Federal: DOL Notice of Proposed Rulemaking to Phase Out Subminimum Wage Certificates for Workers with Disabilities

What happened?

On December 3, 2024, the U.S. Department of Labor (DOL) announced a notice of proposed rulemaking (NPRM), that would phase out certificates allowing employers to pay workers with disabilities at wage rates below the federal minimum wage. 

Quick Summary:

• The Notice of Proposed Rulemaking aims to phase out Section 14(c) certificates, which allow employers to pay workers with disabilities below the federal minimum wage, by ceasing the issuance of new certificates and allowing a three-year phase-out period for existing ones.

• The Department is also seeking public comments on whether extensions should be granted for current certificate holders who demonstrate a need.

What are the details?

The DOL announced a Notice of Proposed Rulemaking (NPRM) to phase out Section 14(c) certificates under the Fair Labor Standards Act (FLSA). These certificates have historically allowed employers to pay workers with disabilities below the federal minimum wage, currently $7.25 per hour.

The NPRM proposes to:

• Cease the issuance of new Section 14(c) certificates to employers submitting initial applications on or after the final rule’s effective date.

• Permit existing Section 14(c) certificate holders to continue operating under their current certificates for up to three years after the final rule’s effective date, provided all legal requirements are met.

The Department believes this proposal will increase wages and improve the economic self-sufficiency of workers with disabilities. It is expected to enhance labor force participation rates among individuals with disabilities without requiring them to leave their current employment or change the services provided by their employers.

Public comments on the NPRM are encouraged, particularly regarding the potential need for extensions for existing certificate holders. Comments can be submitted, identified by Regulatory Information Number (RIN) 1235-AA14, by either of the following methods:

• Electronic Comments: Submit comments through the Federal eRulemaking Portal.
  Follow the instructions for submitting comments. Mailing Address

Business Considerations

• Employers should ensure that all legal requirements are met to continue operating under existing Section 14(c) certificates for up to three years after the final rule’s effective date.

Source References

• Proposed Rule: Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act
• DOL Notice of Proposed Rule
• DOL Press Release of Notice of Proposed Rulemaking
• DOL Phasing out pay inequity for workers with disabilities

Resources

• Section 14(c) of Fair Labor Standards Act

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