Workers with Disabilities Paid Subminimum Wages

Section 14(c) of the Fair Labor Standards Act (FLSA), a section which was written in 1938 law, permits employers to pay subminimum wages to workers who have disabilities. This section of the FLSA states that employers must apply to the Department of Labor for a waiver to do so, with the caveat that subminimum wages only apply to individuals whose physical or mental disabilities impair their earning or productive capacity at their jobs.

While the FLSA doesn’t necessarily guarantee individuals with disabilities will make a subminimum wage, the Department of Labor has found that about 3% of workers with disabilities do. That’s about 195,000 workers whose hourly rate is lower than the Federal Minimum Wage, and legally so.

How much lower are wages for individuals with disabilities?

When the FLSA was established in 1938, employers had to pay workers with disabilities 75% of the minimum wage. In 1966, this amount was changed to 50%. Finally, in 1986, the law was amended to eliminate a wage floor entirely. Due to the elimination of the wage floor in the 80s, today’s employers can get away with paying disabled employees well below the minimum wage. According to the Department of Justice, some employees with disabilities are payed “pennies per hour.”

Compensation Discrimination Among Disabled Employees: How Did We Get Here?

The Department of Labor argues that the subminimum wage is the reason that so many individuals with disabilities get hired in the first place.

It’s true that in general, people with disabilities are under-employed. According to the U.S. Bureau of Labor Statistics, only 18.7% of individuals with disabilities were employed in 2017. It’s also true that unemployment rates within the disability community  were higher than for individuals without a disability across all age groups and educational attainment groups in this 2017 report. The Department of Labor argues that with the money-saving incentive of subminimum wage employment, employers are more likely to hire people with disabilities.

Sheltered Workplaces

Workers with disabilities are often hired by organizations called sheltered workplaces. Sheltered workplaces are supervised facilities that provide employment opportunities for individuals with disabilities at subminimum wages in order to protect them, teach them new skills, and attempt to  train them for a position in the mainstream labor market. More commonly, however, workers stay in sheltered workplaces long-term, making much less than the minimum wage – often leading to exploitation at the hands of their employers.

Hope on the Horizon

Positive changes, however, have been made in recent years. A timeline of the improvements made to wages for individuals with disabilities includes:

In 2010, President Barack Obama established a $10.10 minimum wage for workers on government contracts, including those with disabilities.

  • In 2015, New Hampshire banned employers from paying subminimum wages to individuals with disabilities.
  • In 2016, both the Republican and Democratic parties included the elimination of the subminimum wage in their goals for the first time in history.
  • In 2016, the Workforce Innovation and Opportunity Act (WIOA) was passed. It created additional vocational rehabilitation and training requirements for employers who pay a subminimum wage to people with disabilities.
  • In 2016, Maryland banned employers from paying subminimum wages to individuals with disabilities.
  • In 2018, Alaska banned employers from paying subminimum wages to individuals with disabilities.

Workers with disabilities paid subminimum wages


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