Editor's note: On July 7, 2025, the U.S. Department of Labor withdrew the proposal to phase out the issuance of subminimum wage certificates. The DOL stated that it "is formally discontinuing the rulemaking process and removing the proposal from further consideration."
Under Section 14(c) of the Fair Labor Standards Act (FLSA), employers are currently permitted to apply to the Wage and Hour Division for a certificate that allows payment of less than the federal minimum wage to certain employees with disabilities. Specifically, it allows such payments to employees who have a physical or mental disability that limits their earning capacity or productivity.
The intent behind this provision, which went into effect in 1938, was to increase employment opportunities for workers with disabilities by allowing employers to align pay with a worker’s productivity.
Over the past couple of decades, however, there has been an increased focus on improving earning opportunities for employees with disabilities. The inequality in wages permitted under Section 14(c) has increasingly come under scrutiny at the state level. As a result, several states have eliminated or begun phasing out the use of Section 14(c). For example, Colorado has already eliminated the subminimum wage, and California will have fully phased out and eliminated it by January 1, 2025.
It appears that federal law may be joining this trend. The U.S. Department of Labor (DOL) recently proposed a rule to eliminate the issuance of Section 14(c) certificates and phase out existing certificates over a three-year period following approval of the rule. The DOL has indicated that the subminimum wage is no longer necessary to create employment opportunities for employees with disabilities because today’s employers have more resources and training available.
The proposed rule is currently under review and open for comment until January 17, 2025. The fate of this proposed rule is uncertain, however, as the comment period ends just days before the new presidential administration takes office.
Employers with existing Section 14(c) certificates should be prepared to pay higher wages in the event the proposed rule, or some version of it, takes effect. If you are a Consulting or Enterprise member and have questions about how this proposed rule may affect you, please contact Employers Council at info@employerscouncil.org.
Gayle Moser is an attorney for Employers Council.