Biden Moves to End Subminimum Wages for People with Disabilities

The Washington Post / Jacqueline Alemany

13:28 JST, December 4, 2024

The Biden administration is moving to phase out a Depression-era program that allows some employers to pay disabled workers far less than minimum wage, fulfilling one of President Joe Biden’s campaign promises and triggering what will probably become a fierce legal and political battle.

The decision is the culmination of the Labor Department’s year-long review of the program, which opponents have criticized as a form of discrimination and supporters have described as providing disabled people with hard-to-find opportunities for steady wages and meaningful work. The agency released a 137-page proposed rule Tuesday that would immediately halt the issuance of certificates that allow employers to pay less than minimum wage and institute a three-year phaseout period for employers that already hold those certificates.

Before it can take effect, the rule will be subject to a public comment period, possible legal challenges and the scrutiny of the incoming Trump administration. The public comment period is expected to conclude on Jan. 17, 2025, just days before Donald Trump takes office. His administration will have to evaluate and respond to those comments, then issue a final rule – or withdraw the rule entirely.

“There have been significant legal and policy developments that have dramatically expanded employment opportunities and rights for individuals with disabilities” since the program began decades ago, acting labor secretary Julie Su said in a statement. “With this proposal, the department expects that many workers currently paid subminimum wages … will move into jobs that pay full wages, which will improve their economic wellbeing and strengthen inclusion for people with disabilities in the workforce.”

The subminimum wage program, which was first authorized under Section 14(c) of the Fair Labor Standards Act of 1938, was originally intended to provide jobs for injured veterans.

Today, tens of thousands of disabled people participate in the modern version of the program, many of whom work in what are known as sheltered workshops, where they are segregated from workers without disabilities. Certified employers can pay disabled workers based on a per-item rate or on calculations of their productivity relative to workers without disabilities, and some workers make as little as 25 cents per hour. During his 2020 campaign for president, Biden promised to phase out the program. But he was slow to act: As of Nov. 1, at least 37,106 workers across 37 states were paid subminimum wages by 710 certificate holders, according to Labor Department data. Another 35 employers had pending renewals for certificates.

The program, which is overseen by four different federal agencies but subject to little formal oversight, is intended to prepare participants for higher-paying jobs in nonsegregated facilities. But an extensive Washington Post investigation of the program found that many of the workers have languished in jobs with low wages for years. About 1 in 3 certified employers have failed to correctly pay wages, The Post also found; between October 2009 and September 2023, the Labor Department ordered employers to pay $20.2 million in back wages for pay and other violations.

Still, the proposal is expected to reignite the long-running debate over the executive branch’s authority to unilaterally make changes to a program that was created by Congress.

Biden’s first labor secretary, Marty Walsh, previously told The Post that he believed that Congress needed to act to amend the law. Otherwise, “the next president could come in and just flip the rule,” said Walsh. Current Labor Department officials, however, have come to a different conclusion, and, in the proposal, they argue that given a “changed employment landscape,” subminimum wages “are not necessary to prevent the curtailment of employment opportunities” for people with disabilities.

“Some workers with disabilities who are being paid subminimum wages under the 14(c) provision are making pennies on the hour. This is fundamentally about equity and inclusion and our obligation under the statute to take a look at the changed employment landscape over the past several decades and make a determination as to whether those certificates are still necessary for employment opportunities,” Kristin Garcia, deputy administrator of the Wage and Hour Division, said in an interview with The Post.

Congress could also reverse the rule through the Congressional Review Act, a law that empowers it to halt implementation of final rules issued by federal agencies. And if private companies that contract with 14(c) facilities move to challenge the rule in court, agencies have a weakened hand, because the Supreme Court overruled the principle known as Chevron deference, which for decades held that courts should defer to agencies’ expert interpretation of statutes.

Congressional action to end the program nationwide has stalled in the face of opposition from Republican lawmakers who support sheltered workshops. Proponents of a bipartisan bill that would phase out the program believe it is unlikely to pass while Republicans control the House and Senate. Democratic lawmakers applauded the administration’s proposal on Tuesday. Sen. Patty Murray (D-Washington), the former chair of the Senate Health, Education, Labor and Pensions Committee, called on Trump and Republicans to “protect this rule next year.”

Sen. Tom Cotton (R-Arkansas), who has previously expressed concerns about abolishing the program, posted on X that the administration’s proposal “would shutter organizations across America and Arkansas that give disabled adults a chance at meaningful work, like the MARVA workshop in Russellville,” referring to a sheltered workshop in Arkansas.

Defenders of the law – including the family members of disabled workers – will also have the opportunity to weigh in on the proposal during the public comment period, and they can potentially influence or shape the final rule. Kit Brewer, vice president of the Coalition to Preserve Employment Choice and executive director of a sheltered workshop in Missouri, previously told The Post that he planned to lobby for a “carve-out” for people who have struggled to make the transition to competitive integrated employment.

“Something needs to be available that is the desired choice of these men and women,” said Brewer, who declined to say whether the coalition will challenge the Labor Department’s proposal in court without seeing the exact language. “That’s why you see the parent and family and individual’s concern. You see the feeling of desperation and uncertainty. … We certainly don’t want to see that group left out of services altogether.”

Rick Wilson, a single-parent caregiver for his 40-year-old son who has Down syndrome, told The Post after the announcement Tuesday that he is already working with other parent advocates who hope to preserve the program and that he and his allies plan to submit comments opposing the rule. Wilson called the proposal a “usurpation of Congress” and predicted lawsuits intended to stop the rule from going into effect.

“It’s just not true that all of these people can exist in a community job,” he said. “Our fear is that they don’t get a job and get moved into day care.”

Even if the federal rule never takes effect, subminimum wages for people with disabilities may be on the way out.

States have been moving to sunset the subminimum wage program, and 13 states and D.C. have already eliminated it entirely. The Illinois legislature recently passed a bill to phase out subminimum wage for disabled workers by 2029. California, Virginia and Nevada are in the process of phasing out the program, and Texas has partially eliminated the practice. The Post previously found that, when states shut down their subminimum-wage programs, employment rates for adults with cognitive disabilities increased.

Even without any political movement on the issue, the “existing multitude of federal and state programs” will continue to encourage states and service providers to move away from subminimum wages, said Taryn Williams, the assistant secretary of labor for disability employment policy.

“There is an extensive and continually growing network of support for workers with disabilities to access full-wage employment opportunities in a variety of ways,” Williams said.