Subminimum Pay for Disabled Workers Targeted in Budget Bill

A proposal to help phase out a subminimum wage for workers with disabilities is included in Democrats’ $1.75 trillion tax and social spending framework, one example of an initiative supported by progressives that survived the paring back of worker-focused policy items.

The legislative package, which is still under negotiation, would provide federal grants to states to support employers as they reshape their businesses to stop paying a subminimum wage to workers with disabilities. Employers can legally pay workers less than the minimum wage if they hold a waiver under Section 14(c) of the Fair Labor Standards Act.

The proposal wouldn’t require employers to exit such pay arrangements, however. States would receive the grants over a five-year period in exchange for ending the subminimum pay practice.

The bill would also provide grants to help workers subject to 14(c) waivers find jobs in what are known as competitive integrated employment settings, or those where they labor alongside workers who are paid the minimum wage or more.

The proposal made it through tense intra-party negotiations that scrapped other policies favored by progressives, such as paid family and medical leave, tuition-free community college, Medicare dental and vision benefits, and some tax measures. The draft of the spending bill isn’t final, as Democrats haggle over final items and when a vote might take place.

The package is being advanced through a budget reconciliation process that will allow Democrats to pass it with a simple majority in both chambers, as long as its items are budgetary in nature.

The subminimum wage proposal is one of a number of labor-focused provisions in the package, including new fines for existing violations of federal labor law, and exponential increases to penalties for violations of the FLSA and the Occupational Safety and Health Act. The measure would also give additional funding to workplace enforcement agencies and provide a 50% increase for the annual budget of the U.S. Department of Labor’s workforce development efforts over the next five years.

Law ‘Denies Equal Opportunity’

Section 14(c) of the FLSA has allowed workers with disabilities to receive a subminimum wage since 1938. Some advocates for workers with disabilities say paying individuals less simply because they have a disability is discriminatory, but others say these jobs might be the best chance some workers have to earn wages.

“More than 30 years after the passage of the Americans with Disabilities Act, our nation’s preeminent wage and hour law still denies equal opportunity for far too many workers with disabilities,” Rep. Bobby Scott (D-Va.), chairman of the House Education and Labor Committee, said in an emailed statement. “By fostering collaboration between employers and services providers, this makes clear that it is not only possible, but beneficial to invest in fully integrated and competitive jobs for people with disabilities.”

Earlier this month, the AbilityOne Commission, a program that facilitates opportunities for workers with significant disabilities to provide goods and services to the federal government, announced it would propose eliminating the payment of subminimum wages on contracts.

“Paying people with disabilities less than the minimum wage is discrimination based on outdated beliefs about what people with disabilities can achieve in workplaces,” Curt Decker, executive director of the advocacy group National Disability Rights Network, said in an email. “Subminimum wages trap people with disabilities in poverty and NDRN is pleased the Build Back Better legislation provides the support necessary for them to begin transitioning to competitive, integrated jobs.”