal minimum wage.” The bill also affects sheltered workshops, in which the majority of subminimum wages are paid.

Legal payment of subminimum wage for individuals with disabilities dates back to the Fair Labor Standards Act (FLSA) of 1938. Section 14(c) of the FLSA, originally created to help injured veterans, allows employers to apply for an exemption to the federal minimum wage when an employee’s disability directly affects his or her productivity. Wages are to be “commensurate,” or equal, to productivity. Employers calculate wages by measuring the productivity of employees with disabilities against the productivity of individuals without disabilities doing the same work.

The payment of subminimum wage to individuals with disabilities increased as the sheltered workshop movement expanded in the 1950s and 1960s. A 1977 Department of Labor study reported that by 1976 there were 3,000 sheltered workshops with 14(c) subminimum wage certificates, up from only 85 in 1948. The deinstitutionalization movement contributed to that increase as more individuals with significant disabilities rejoined the community and entered vocational rehabilitation programs.

The stated goal of most sheltered workshops during that expansion was to provide training and experience that would lead to competitive jobs in the community. However, most individuals stayed in sheltered employment indefinitely, some earning pennies an hour. The 1977 Department of Labor study found that only 10 percent of those in sheltered workshops transitioned to competitive employment. According to that study, “the severely disabled [had] little hope for employment in the competitive labor market because of the complexity of their needs.” That number dropped to five percent in 2001.

In the decades since, attitudes about disability and employment have drastically changed. Customized and supported employment help individuals with all levels of disability find meaningful work as vocational rehabilitation specialists recognize that the employment potential for individuals with disabilities has been underestimated. With supports like job coaches and placement in customized positions to fit each individual’s skills, people previously considered unemployable are able to hold competitive jobs within the community.

These changes occur as national disability policy shifts toward community integration. The Americans with Disabilities Act (ADA) and the 1999 Olmstead decision state that services for people with disabilities must be provided in the most integrated setting appropriate to the needs of each individual. Some advocates charge that states violate the ADA by over-relying on sheltered workshops and too often place individuals who can and want to work in the community into segregated settings instead of offering the supports needed for competitive employment. Since 2009, the Department of Justice has been cracking down on Olmstead compliance, causing states to re-evaluate their employment programs for individuals with disabilities.

New Hampshire’s subminimum wage and sheltered workshop legislation comes as the U.S. Department of Education releases a draft rule of proposed changes to the Vocational Rehabilitation (VR) program. Among other changes to VR programs, the draft rule proposes limits to subminimum wage employment for individuals with disabilities. The proposed changes are mandated by the Workforce Innovation and Opportunity Act, signed by President Barak Obama in July of 2014.

The draft rule places heightened emphasis on competitive integrated employment. The proposal states that, “The foundation of the VR program is the principle that individuals with disabilities, including those with the most significant disabilities, are capable of achieving high quality, competitive integrated employment when provided the necessary skills and supports.”

The proposed changes would require individuals with disabilities to satisfy certain service-related requirements to start or maintain subminimum wage employment. Individuals age 24 and younger must receive pre-employment transition services and be given competitive employment opportunities before they could work for subminimum wage. Those currently working for subminimum wage would receive career counseling at regular intervals to ensure they have the information needed to make informed choices about their employment. In addition, schools and states would be prohibited from creating contracts with organizations that provide subminimum wage employment for youth with disabilities. The proposal would also mandate increases in the percentage of VR funding set aside for supported employment for individuals with the most significant disabilities.

The proposed changes are open for public comment until June 15, 2015 and can be found here.


Editor’s note: Carrie Salberg is a Twin Cities resident who is completing a master’s degree at Metropolitan State University this spring. This article is excerpted from her extensive research on subminimum wage and sheltered/segregated employment versus integrated employment for people with disabilities. The research was conducted for her Capstone course paper, and then framed within the context of current events. She is a member of the Access Press Board of Directors.

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