Urban Wire It’s Legal for Some Employers to Pay Disabled Workers Less Than the Minimum Wage. Ending This Practice Is Just a First Step Toward Supporting Their Economic Stability
Marokey Sawo, Dana Ferrante, Alexis Weaver
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photo of young man with Down syndrome working in industrial factory

In December, the Biden administration released a proposed rule that would phase out a program that allows some employers to pay disabled workers less than the federal minimum wage.

As of July 2024, more than 38,000 disabled people (PDF)—90 percent of whom have intellectual or developmental disabilities (PDF)—earned subminimum wages. The majority of these workers earn under $3.50 per hour (PDF), less than half of the federal minimum wage ($7.25).

Authorized under Section 14(c) of the Fair Labor Standards Act in 1938, the subminimum wage was originally intended to create employment opportunities for disabled people at a time when many were institutionalized and excluded from the education system and economic opportunities. 

In recent decades, subminimum wage employment has declined as disabled people’s rights, access to education, and employment opportunities have expanded. The 2014 Workforce Innovation and Opportunity Act, the law governing the public workforce system, prioritizes competitive integrated employment (CIE) for disabled people. CIE is defined as a job where the worker earns the prevailing minimum wage, works alongside nondisabled workers, receives the same benefits as nondisabled workers, and has opportunities for advancement.

The proposed federal rule follows actions by more than two dozen states to phase out or disincentivize 14(c) programs through legislation or state agency initiatives. Research has shown 14(c) programs don’t lead to integrated employment and create economic precarity for people with disabilities. With the proposed rule’s comment period ending January 17, the incoming Trump administration will ultimately have the opportunity to support the financial security and dignity of disabled people by moving the rule forward.

Whether 14(c) is phased out at the local, state, or federal level, insights into how states have eliminated subminimum wages can help other state policymakers develop robust employment pathways for disabled people and better support their overall economic security.

Subminimum wage employment does not help disabled workers achieve financial stability

Today, 93 percent of 14(c) employers are community rehabilitation programs, also known as sheltered workshops. There, disabled workers do piece work, often assembling or packaging items in a segregated workplace, without the protection of a minimum wage. Almost no sheltered workshops offer benefits.

Section 14(c) employment is ineffective at helping disabled workers transition into the wider workforce (PDF). A ProPublica investigation found that from January 2017 to June 2022, only 2.3 percent of disabled people working in sheltered workshops transitioned to regular employment.

Additionally, 14(c) programs can harm disabled workers. A 2020 report from the US Commission on Civil Rights found the operation of 14(c) programs to be discriminatory (PDF), often contributing to the segregation of disabled workers from the larger workforce. The report also found that between 2010 and 2020, the majority of 14(c) employers investigated by the US Department of Labor had violated subminimum wage rules and were ordered to pay their employees back pay (PDF).

How states have phased out subminimum wages

In recent decades, more than two dozen states and localities have worked to phase out subminimum wage work.

Between 2001 and 2024, the number of disabled people employed by 14(c) programs across the US fell by nearly 86 percent, from roughly 424,000 to 40,000 workers. This coincided with a drop in 14(c) employers, from almost 6,000 to 800 over the same period.

A recent study found that states that have repealed 14(c) haven’t seen a decrease in labor force participation among workers with intellectual disabilities.

As of January 1, 2025, 18 states have passed legislation that has or will end subminimum wage work for people with disabilities, or have no active 14(c) programs in the state.

State actions related to Section 14(c)
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An additional eight states have begun phasing out or disincentivizing 14(c) programs in other ways. In 2019, Texas passed a bill making it illegal for some businesses that have contracts with the state to pay their disabled workers below the minimum wage. In other states, state agencies (PDF) have initiated the phaseout.

A comprehensive transition approach and robust job supports are needed to help ensure disabled people can achieve economic security

Ensuring people with disabilities have the opportunities and resources to thrive will require more than phasing out subminimum wage employment.

In the US, disabled people are twice as likely as nondisabled people to experience poverty, and only 23 percent of disabled adults are employed. Subminimum wage employment perpetuates a narrative of disabled workers as less capable, reflecting the discrimination disabled people face in the broader labor force. To achieve upward mobility, disabled people, like all people, need dignity and autonomy in the workplace.

How states phase out 14(c) programs matters. State and local policymakers can better support the economic security of disabled people by implementing policies that help disabled people find and maintain quality jobs. California created a transition plan (PDF) and put funding toward helping disabled workers at 14(c) programs find competitive integrated employment.

Other states have used regulations and funding to implement an Employment First framework, which holds that all people, including people with disabilities, are capable of working in competitive integrated employment and being a part of the community. States could also adapt tested models like customized employment programs, which focus on building a personalized employer-employee relationship, to shape their comprehensive transition programs.

Some supporters of Section 14(c) argue that eliminating sheltered workshops would deprive disabled workers of workplaces with specialized supports. However, many of these supports are funded through vocational rehabilitation programs, which can receive funding through the Workforce Innovation and Opportunity Act to ensure they can provide workers with competitive integrated employment. That means states could instead put these funds toward programs that help disabled people access and maintain integrated employment.

States are also critical to ensuring higher wages. Currently, 30 states and Washington, DC, have set a minimum wage higher than the federal minimum wage ($7.25), which was last raised in 2009. Raising the minimum wage would likely benefit disabled workers, who make up a disproportionate share of workers in low wage jobs.

Finally, when phasing out Section 14(c) and developing comprehensive economic supports, policymakers should engage disabled workers and their families in decisions that affect their lives. Ensuring disabled people have a seat at the table is critical to their full participation in the workforce and the community at large.

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Research and Evidence Race and Equity
Tags Disabilities and employment Employment Employment discrimination Welfare and safety net programs Disability equity policy Inequality and mobility Poverty
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