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Bipartisan Bill Would End Subminimum Wages for People with Disabilities

Apr 10, 2023

A bipartisan, bicameral bill would end a loophole in the United States' minimum wage law that enables employers to pay wages less than $3.50 per hour to employees with disabilities. 

Led by Bob Casey (D-PA), the Transformation to Competitive Integrated Employment Act (PDF) would provide employers and states with grants to end subminimum wages and establish “competitive integrated workplaces” within five years. The Act would also create a new technical assistance center to help employers make the transition while retaining employees with disabilities.

Currently, employers are prohibited from discriminating against job applicants who have disabilities under Title I of the Americans with Disabilities Act (ADA). The U.S. Equal Employment Opportunity Commission (EEOC) enforces Title I. 

But while the ADA guarantees “equal opportunities,” it does not prevent employers from hiring based on applicants’ productivity. Workers with disabilities make up a small percentage of the total U.S. workforce when compared to people without disabilities.

Federal law allows some employers to pay disabled workers less than minimum wage

Section 14(c) of the Fair Labor Standards Act allows employers to apply for a certificate that permits them to pay employees with disabilities subminimum wages. These wages must be commensurate — they must be based on the worker’s individual productivity, “no matter how limited,” and all hourly subminimum wages must be reviewed every six months.

Many disability advocates believe that Section 14(c), while well intentioned, creates unnecessary stress for workers with disabilities by forcing employers to compare them to workers without disabilities. 

And while subminimum pay must be commensurate, that rarely results in livable wages. 

Most Section 14(c) workers make less than half of the federal minimum wage

According to a 2023 report (PDF) from the Government Accountability Office, most Section 14(c) employees make less than $3.50 per hour, which is significantly less than the $7.50 per hour minimum wage. Only 14% of Section 14(c) workers earned at or above the federal minimum.

“Paying workers less than the minimum wage is unacceptable,” Senator Casey said in a statement. “Everyone deserves to be paid a fair wage, and Americans with disabilities are no exception. This commonsense, bipartisan bill would lift up people with disabilities by raising their wages and creating competitive jobs in workplaces that employ both workers with and without disabilities.”

The Transformation to Competitive Integrated Employment Act has received broad support from disability advocacy organizations including the American Council of the Blind (ACB), National Association of the Deaf (NAD), and the Autistic Self Advocacy Network (ASAN).

Related: 4 Surprising Statistics About Employment for People with Disabilities

People with disabilities provide enormous contributions to U.S. employers

According to the Bureau of Labor Statistics (BLS), about 21.3% of persons with a disability were employed (PDF) in 2022. That was a record high — but still significantly smaller than the 65.4% employment rate for persons without a disability.

It’s difficult to directly compare employment rates between disability groups. People with disabilities are more likely to be older than people without disabilities. Disabled workers are also much more likely to be self-employed, more likely to hold part-time jobs, and less likely to seek employment.

Given those factors, it’s likely that there will always be an employment gap between individuals with disabilities and individuals without disabilities. But employers have a legal and ethical responsibility to accommodate all applicants — and strong business reasons to build inclusive workplaces.

In other articles, we’ve discussed how most workplace accommodations for workers with disabilities cost absolutely nothing. Even when organizations pay substantial costs for accommodations, the vast majority of employers report that they’re satisfied with the results.

Employers with diverse teams are more profitable and experience lower turnover rates, and workers with disabilities can bring unique insights that facilitate business success.

And while subminimum wages are only legal when the employee’s “earning or productive capacity is impaired" by their disability for the work being performed, many advocates believe that employers have taken advantage of that broad definition. 

People with disabilities are entitled to fair payment for their work. The Transformation to Competitive Integrated Employment Act may play an important role in reducing pay disparities — and ensuring that competitive workplaces become the standard. 

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