The subminimum wage for disabled workers stays — DOL just withdrew its own plan to end it

Since 1938, Section 14(c) of the Fair Labor Standards Act has let the Department of Labor certify employers to pay workers with disabilities less than the federal minimum wage, on the theory that a disability impairing productivity would otherwise price a worker out of a job entirely.▸ In December 2024, DOL proposed to phase the program out over three years. On July 7, 2025, the Department withdrew that proposal, concluding it lacks the statutory authority to end unilaterally what Congress made mandatory. The certificate program continues, unchanged, into its ninth decade.

The number of workers paid under Section 14(c) certificates has collapsed for two decades.▸ In 2001, the U.S. Government Accountability Office estimated roughly 424,000 workers were paid subminimum wages by 5,612 certificate-holding employers. By May 1, 2024, the Department of Labor's own administrative data — cited in its now-withdrawn proposed rule — counted 801 employers holding or seeking a certificate, reporting approximately 40,579 workers paid subminimum wages in their most recent fiscal quarter. That is a decline of roughly 90% in workers and nearly 86% in employers in 23 years. Separately, the Government Accountability Office counted "almost 40,000" workers under 14(c) certificates as of November 2024 — a figure derived independently of DOL's own count, and consistent with it.

The decline reflects both fewer employers seeking certificates and a broader shift toward "competitive integrated employment" — jobs that pay at least minimum wage, in settings alongside workers without disabilities — that federal and state policy have pushed for decades.▸ It does not mean the program has become marginal to the people still in it: tens of thousands of workers remain paid below the wage floor that covers virtually everyone else in the country.

A 14(c) wage is not a flat discount off $7.25.▸ It is set to be "commensurate" with a worker's individual productivity, measured against a non-disabled worker doing the same job — which in practice means wages scaled arbitrarily low. Using its own administrative data covering certificates valid between October 2023 and March 2024, DOL found that only 16% of 14(c) workers were paid at least the federal minimum wage of $7.25 an hour, while nearly 49% were paid less than $3.50 an hour. Ten percent were paid $1.00 an hour or less, and nearly 2% were paid 25 cents an hour or less. An earlier GAO analysis covering 2019–2021 found essentially the same pattern — more than half of workers below $3.50 an hour, about 14% at or above the federal minimum — meaning the wage distribution has held steady across two independently measured periods.

DOL's Wage and Hour Division investigates certificate holders for compliance, and its own record shows a program with a high failure rate.▸ In fiscal year 2023, WHD concluded 89 investigations of 14(c) employers, found violations in approximately 88% of them, and recovered more than $2 million in back wages for nearly 3,000 workers. Since 2016, the same division has identified violations of a related requirement — that 14(c) employers inform workers of their rights to pursue competitive integrated employment — in more than 250 investigations. With roughly 800 certificate holders nationally, 89 investigations in a year reaches a small fraction of the program each year.

Sixteen states had eliminated the use of 14(c) certificates as of January 2025, according to GAO, which tracked outcomes for former 14(c) workers in two of them.▸ In Colorado, whose transition ran 2021–2023, 28% of 162 tracked former workers were in competitive integrated employment by June 2023; the rest were in Medicaid- funded day services, employment-preparation services, or untracked. In Oregon, which began its transition in 2015, 26% of 862 tracked former workers were in competitive integrated employment by September 2023. In neither state did most former 14(c) workers move directly into a minimum-wage job — most moved into non-work Medicaid services instead.

That evidence — the same evidence some commenters cited to argue phase-out would strand workers — is part of what DOL weighed when it withdrew its own proposal.▸ In its withdrawal notice, the Department also concluded that Section 14(c)'s "shall" language imposes a mandatory duty to make certificates available "to the extent necessary to prevent curtailment of opportunities for employment," and that it lacks authority to end the program by regulation alone. The NPRM had drawn more than 17,000 comment submissions, including from members of Congress and from the community rehabilitation programs that hold most 14(c) certificates and warned that ending them could force service closures.

Worker and employer counts are DOL/WHD's own administrative snapshots (2001 estimate and May 2024 data, as cited in DOL's 2024 rulemaking); wage distribution figures are WHD's Oct. 2023–Mar. 2024 data; enforcement figures are fiscal year 2023; state outcome figures are GAO's April 2025 tracking through mid-to-late 2023. Each figure is dated in the prose above because the underlying data spans more than two decades.