Section 14(c) and Subminimum Wage

What Subminimum Wage Means for Individuals with Disabilities and the Community

Employment leads to many opportunities. Higher standards of living. The ability to go out and do things. Get an education. Contribute to your household. But employment isn’t necessarily that easy to come by, especially for individuals with intellectual and developmental disabilities. Employers often pay their employees with disabilities a subminimum wage. Evidently, employers are not always willing to pay the same wage for someone who may not be able to perform as productively as someone without a disability. And if they do receive the same wage, the individual may face resentment from his/her co-workers.

What is Section 14(c)?

Section 14(c) of the Fair Labor Standards Act (F.L.S.A.), however, authorizes employers, after receiving a certificate from the Wage and Hour Division, to pay subminimum wages (wages less than the Federal minimum wage) to workers who have disabilities for the work being performed.

Recently, there have been efforts to repeal Section 14(c). Many organizations are calling for its complete phase-out by the year 2022. Those in favor of phasing out Section 14(c) believe this program may keep disabled employees in isolated workshop environments and enables employers to take advantage of them by paying them less than the federal minimum wage. On the other hand, those against phasing out Section 14(c) believe that some form of financial support is necessary in creating and maintaining jobs for individuals with disabilities.

In this important article, we’re unpacking what Section 14(c) offers to individuals with disabilities and the community, and the potential impacts of eliminating it.

Unemployment in the I/DD Community

First, we have to look at unemployment rates among people with intellectual and developmental disabilities. In 2019 the Bureau of Labor Statistics, U.S. Department of Labor, reported the unemployment rate for people with disabilities as 7.3 percent. In 2020, this number jumped to 12 percent. Since releasing its January jobs report, the Department of Labor Office of Disability Employment shares the following information for individuals 16 and over:

Labor Force Participation Rate

  • People with disabilities: 19.6%
  • People without disabilities: 66.4%

Unemployment Rate

  • People with disabilities: 12.0%
  • People without disabilities: 6.6%

On average, unemployment rates for individuals with disabilities are two times higher than individuals without disabilities. With a staggering 12% unemployment rate and only 19.6 percent of people with disabilities attached to the workforce, there are legitimate concerns for paid work options being put at risk.

As a result of unemployment, individuals may experience:

  • Worsened mental and physical health
  • Lower standards of living
  • Erosion of skills

Due to high unemployment numbers, communities may endure:

  • Higher crime rate
  • Reduced volunteerism
  • Depleted government funds/programs

The solution is not as easy as forcing companies to hire individuals with disabilities. Companies may not be so inclined to hire someone with limited capabilities, and additionally, if an individual who could not perform at the same rate as his/her peers were to be paid equally, they would undoubtedly experience resentment and isolation from their coworkers. Which brings us to Section 14(c) of the Fair Standards Labor Act.

Section 14(c) and Subminimum Wage

Subminimum wage goes back to 1938, when President Roosevelt established the Fair Labor Standards Act. Under this provision, employers are permitted to pay their workers less than minimum wage.

Aspiro, a non-profit dedicated to helping individuals with disabilities, states, “The commensurate wage is part of safety net for people with disabilities who might otherwise find it very difficult, if not impossible, to find a job in the private sector because they are unable to satisfy productivity standards established by employers.”

When a business completes the necessary paperwork and meets the necessary credentials, they are granted a certificate from the Wage and Hour Division (W.H.D.) which allows them to participate in Section 14(c). This provision authorizes them to pay subminimum wages to workers who have disabilities.

The employer is required to review the wage rates at least every 6 months, and wages are adjusted at least once a year to reflect any change in minimum wage rate for workers without disabilities. Businesses and schools are required to renew their 14(c) certificates annually, and work centers biannually. Everything is reviewed by the Department of Labor.

The wage an employee receives is determined by performance. It is the responsibility of the employer to determine the productivity measurements for each individual worker and demonstrate the accuracy of that determination to the W.H.D.. This means the employer must identify the wage to performance ratio for an employee in their geographic area who does not have a disability, and compare to the performance of an employee with a disability. Here’s an example of how this works.

A graphic of two men working in an assembly line.
Employee Jeff has a disability. Employee John does not have a disability and receives a wage of $10.00 per hour. Jeff’s disability limits him to producing 60% of what John can produce in an hour. The subminimum wage is calculated by multiplying John’s wage of $10.00 per hour by 60% to equal a sum of $6.00 per hour. Therefore, Jeff will be paid a total of $6.00 per hour.

The fact that a worker may have a disability is not in and of itself sufficient to warrant the payment of a subminimum wage. Section 14(c) applies only when the disability actually impairs the individual’s earning or productive capacity for the work being performed. To qualify, an individual must have been terminated from three previous jobs in the private sector.

Support for Section 14(c)

The ultimate goal of subminimum wage is to establish equal opportunities for all. By enabling companies to participate in Section 14(c) of the F.S.L.A., individuals with disabilities benefit in three major ways: overall support, finances, and life enrichment.

How do Individuals with Disabilities Benefit from Section 14(c)?

  1. Supportive work environment: There are many developments that must be in place for a business to qualify for the program. Work centers that participate in Section 14(c) provide supervisors who are trained to create and implement operational modifications; supervisors who are trained to redirect challenging behavior, monitor medical needs, and uplift; a safe, clean, and secure work environment to benefit all employees.
  2. Financial success: The ability to earn money is a giant step toward greater independence. When individuals have their own money to spend, not only can they help support themselves and their families, but they become more actively engaged with the community.
  3. Life enrichment: Wages aside, perhaps the most significant impact that Section 14(c) brings to workers with disabilities is the sense of accomplishment and self-worth for a job well done. With the ability to work and be productive, individuals with disabilities continue to develop social skills, as well as enrich their own lives and the lives of others around them.

Without a commensurate wage, employees with disabilities may be subject to resentment from their coworkers who produce more than them, yet get paid the same. Long term, employees with disabilities could be dismissed from their work due to low productivity, adding to the already grim unemployment figures.

Despite the numerous benefits to individuals with disabilities and employers, there are many organizations that feel the principle of subminimum wage is outdated and should therefore be eliminated. It should be noted that while higher wages seem like a good thing, they come with a price.

The Call to Eliminate Section 14(c)

As mentioned at the beginning of this article, subminimum wage was established in 1938. That’s over eighty years ago. The perspective on disabilities was quite different than it is today. In recent years, many advocacy organizations, including the National Disability Rights Network, have asserted that the program is antiquated and requires updating.

In addition to being an out of date practice, it’s possible that Section 14(c) further segregates individuals with disabilities as there is often little incentive for employers to integrate non-disabled workers with disabled workers—a goal that was outlined nationally through the Americans with Disability Act of 1990 and the Rehabilitation Act of 1973. Advocates believe the program incentivizes employers to provide sheltered employment at reduced wages.

Opportunities are for Everyone

At Covey, we truly believe that opportunities are for everyone. It’s why our mission is to create opportunities for individuals with disabilities that foster personal growth. Located in Oshkosh and Appleton, Wisconsin, we embrace all individuals as they are, and want everyone to achieve their highest potential, whether that’s realized through volunteerism, gainful employment, learning to ride a bike, or so many other ways.

Employment creates opportunities. As an advocate for individuals with disabilities, we feel it is our responsibility to educate and empower people to make their own informed decisions, especially when it comes to employment. While the community of individuals with disabilities has overcome a lot of barriers, we still have an uphill climb. We encourage everyone to research Section 14(c) and take the opportunity to advocate for yourself.