Biden Proposes Rule To End Sub-Minimum Wage For Workers With Disabilities

The Labor Department said Tuesday that it would be phasing out a long-running and controversial program that allows certain employers to pay workers with disabilities less than the minimum wage.

The new rule eliminating the program follows years of pressure from disability rights groups and is meant to deliver on a campaign pledge from President Joe Biden. But its future is uncertain due to likely legal challenges as well as the incoming Trump administration.

Kristin Garcia, deputy administrator of the Labor Department’s Wage and Hour Division, said the reform is consistent with the principle that workers deserve fair pay for a hard day’s work.

“For too long, workers with disabilities have been left out of that promise,” Garcia told reporters Tuesday.

The federal government’s endorsement of a sub-minimum wage for workers with disabilities dates to 1938, when Congress created a wage floor under the Fair Labor Standards Act. Eligible employers receive certificates from the Labor Department allowing them to pay well below the federal minimum wage of $7.25 per hour.

A 2023 study from the Government Accountability Office found that around 120,000 workers were employed under what are known as 14(c) certificates, so named for the section of the law that allows them. Half of those workers were earning less than $3.50 per hour.

Many of the workers are employed in community rehabilitation programs and nonprofits, including Goodwill, and the vast majority have an intellectual or developmental disability. It’s common for these workers to earn wages on “piece rate,” so that they’re paid according to how many tasks they complete in a given time rather than a standard hourly rate.

While backers of the program argue many employees will lose their jobs without it, critics say it’s an antiquated practice that discriminates against an entire workforce and furthers income inequality.

Taryn Williams, assistant secretary of labor for disability employment policy, said Tuesday that the expectations for workers with disabilities have “evolved” over the decades and no longer match the law as it was written during the Great Depression.

“Employers today have more resources and training available to recruit, hire, retain and advance workers with disabilities in employment at or above the full minimum wage, and this proposed rule aligns with that reality,” she said.

Under the proposed rule, the government would no longer issue new certificates allowing a sub-minimum wage for workers with disabilities. Existing certificates would be phased out three years after the rule goes into effect.

Workers employed under current certificates could remain in their jobs, but the employer would have to pay them at least the federal minimum wage of $7.25 per hour.

That would “lead to greater financial stability, increased purchasing power and independence” for those workers,” Garcia said.

The rule must undergo a public comment period and wouldn’t be finalized until after Biden has left the White House. The new Trump administration could choose to ditch the rule and keep the current system intact.