In a recent update, the U.S. Department of Labor (DOL) proposed a significant change which emphasizes phasing out the issuance of Section 14(c) certification. To briefly explain, section 14(c) of the Fair Labor Standards Act (FLSA) allowed employers to pay workers with disabilities less than the federal minimum wage of $7.25 per hour. The primary agenda of this act was to provide employment opportunities for individuals whose productivity may be impaired due to their disabilities.
Although, this move reflects a growing recognition that subminimum wages are no longer necessary to ensure employment for individuals with disabilities. The following blog explores the impact this proposed change will have on the significant stakeholders, and majorly to what is the impact of this legislation on the larger workforce in the US.
Current Status of Section 14(c)
As of May 2024, there are approximately 801 employers with current or pending applications for Section 14(c) certificates, affecting around 40,579 workers with disabilities. According to reports from the DOL, the number of certificate holders has decreased dramatically over the past two decades. Many states have enacted bans or limitations on these certifications, leading to a 90% reduction in the number of employees paid subminimum wages since 2001.
With the aim of immediately imposing the seizure of section 14(c) certificates, the DOL proposed a three-year period for employers currently holding these certifications to transition away from paying subminimum wages. The rationale behind this change is that employment opportunities for individuals with disabilities have significantly improved since the FLSA was enacted in 1938, making subminimum wages unnecessary.
Two Sides of the Same Coin
While many significant figures support the new proposal and emphasize the need of providing good jobs for workers with disabilities. Moreover significant legal and policy advancements have made subminimum wages obsolete.
Disability rights advocates, including organizations like the National Council on Disability (NCD), also support the proposed rule, viewing it as a necessary step towards equity, and competitive integrated employment, creating a more inclusive workforce.
On the other hand, other stakeholders express concerns about the potential impact on job availability. Some employers even state the complexity of the need to invest in training and resources to support workers with disabilities, ensuring they can meet the new wage standards while maintaining productivity.
Broader Implications for Workforce and Society
To highlight the Short-Term Impacts, workers currently earning subminimum wages may see immediate wage increases, enhancing their economic wellbeing. Although, some workers could also face job security concerns particularly with employers struggling to adapt to the new wage requirements.
Although in the long-run, the DOL estimates a total gain in annual earnings of approximately $174.8 million, given all subminimum wage earners receive a standard minimum wage. Furthermore, the phase-out is expected to promote greater inclusion of individuals with disabilities in the workforce, as employers adapt to hiring practices that prioritize fair compensation. Another significant benefit is the long-term cost saving employers get by no longer needing to apply for or maintain Section 14(c) certificates. All of these highlight the improvement of employment practices which focus more on competitive integrated employment practices.
The proposed changes have significant implications for the workforce and society at large. By ensuring that all workers receive fair compensation, the phase-out reflects a broader cultural shift towards valuing the contributions of all individuals equally. This initiative aligns with societal goals of equity and justice in employment, reinforcing the principle that a fair day’s work deserves fair pay.
Takeaway
The proposed phase-out of Section 14(c) certificates represents a significant step towards ensuring fair wages for workers with disabilities. While there are challenges associated with this transition, the overall expectation of this proposal is to improve economic outcomes and promote a more inclusive workforce. Moreover, the DOL encourages stakeholders to engage in the public comment period, which remains open until January 17, 2025, to ensure that the voices of those affected by these changes are heard and considered.
This engagement with stakeholders indicates a commitment to considering diverse perspectives as they finalize the rule, paving the way for a more equitable labor market for all individuals.