What is a Subminimum Wage? And Why is It Important?

By Elise McMillan

About the Author

Elise McMillan is the co-director of the Vanderbilt Kennedy Center for Excellence in Developmental Disabilities, the director of Community Engagement and Public Policy at the VKC, and a senior lecturer in Psychiatry & Behavioral Sciences at Vanderbilt University School of Medicine. Elise also currently serves as president of the board of The Arc of the United States, and she has an adult son with an intellectual disability.

Our hope is that this weekly blog will offer information you want to know, so if you have a question you want answered about employment for people with disabilities or other mysteries of the world of work, please email janet.shouse@vumc.org.

As we continue to work toward more employment opportunities for people with disabilities in the community and in competitive, integrated employment, questions remain about subminimum wage.

Although regulations under the federal Fair Labor States Act do exist and the Workforce Innovation and Opportunity Act did place additional restrictions on payment of subminimum wage, the use of such wages does continue, and in many states there are individuals with disabilities who earn as little as seven cents an hour and workers who do not earn any wages. Subminimum wages are often paid in what are known as sheltered workshops.

To provide a better understanding of subminimum wage certificate holders and to share activities that some states have undertaken to end subminimum wage, a team from TennesseeWorks, from the Alaska employment systems change team project and from the Institute for Community Inclusion at the University of Massachusetts Boston developed two practice briefs.

The goal of the practice briefs was to answer the following questions and provide information that could be used by policymakers across the country:

  1. How do you find out who holds subminimum wage certificates in your state and what information can be obtained?
  2. Once you have that information, what can be done with it to advance policy and practice?

Obtaining information on the use of Subminimum Wages

The first document, “Guidance on How to Obtain Data on the Use of Subminimum Wages within a State to Inform Systems Change Activities,” provides an overview of obtaining the information.

The Fair Labor Standards Act of 1938 provided protections to U.S. workers including a federal minimum wage and overtime pay. A section of the FLSA permitted certificates, commonly called 14 (c) certificates, issued by the federal Department of Labor, to pay their employees whose earning or productive capacity was impaired by a physical or mental disability below the federal minimum wage.

The legislation at the time reflected views about employment and people with disabilities. Since then, with landmark legislation such as the Americans with Disabilities Act, which prohibits disability discrimination in employment, and the Workforce Innovation and Opportunity Act, views have changed. We know expectations are high for people with disabilities and opportunities for competitive, integrated employment in the community now exist.

The federal Department of Labor periodically updates lists available publicly of employers who hold 14 (c) certificates allowing them to pay subminimum wages. These lists are actually Excel spreadsheets that can be downloaded and sorted by state. You can find Tennessee’s certificate holders here.

The lists identify:

  • A state’s 14 (c) certificate holders;
  • The 14 (c) certificate starting and ending dates and status (pending or issued);
  • The number of workers paid subminimum wages at the time the 14 (c) certificate application was filed.

These lists can then be used as a basis for a Freedom of Information Act request to obtain additional information on the individual certificate holders. Our brief includes instructions on filing the request and even includes a sample letter.

The Department of Labor will generally charge a fee to provide this material, and that fee is based on the time it takes for the DOL to gather the requested material. A request can be made for a waiver of fees.

Using the data to advance policy and practice 

Once the information is obtained, states have used the data collected from the DOL in a number of different ways to advance policy and practice. The second practice brief, “Influencing Changes in State Policy and Practice with Data on Subminimum Wages,” outlines some of these activities from across the country.

A number of states also have state specific subminimum wage laws. Tennessee is among seven states that do not. Others include Alabama, Kentucky, Louisiana, Mississippi, South Carolina and Wyoming.

Alaska, for example, has a secondary subminimum wage certificate required by state law. In Alaska, employers must identify the work category of the subminimum wage worker. As a result, it is possible to analyze some primary occupational categories. Janitorial, clerical, maintenance, and food-related jobs are the most prevalent subminimum wage work categories in Alaska. Sharing data on the concentration of work in this limited number of categories has encouraged discussion about low expectations and stereotypes of individuals with disabilities in the workforce and how changes can be made.

Other state strategies are also discussed in the brief. At the state level, Vocational Rehabilitation can be a partner in sharing information about subminimum wages and in counseling Tennessee workers who are being paid subminimum wages. Because of requirements of Workforce Innovation and Opportunity Act relating to the payment of subminimum wages, VR has an obligation to provide career counseling and information and referral services to individuals that it knows to be employed at subminimum wages.

The brief outlines other strategies that states can use to help equip individuals of any age find competitive integrated employment.

Share your questions about subminimum wage with us here at TennesseeWorks. You can email Janet Shouse at janet.shouse@vumc.org. Another free resource always available is the Client Assistance Program of Disability Rights Tennessee, Tennessee’s protection and advocacy agency. Contact them at 800.342.1660.

Thanks to Evelyn Doxey, retired attorney for Disability Rights Tennessee; Jean Winsor, senior research associate with the Institute for Community Inclusion at the University of Massachusetts Boston; Kristin Vandagriff, planner with the Alaska Governor’s Council on Disabilities and Special Education and the Alaska Partnerships in Employment Project; and Leslie Jaehning, staff attorney at the Disability Law Center of Alaska.

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