In December 2024, the U.S. Department of Labor (DOL) announced a proposed rule that would end payment of subminimum wages to workers with disabilities under Section 14(c) of the Fair Labor Standards Act (FLSA). After receiving thousands of comments, including concerns from members of Congress that the DOL lacked legal authority to unilaterally and permanently eliminate issuance of Section 14(c) certificates, the DOL formally withdrew the proposed rule on July 7, 2025. Accordingly, Section 14(c) of the FLSA remains unchanged.
Current Federal Law
Under Section 14(c), employers can apply to the DOL’s Wage and Hour Division for a certificate that allows payment of less than the federal minimum wage to employees with physical or mental disabilities that limit their earning capacity or productivity. This provision has been in effect since the FLSA was enacted in 1938. The purpose of this provision was to increase employment opportunities for disabled workers by allowing employers to align pay with a worker’s productivity.
Movement to Eliminate Subminimum Wages
Over the past couple decades, the inequality in wages permitted under Section 14(c) has come under scrutiny at the state level. Over a dozen states, including Colorado and California, have passed laws phasing out or eliminating the issuance of Section 14(c) certificates. Similar laws are pending in other states.
Despite this trend, most states continue to follow the FLSA and permit payment of subminimum wage to workers with disabilities under Section 14(c). For example, states like Utah, Idaho, Wyoming, New Mexico, and Arizona still permit issuance of Section 14(c) certificates; note that states may have nuanced requirements.
Takeaway for Employers
Employers should check applicable state law to determine whether subminimum wage certificates are prohibited or in the process of being phased out. If prohibited at the state level, the state law will take priority over the federal law.
For assistance with questions about Section 14(c) certificates, Employers Council members can contact us at info@employerscouncil.org.
Gayle Moser is an attorney with Employers Council.