In 1938, President Roosevelt signed the Fair Labor Standards Act (FLSA) into law. It was a landmark piece of civil rights legislation designed to protect the rights of workers.

At the time, there was a fear that people with disabilities would be disadvantaged by the law and experience high rates of unemployment if employers had to pay comparable wages to people with and without disabilities. Therefore Section 14(c) of the FLSA (14(c)) was written into the law to allow employers to pay workers with disabilities lower wages.

Accordingly, California also included similar exemptions in its state Labor Code, in Sections 1191 and 1191.5.

The Fair Labor Standards Act authorizes the Secretary of Labor to issue certificates allowing employers to pay productivity-based subminimum wages to workers with disabilities, but only where such certificates are necessary to prevent the curtailment of opportunities for employment. Employment opportunities for individuals with disabilities have vastly expanded in recent decades, in part due to significant legal and policy developments.

Section 14(c) was little known and rarely used until the 1950s when sheltered workshops began to flourish. Sheltered workshops were started with good intentions as parents were seeking a way to keep their children out of institutions. The law currently has about 40,000 American workers laboring for half the minimum wage or less, according to the Labor Department.

However a proposed new rule, announced on December 4 with a Notice of Proposed Rulemaking (NPRM), would end the issuing of 14(c) certificates, which permit businesses to pay people with disabilities below the federal minimum wage of $7.25 an hour. If implemented, the proposal would phase out 14(c) certificates altogether over a 3-year period, ending subminimum wage nationwide.

The Labor Department’s proposal follows a review of the program, and the new rule would not take effect until a public comment period ends on Jan. 17, 2025, days before President-elect Donald Trump takes office. The new administration could review and respond to the comments and issue a final rule, or withdraw it entirely.

If finalized, the proposed federal rule would not require workers with disabilities to leave their current places of employment and would not require current section 14(c) certificate holders to amend the employment setting or type of services they provide.

Subminimum wage for disabled workers in California will however end this January.

In 2021, Disability Rights California sponsored legislation to phase out subminimum wage in California. With the passage of SB 639 (Durazo), subminimum wage for Californians with disabilities will be fully phased out at the start of 2025.

California joins more than a dozen states and the District of Columbia that have already banned the program.

Today, unemployment rates among people with disabilities remain disproportionally high, despite the continued use of 14(c) and California exemptions. In 2019, California ranked 22nd in the nation for its employment of people with disabilities. People with disabilities experienced employment rates at 36.9 percent compared to 75.6 percent for their peers. Additionally, people with disabilities also represent a larger portion of the population not included in the labor force. Nationally, about 8 in 10 were not in the labor force in 2019, compared with about 3 in 10 of those with no disability.