The U.S. Department of Labor (DOL) announced on Tuesday that it will move forward with a rule to end the ability of employers to pay workers with disabilities below the federal minimum wage. This long-awaited action comes in the final weeks of President Joe Biden's administration.

A Historic Shift in Employment Law

For decades, Section 14(c) of the Fair Labor Standards Act (FLSA) has allowed employers to seek special certificates that exempt them from paying the federal minimum wage, which is currently $7.25 per hour, to workers with disabilities. Under the new rule, the DOL will stop issuing new certificates under Section 14(c), effectively putting an end to this practice. However, existing certificate holders will still be able to pay subminimum wages for up to three years.

The DOL has stated that if the proposal is finalized, it could increase wages for workers with disabilities, ultimately improving their economic independence. It also believes that this change could boost the overall labor force participation rate among people with disabilities.

Efforts to End Section 14(c) and Broader Implications

This proposal represents the most significant federal effort to end Section 14(c) since the provision's establishment in the 1930s. Lawmakers have sought to eliminate the program through various legislative actions, such as the Raise the Wage Act and the Transformation to Competitive Integrated Employment Act. Both bills remain pending, though some Republican lawmakers have expressed support for the latter bill.

In addition to this rule, the Biden administration has previously ended the practice of paying subminimum wages for federal contract workers with disabilities as part of efforts to raise the minimum wage for such workers.

State-Level Movements and the Decline of 14(c) Certificates

While federal action has been slow, more than a dozen states have enacted laws in recent years to prevent the payment of subminimum wages to workers with disabilities. These state laws are credited with reducing the number of employers holding 14(c) certificates. As of November 1, the DOL reported that only 751 employers held such certificates, a significant decline from about 1,500 certificate holders four years ago.

Next Steps for the Proposal

The proposed rule will now undergo a notice and comment period, typically lasting 30 to 60 days. As is typical for regulations introduced near the end of an administration, the proposal is vulnerable to legal challenges that could delay its implementation.