The Department of Labor (DOL) announced a proposed rule that would phase out the ability of employers to pay employees with disabilities less than the federal minimum wage.

Currently, under section 14(c) of the Fair Labor Standards Act, an employer can obtain a certificate from the Wage and Hour Division allowing it to pay employees with disabilities less than the federal minimum wage of $7.25 per hour if their “productive capacity” is reduced by a physical or mental disability. The proposed rule would phase out the issuance of the 14(c) certificates.

According to the DOL, as of May 2024, only 801 employers have 14(c) certificates (or have pending applications), and reported paying only 40,579 workers less than the federal minimum wage in their last fiscal quarter, a number that has gone down drastically in the last twenty years.  The DOL has taken the position that the 14(c) certificates are no longer necessary the prevent the “curtailment” of employees with disabilities.  The DOL is not the first to take this step, several states have already prohibited or otherwise restricted paying employees with disabilities a subminimum wage, including Alaska, California, Colorado, Delaware, Hawaii, Illinois, Kansas, Maine, Maryland, Minnesota, Nevada, New Hampshire, New York, Oregon, Rhode Island, and Washington.

The proposed rule comes after the DOL’s review of the 14(c) program that included engagement sessions from stakeholders.  The proposed rule will be subject to a comment period, which will remain open until January 17, 2025.