Below Minimum Wage

Companies Can Pay Disabled People Below Minimum Wage. The Department of Labor Wants to Change That.

A proposal from the Department of Labor recommends the end of certificates that allow a subminimum wage for disabled people.

Julia Métraux

On Tuesday, the Department of Labor filed a proposed rule that could end the subminimum wage for disabled people—beginning the process of closing a loophole that can let companies pay disabled employees less than a dollar per hour.

When the federal minimum wage was established in 1938, it included a carveout that would permit companies to obtain certificates and pay disabled people less than non-disabled people. The argument for this subminimum wage is that disabled people bring less value to the workforce.

As of January 2023, half of the people—mostly those with intellectual and developmental disabilities—working under this certificate program make less than $3.50 an hour. These employees mostly work in sheltered workshops, which disabled advocates have also criticized for segregating disabled workers.

The new proposal recommends that the Department of Labor stop issuing new certificates, as well as let current certificates expire. Prior to this rule, 25 states have either started to phase out, completely ended, or introduced legislation to end subminimum wage for disabled people.

Mia Ives-Rublee, the senior director of the Disability Justice Initiative at the Center for American Progress, said that ending the certificate program “is one of the first steps to reducing poverty within the disability community and stopping the exploitation of disabled people.”

This proposed rule has been in the works for a long time. In 2014, an advisory committee was put together, which included advocates with intellectual and developmental disabilities. The committee concluded that “current widespread practice of paying workers subminimum wages, based on assumptions that individuals with disabilities cannot work in typical jobs…[is] antithetical to the intent of modern federal policy and law.”

Of course, the elephant in the rule is whether the incoming Trump administration will support an end to this type of subminimum wage. Donald Trump has not previously voiced his opposition or support of the certificate program; likewise, Project 2025 has not weighed in on this certificate program either.

Members of the public will be able to submit written comments on this proposed rule by January 17, 2025.