Submitted via regulations.gov
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210
Re: Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act (RIN 1235-AA14)
We write to submit this comment on behalf of the Economic Policy Institute. The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank working for the last 30 years to counter rising inequality. We intentionally center low- and middle-income working families in economic policy discussions at the federal, state, and local level.
We strongly support the Department’s Proposed Rulemaking on the Employment of Workers with Disabilities Under Section 14(c) of the Fair Labor Standards Act. The rule as proposed would phase out the Department’s issuance of special certificates, referred to within our comment as “14(c) certificates,” that allow employers to pay workers with disabilities less than the subminimum wage under certain circumstances. We believe that it is time for this practice to end. For too long, workers with disabilities have been shut out of the basic labor rights afforded to other workers, and this proposed rulemaking is long overdue to extend the promise and intent of the Fair Labor Standards Act (FLSA) without discrimination on the basis of disability.
Why this rule is needed: the economic situation of disabled workers
According to the Wage and Hour Division’s administrative data cited in the proposed rule, nearly half of workers with disabilities working under 14(c) certificate-holding employers were paid less than $3.50 per hour, and nearly 2 percent were paid a shocking $0.25 or less per hour – essentially an insulting symbolic stand-in for real pay.1
Meanwhile, nearly half of U.S. workers overall will live in states with the right to at least a $15 minimum wage by 2027.2 People with disabilities who work for 14(c) certificate holders are being effectively excluded from the wage gains that other low-wage workers have won through state legislation and at the ballot box over in recent decades.
People with disabilities are in urgent need of real wage protections. Disabled adults are more likely to experience housing insecurity, struggle with access to transportation, and struggle to put food on the table, pay for health care, and meet other basic needs. In 2023, workers with disabilities earned 20 percent less than those without disabilities.3 Workers with disabilities of working age with cognitive disabilities were 24.1 percent more likely to live in poverty than other adults.4 The unemployment rate is much higher for workers reporting any disability than those without disabilities, but even when they are employed, workers with disabilities are significantly more likely to get low pay.
There is no county in the U.S. where a wage of even $7.25 – the full federal minimum wage – would support a single adult living alone to meet basic expenses, let alone the $3.50 an hour earned by 49 percent of disabled employees working for 14(c) certificate holders. According to 2023 estimates based on EPI’s Family Budget Calculator, which provides an estimate of the income needed to achieve an adequate standard of living in each county in the U.S., even workers in areas with extremely low costs of living would need earnings in the range of $17-20 per hour, working full-time year-round, to attain that level of basic stability.5
As noted by the Center for Economic and Policy Research (CEPR) in their Disability and Economic Justice chartbook, structural inequality and systemic racism and ableism also contribute to differences in disability rates among racial and ethnic groups. For instance, there are higher rates of disability among working-age men who identify as American Indian or Alaska Natives, a group that already overall experiences poverty at twice the rate of the typical American household.6 Taking into account intersecting forms of labor market discrimination, even when they have jobs, Black and Hispanic disabled workers have median wages just over two-thirds that of a white worker without disabilities (66 percent for Black workers and 68 percent for Hispanic workers).7 Suppressing disabled workers’ wages is contributing to the perpetuation of stubbornly persistent racial-economic inequality.
Further, aside from perpetuating wage segregation for disabled people, the methods for setting the actual subminimum wage levels are poorly suited to determining a fair wage floor. Employers applying for 14(c) certificates are required to conduct “time studies” according to a complex process that involves calculating the wage for the disabled worker based on comparing their observed productivity or output to that of a nondisabled worker performing the same task.8 However, control of these timed tests or studies are effectively entirely within the control of the employer, who may perform them incorrectly and with little oversight as to the determination made about the workers’ supposed productivity deficit or the calculated wage. In addition to adding bureaucratic complexity, these tests place too much importance on quantitative, output-based measures of productivity in determining an individual worker’s legal minimum wage floor.
