Ending Subminimum Wage: The DOL’s Plan to Phase Out 14(c) Certificates
Jan 15, 2025The DOL Wants to Phase Out Section 14(c) Subminimum Wage Certificates
If enacted, the new rule ends an 86-year-old program that allows some employers to pay workers with disabilities below the federal minimum wage
When Congress enacted the Fair Labor Standards Act (FLSA) in 1938, it included a provision— Section 14(c)—that allows the United States Department of Labor (DOL) to “certify” employers to pay workers with disabilities below the federal minimum wage. Today, in 37 states, employers can legally pay certain employees—individuals whose “earning or productive capacity is impaired”— less than the federal minimum wage of $7.25 an hour.
On December 4, 2024, the DOL proposed a rule to gradually eliminate the availability of the subminimum wage certificates that make the practice legal. If the rule moves forward and becomes effective, the DOL will stop issuing new certificates on a specified effective date and implement a three-year phase-out period for employers with existing certificates.
The DOL will consider comments on the proposed rule through January 17, 2025.
Why is a new rule needed?
The rule narrative states that opportunities for individuals with disabilities have expanded dramatically since the passage of the Americans with Disabilities Act (ADA) in 1990.
Fueled by the disability rights movement, societal and cultural assumptions, beliefs, and expectations regarding the employment of individuals with disabilities have evolved, and opportunities for individuals with disabilities have dramatically expanded. Federal legislation and judicial precedent have established and enshrined fundamental legal protections requiring equal access, opportunities, and respect for individuals with disabilities in education and employment.
— Federal Register, December 4, 2024
In addition to the ADA, employers in New Hampshire — where Orr & Reno is located — should also be aware that the state has its own anti-discrimination law — RSA 354-A — that applies to employers with six or more employees and state government employees. This legislation enshrined equal opportunity for employment without discrimination based on age, sex, gender identity, race, creed, color, marital status, physical or mental disability, or national origin as a civil right.
In 2023, people living with disabilities were employed at the highest rate in history, at 22.5 percent. Over a dozen states and localities have already prohibited or limited the payment of subminimum wages to workers with disabilities. In New Hampshire, legislation was enacted in 2015 — SB47—to eliminate subminimum wages, and there are no reports of active or pending 14(c) certificates in the state.
Who will be affected?
According to DOL data, about 700 employers hold certificates to pay approximately 39,000 workers less than the minimum wage. These certificates are typically used to pay individuals with mental health challenges or physical disabilities in “sheltered workshop” settings operated by nonprofits.About half the workers paid under the certificates earned $3.50 per hour or less. Almost 5 percent of these workers were paid 25 cents per hour or less.
Disability rights, reasonable accommodation, and employers
As in many other states, it is the official policy of the State of New Hampshire, in its capacity as an employer, to comply with the ADA to ensure that “persons with disabilities are given equal employment opportunities and to provide reasonable accommodations to qualified individuals with disabilities in all aspects of employment, ” provided such accommodation does not cause an “undue hardship. ”
The United States Equal Opportunity Employment Commission (EEOC) provides comprehensive enforcement guidance about the meanings of “reasonable accommodation” and “undue hardship” under the ADA. It is a helpful tool for employers wishing to understand their rights and their employees’ rights under the ADA.
The New Hampshire Commission for Human Rights provides a helpful overview of employers’ rights regarding disability. When an employee requests a reasonable accommodation, an employer is not necessarily required to provide the specific accommodation requested but must be willing to “engage in an interactive process to propose alternative, suitable accommodations.” Employers also have specific rights regarding medical documentation and the “parameters of the accommodation as it relates to the employee’s position and the employer’s business,” and the “performance and discipline requirements.”
The official New Hampshire ADA Reasonable Accommodation Policy and template request forms are available on the Department of Administrative Services (DAS) website.
If you have any questions about the federal and state laws governing disability rights and reasonable accommodation — and your responsibilities as an employer — don’t hesitate to contact Orr & Reno for assistance.
