The long fight to phase out subminimum wages for disabled workers is the focus of a public comment period and potential federal rule change. The proposal announced in December by the U.S. Department of Labor would sunset Fair Labor Standards Act 14 (c) certificates, which have been in place since 1938. The comment period ends at 11:59 Eastern Standard Time January 17. Go to https://www.dol.gov/regulations
The change was proposed by the Biden administration. It’s not clear how the incoming Trump administration would address the proposal. If the change is finalized, the Labor Department would no longer issue certificates. Current certificate holders would have three years to stop paying workers subminimum wages.
“In the decades since Section 14 (c) was included in the Fair Labor Standards Act, there have been significant legal and policy developments that have dramatically expanded employment opportunities and rights for individuals with disabilities,” said Julie Su, acting Labor Secretary. “With this proposal, the department expects that many workers currently paid subminimum wages under Section 14 (c) will move into jobs that pay full wages, which will improve their economic well-being and strengthen inclusion for people with disabilities in the workforce.”
“One of the guiding principles of the American workplace is that a hard day’s work deserves a fair day’s pay, and this proposal ensures that principle includes workers with disabilities,” said federal Wage and Hour Administrator Jessica Looman. “Since the enactment of the Fair Labor Standards Act in 1938, opportunities and training have dramatically expanded to help people with disabilities obtain and maintain employment at or above the full federal minimum wage. Similarly, employers today have more resources and training available to recruit, hire and retain workers with disabilities in employment at or above the full minimum wage, and this proposed rule aligns with that reality.”
As of May 2024, federal labor statistics indicated that 801 employers had 14 (c) certificates covering about 40,000 workers. That’s one-third the number counted in 2019. It was also found that about half of the workers made $3.50 per hour or less. About 10 percent earned $1 or less per hour.
The prospect of eliminating subminimum wage at the federal level has energized disability rights activists in Minnesota, who are forging ahead with 2025 state legislation. Efforts to eliminate such wages in Minnesota have been thwarted in the Senate despite a detailed task force study and work by the University of Minnesota Institute on Community Integration (ICI) and other partner agencies.
Jillian Nelson of the Autism Society of Minnesota cochaired the Minnesota Task Force on Eliminating Subminimum Wages. She said previous efforts laid the groundwork for a phaseout. “It’s time to do things differently,” Nelson said. She has seen a shift in attitudes and expectations toward employment for people with disabilities, and a recognition that disabled workers merit higher pay.
While she supports change at any level, Nelson said a state mandated phase-out date would give Minnesota more control over transitions from 14 (c) than a federal date would.
“I think the writing is on the wall for change,” said Danielle Mahoehney, a community living and employment specialist at University of Minnesota’s Institute on Community Integration (ICI). ICI was awarded a Minnesota Department of Human Services grant, leading to creation of the Minnesota Transformation Initiative Technical Assistance Center and transformative work with employment provider organizations. Mahoehney works with organizations, workers and their families. Many resources were offered, including statewide training sessions. Federal minimum wage is $7.25 an hour. Minnesota’s minimum wage is $11.33. Several cities have higher minimum wages.
Fifteen states and the District of Columbia already banned subminimum wages for disabled workers. Illinois state lawmakers will end subminimum wages for disabled workers by 2029. Virginia, California and Nevada are also phasing out such programs.
A report issued in late 2024 indicated that about 3,480 disabled Minnesotans are paid subminimum wages. That is second in the nation to Missouri. Nationally, there are about 367,000 worker still earning subminimum wage.
The latest push in Minnesota gained momentum in 2020. Then about 100 employment providers statewide were paying subminimum wages to 100,000 workers. Nelson was part of a “gang of four” that led on the issue. Others were Chris Juhn, Brad Teslow and Noah McCourt. They were a constant capitol presence, sharing experiences of those who did “piecework” for meager wages. The task force was approved in 2021, made a plan and in 2023 saw legislation passed that included most of its recommendations including enhanced employment support services, improved case management training, and increased data collection and monitoring of employment outcomes for disabled workers.
The lone recommendation that wasn’t pass was a sunset date for 14 (c). That effort was blocked in the Senate again last year. Staunch opposition came from parents, who fear that their disabled adult children would lose opportunities. That was seen as especially true in small communities, where disabled workers have fewer options for work and socialization.
Mahoehney talked to many family members, who are concerned that their adult children won’t be able to transition into CIE or other programs. “The concerns are very real,” she said. Some disabled workers have held their jobs for a very long time and worry that they cannot make a change.
With the right job and the right supports, transitions can be made, Mahoehney said. ICI has worked closely with those who provide jobs for disabled Minnesota. Of eight Minnesota organizations committed to ending subminimum wages, seven relinquished their 14 (c) certificate by March 2024, she said. Six of the eight are in Greater Minnesota, with two in the Twin Cities.
One small provider, which has gone through leadership changes, still has its certificate.
Those receiving subminimum wage decreased from 689 to 14 by the end of their grant period. Forty-three of the workers moved into Competitive Integrated Employment (CIE). Those who didn’t obtain CIE transitioned into group employment and/or day supports or stayed in center-based employment while making at least minimum wage. Mahoehney said that no one lost services and needed supports due to the changes.
One question raised is what happens to benefits. “All public benefits are designed to support work,” said Scott Peterson of the Minnesota Department of Human Services (DHS). He cited special rules called “work incentives” that help people go to work, keep needed healthcare benefits and have more money overall. “Benefits planning can help workers decide how to work to their full potential, save money and get ahead financially,” said Peterson. “Contacting Disability Hub MN and using online tools like DB101.org and My Vault can help workers understand how this is possible and plan for their future with higher wages.”