Supporters of maintaining the 14(c) certificates have defended continuing the 14(c) program by alluding to the basic dignity of work afforded to disabled workers by the opportunity to independently earn their pay where other outside employment opportunities may not exist. However, true dignity at work must come from the sense of empowerment afforded by having basic labor standards, a voice on the job, and a living wage. As noted in the Department’s NPRM, the U.S. Commission on Civil Rights report examining the state of the 14(c) program found that “persons with disabilities who have transitioned out of 14(c) workshops were adamantly against the program.”9
Who’s impacted
Data reported from employers who hold 14(c) certificates indicated that about 700 employers were paying subminimum wages to nearly 37,000 workers (36,922) through the use of 14(c) certificates, as of a U.S. DOL report on December 1, 2024.10 Further, 48 employers were listed as having a “pending” application for their certificates. 31 of these employers indicated that they also hold government contracts under the Service Contract Act (SCA), and 9 hold government contracts under the Walsh-Healy Public Contracts Act (PCA) – meaning that public dollars are currently subsidizing employers who pay subminimum wages to disabled people.
While the tens of thousands of workers with disabilities currently being paid subminimum wage comprise a relatively small segment of the overall U.S. workforce, the transition to competitive integrated employment and the opportunity to earn the legal minimum wage in their jurisdiction would still make a significant difference in the lives of these workers and their role in their communities.
The 14(c) program has already continued to decline steadily in participation over time as other employment support initiatives have replaced the outdated model that segregates workers with disabilities into “sheltered workshops,” and as more disability justice advocates have successfully made more policymakers aware of the inherent unfairness of subminimum wage programs.
As noted in the Department’s NPRM, 27 states and the District of Columbia – more than half of U.S. states – have taken at least some policy measures to eliminate or restrict the use of 14(c) certificates to pay subminimum wages: Alaska, California, Colorado, Delaware, Hawai’i, Maine, Maryland, Nevada, New Hampshire, Oregon, Rhode Island, North Carolina, South Carolina, Tennessee, Vermont, Virginia, and Washington. Arizona, Illinois, Kansas, Minnesota, Nebraska, New Mexico, New York, Texas, and West Virginia have all placed some higher standards than the federal requirements to pay subminimum wages to workers with disabilities. And the District of Columbia and Wyoming currently report no workers legally receiving the subminimum wage.11
We urge the Department to finalize this rule
It is encouraging that so many states have already taken action to end or curtail the use of these certificates, and it also means that employers in a majority of states will already effectively be in compliance with the changes in the Department’s NPRM, or have at least made some strides in that direction. Fewer workers over time are being paid less than the federal minimum wage, and more states or localities are also considering further action. In the state of Georgia, for example, an effort in 2024 to advance legislation banning the use of the subminimum wage was not only bipartisan, but is being led by Republicans in the state legislature.12 At the same time, the continuation of the program at DOL has created a patchwork of regulations in which some workers with disabilities may have fewer labor rights and fewer opportunities for integrated employment than their neighbors just across the border in a neighboring state.
There is also broad support for eliminating the 14(c) program across the political spectrum, and among diverse groups of advocates for disability rights.13 Reps. Bobby Scott (D-VA) and Cathy McMorris-Rodgers (R-WA) recently reintroduced H.R. 1263, the Transformation to Competitive Integrated Employment Act, with former Sen. Bob Casey (D-PA) and Sen. Steve Daines (R-MT) introducing the companion bill, S. 533 in the Senate. 14 This legislation has also enjoyed bipartisan support in recent years, and if passed, would also establish for the phase-out and elimination of the 14(c) subminimum wage program, similar to the goals of the Department’s proposed rule.
