In December 2024, the U. S. the Department of Labor published a proposed rule that would phase out a Depression-era program that allows some employers to pay disabled workers less, often far less, than the minimum wage. The minimum wage in Texas, like the federal minimum wage, is still $7.25 per hour. The comment period for the proposed rule ended on January 17, 2025, three days before the end of the Biden administration. The incoming Trump administration may withdraw the rule entirely.
If the rule does go into effect, it may be challenged as exceeding the statutory authority of the Department of Labor. Even if it does take effect, it may not make much difference to disabled people in Texas because of a 2019 amendment to Section 122 of the Texas Human Resources Code.
On the other hand, any questions about the subminimum wage are bound to raise other uncomfortable questions about why some groups of workers can be paid very little for the value of their work. These nagging issues are unlikely to go away anytime soon. Fair pay for disabled workers is a concept most people support. Disability discrimination is against the law. No worker should be legally underpaid. Wage protections and labor standards should be updated to reflect current labor rights laws.
Kilgore & Kilgore Attorneys Work to Protect Employment Rights
Our Texas employment law attorneys follow closely the shifting outlines of state and federal employment law. Our expertise in the courtroom is well known. Let us help you with your wage discrimination issues. Reach out to us if you have questions about salary, wage, overtime compensation, hiring, discrimination, or any other workplace issues. Use this link to Contact Us online or call us at 214.969.9099.
The Subminimum Wage Program and Workplace Rights
The subminimum wage program, which was first authorized under Section 14(c) of the Fair Labor Standards Act of 1938 (FLSA), was originally intended to provide jobs for injured veterans. Today, tens of thousands of people throughout the country participate in the modern version of this program. Many of these employees work in sheltered workshops, where they are segregated from workers without disabilities.
The stated goal of the program was first to prepare participants for higher-paying jobs in nonsegregated facilities. But today, many workers languish in low-wage jobs. Certified employers can pay disabled workers based on a per-item rate or on calculations of their productivity relative to workers without disabilities. Some workers make as little as 25 cents per hour. Roughly one-third of certified employers reportedly fail to pay correctly calculated wages. Between October 2009 and September 2023, the Labor Department ordered employers to pay $20.2 million in back wages for pay and other violations.
Opponents of the existing scheme criticize it as perpetrating employment discrimination otherwise banned under the Americans With Disabilities Act. Section 14(c) regulations were last amended in 1989. Since then, federal legislation and judicial precedent have firmly established a broad framework of legal protections requiring equal access, opportunities, and respect for individuals with disabilities.
Furthermore, many states and localities, including Texas, California, Nevada, Maryland, and Washington, have prohibited, or limited, the payment of subminimum wages to workers with disabilities within their jurisdictions.
What the Proposed New Rule Would Change
Section 14(c) of the FLSA authorizes the DOL to issue certificates permitting employers to pay workers at wage rates below the federal minimum wage when the workers’ disabilities impair their earning or productive capacity. That section permits the issuance of such certificates only to the extent “necessary to prevent curtailment of opportunities for employment.”
The Wage and Hour Division issues Section 14(c) certificates to:
- business establishments;
- community rehabilitation programs (CRPs), but better known as sheltered workshops;
- hospital/patient worker facilities; and
- school work experience programs.
The overwhelming majority of current certificate holders are sheltered workshops. But the number has dropped precipitously since 2001. As of May 2024, only 801 employers either had existing certificates or pending applications. As of November 2024, the number of employers had dropped by about 50.
Still, today, that means that at least 37,106 workers in 37 states may be paid less than $1 an hour for the work that they perform. The proposed rule would stop the issuance of any new Section 14(c) certificates to employers who submit an initial application on or after the final rule’s effective date. It would generally permit existing Section 14(c) certificate holders to operate under their existing certificates for up to three years.
Texas Wage Laws – Texas Has Already Banned the Subminimum Wage for People with Disabilities
Texas is among the states that are out in front on this issue. In June 2019, Texas adopted SB 753, which requires sheltered workshops to pay workers with disabilities at least the federal minimum wage. The law, which permits generous exemptions for employers based on the worker’s circumstances, became effective in 2022. It should be noted that SB 753 amends Section 122 of the Texas Human Resources Code, but not the Texas Minimum Wage Act.
On its face, the law would not appear to apply to business establishments, hospital-patient worker facilities, and school-work programs. Today, these are probably a small fraction of the total number of employers affected. In addition, the loosely defined term “worker circumstances” is worth close scrutiny. SB 753 does not appear to provide entirely the same coverage as the proposed DOL amendment to Section 14(c), but the overlap is likely quite large.
Uncomfortable Questions Persist – Ongoing Changes in Wage Laws
There are quite a few “carve-outs” from the FLSA’s guarantee of a minimum wage for employees. We have previously dealt, at length, with the recent developments in the rules for salaried professional, executive and administrative employees and the legal protections for tipped workers. But that still leaves many wage issues for other groups of workers, including:
- students,
- homeworkers,
- domestic employees,
- agricultural workers, and
- prisoners.
And this does not begin to touch the folks, including many in the construction industry, who work for cash off the books and often have no legal protection from unscrupulous employers.
Kilgore & Kilgore Employment Lawyers Fight Wage Discrimination Everyday
Kilgore attorneys understand the shades and complexities of employer obligations and employee rights. Our Texas employment law lawyers have a depth of experience with worker classification, wage and hour law, overtime pay, employee rights, and wage claims. We are well prepared to help you understand the ongoing changes in wage laws. Do you want to discuss your wage issues with a seasoned employment lawyer? Use this link to get the conversation started Contact Us. Or call (214) 969-9099.