Mary Tabb

This paper critically examines Section 14(c) of the Fair Labor Standards Act (FLSA), which permits employers to pay subminimum wages to individuals with disabilities based on their productivity relative to non-disabled workers. While initially intended to increase employment opportunities for people with disabilities, the policy has become increasingly controversial.

Key Findings

• Employment Disparities: People with disabilities remain significantly underrepresented in the workforce, with lower employment rates, higher part-time employment, and greater unemployment compared to non-disabled peers.

• Commensurate Wage Issues: The process for determining subminimum wages is often inconsistent, subjective, and poorly regulated. Many workers earn far below the minimum wage, sometimes as little as $0.25/hour, due to outdated or inaccurate productivity assessments.

• Oversight Failures: The Department of Labor has been inefficient in reviewing and renewing 14(c) certificates, leading to prolonged underpayment and legal violations by certificate holders.

• Legal and Policy Shifts: Landmark legislation, such as the Americans with Disabilities Act (ADA) and the Workforce Innovation and Opportunity Act (WIOA), emphasizes integrated, competitive employment, challenging the segregated model of 14(c) workshops.

• Economic Inefficiency: Research shows that supportive employment services are more cost-effective and lead to better outcomes than sheltered workshops. Workers in integrated settings earn more and incur lower costs for state support services.

• Discrimination Concerns: The paper identifies both statistical and preference-based discrimination in the implementation of 14(c), where assumptions about disability often limit opportunities and fair compensation.

• Corporate Incentives: Large corporations benefit from low-cost labor through 14(c) programs, potentially influencing political resistance to reform.

Recommendations

1. Phase out 14(c) certificates and redirect funding toward supportive employment services.
2. Increase oversight and data collection by the Department of Labor.
3. Expand transition services for students with disabilities.
4. Strengthen the enforcement of anti-discrimination laws in employment.

Conclusions

The 14(c) program, while historically well-intentioned, no longer aligns with contemporary goals of equity and inclusion. It perpetuates economic disparities and limits the potential of people with disabilities. A shift toward supportive, integrated employment is both ethically and economically justified.