Sheltered workshops are a model that should be consigned to the past given what is now increasingly known about the benefits of competitive integrated employment opportunities.15 A two-tiered wage system also leaves workers more vulnerable to labor exploitation, and leaves employers with more complicated compliance requirements. Extensive reporting has shown that many 14(c) certificate holders do not provide the adequate training or opportunities to transition, with adequate workplace supports, to other forms of employment, even though this is a current requirement of the program.16
According to analysis from CEPR of Current Population Survey data, a majority of working-age adults with disabilities said that their most commonly experienced barrier to employment was their disability itself, followed by a lack of education or training.17 This is just one of many indications that employers regularly fail to fulfill their basic legal obligations to accommodate workers with disabilities and to treat them fairly in hiring and training processes. More supports – including public investment – are needed for training and education services to ensure that all disabled workers who want to work, in all states, can experience discrimination-free hiring processes; competitive integrated employment with accommodations that allow them to thrive; and fair pay that helps them to build basic economic security.
We strongly support the Department of Labor’s proposed rule on eliminating the use of 14(c) certificates. Specifically, we call on the Department to cease the renewal of new certificates and allow the expiration of existing certifications. We also encourage the Department to not allow extension of any 14(c) certificates after the proposed three-year phase out. Far too long, thousands of workers with disabilities have been subjected to unlivable, subminimum wages. In order for workers with disabilities to thrive in our economy, they must be a paid a livable wage for their work.
Sincerely,
Samantha Sanders
Director of Government Affairs & Advocacy
Economic Policy Institute
1. Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act [Proposed rule], 89 FR 96474 (December 4, 2024).
2. Martinez Hickey, Sebastian, “Over 9.2 million workers will get a raise on January 1 from 21 states raising their minimum wages,” Working Economics Blog (Economic Policy Institute), December 17, 2024.
3. Brown, Hayley, Cai, Julie Yixia, and Coan, Tori. The Disability and Economic Justice Chartbook. Figure 3.1. Center for Economic and Policy Research, October 1, 2024.
4. Brown, Hayley, Cai, Julie Yixia, and Coan, Tori. The Disability and Economic Justice Chartbook. Figure 3.1. Center for Economic and Policy Research, October 1, 2024. Figure 3.5
5. Economic Policy Institute, Family Budget Calculator, January 2024.
6. Moore, Kyle K. “New data explore U.S. economic conditions by race and ethnicity—including for American Indian and Alaska Native communities,” Working Economics Blog (Economic Policy Institute), December 4, 2024.
7. Brown, Hayley, Cai, Julie Yixia, and Coan, Tori. The Disability and Economic Justice Chartbook. Figure 3.2. Center for Economic and Policy Research, October 1, 2024.
8. Wage and Hour Division, U.S. Department of Labor. “Fact Sheet #39B: Prevailing Wages and Commensurate Wages under Section 14(c) of the Fair Labor Standards Act (FLSA).” Revised May 2009.
9. U.S. Commission on Civil Rights (USCCR). 2020. Subminimum Wages: Impacts on the Civil Rights of People with Disabilities. Executive Summary p. x.
10. Wage and Hour Division, U.S. Department of Labor. 14(c) Certificate Holders List. Publilist of participating employers accessed through Tableau Public. Accessed December 2024.
11. Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act [Proposed rule], 89 FR 96474 (December 4, 2024).
12. Farkas, Evelyn.”Chair of House committee aims to end subminimum wage for workers with disabilities” Georgia Recorder, February 27, 2024.
13. National Disability Rights Network et al. Public letter to U.S. Department of Labor on 14(c) program. November 8, 2023.
14. U.S. House of Representatives, Committee on Education & the Workforce, Committee Democrats. ”Scott, Casey, McMorris Rodgers, Daines to Reintroduce Bipartisan, Bicameral Bill to Help Workers with Disabilities Find Good-Paying Jobs“ (press release). February 27, 2023.
15. Autistic Self-Advocacy Network (ASAN). All About the Transformation to Competitive Integrated Employment Act (TCIEA). September 19, 2024.
16. Morris, Amanda, Gilbert, Caitlin, and Alemany, Jacqueline. ”Some disabled workers in the U.S. make pennies per hour. It’s legal.” The Washington Post, August 30, 2024.
17. Brown, Hayley, Cai, Julie Yixia, and Coan, Tori. The Disability and Economic Justice Chartbook. Figure 2.3. Center for Economic and Policy Research, October 1, 2024.