Federal Law Allows Employers of Those with Disabilities to Skirt Minimum Wage

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June 21, 2013; NBC News


Does the dignity of work for people with disabilities justify a federal law allowing certain nonprofits (and their for-profit partners) to pay a sub-minimum wage? Goodwill Industries, a multibillion dollar nonprofit heavyweight in human services that is known for its good deeds and inexpensive clothing and wares, is one of the most visible nonprofit organizations that takes advantage of the 1938 Fair Labor Standards Act (FLSA) Section 14(c), usually referred to simply as “Section 14(c).” The behemoth charity has dozens of locations in the United States, some of which are documented paying their workers with disabilities as little as 22 cents per hour.

FLSA Section 14(c) authorizes the federal Department of Labor, in a sort of Orwellian process, to grant special minimum wage certificates permitting the holder to pay employees with disabilities a wage commensurate with their abilities, without any wage floor. The certificate-bearing employer simply administers a short “time study” which measures the speed at which an employee can perform repetitively a typically rote task, such as simple assembly (or hanging clothes, as in the case of many Goodwill employees), most often in discrete “sheltered workshop” settings. A formula determines the wage, which can be at or below minimum wage, and can shift significantly, as time studies of this kind are usually conducted for an employee every six months.

Certificate-holding nonprofits can contract out Section 14(c) workers to for-profit companies, leading to a creeping subversion of minimum wage protections for employees beyond the nonprofit world. Restaurants, retail stores and tax return processing centers are some of the common loci of Section 14(c) workers, numbering over 200,000 potential sub-minimum wage earners. “People are profiting from exploiting disabled workers, it is clearly and unquestionably exploitation,” said Ari Ne’eman, president of the Autistic Self Advocacy Network.

A Department of Labor spokesperson said in a recent statement that Section 14(c) “provides workers with disabilities the opportunity to be given meaningful work and receive an income.” Other defenders of the controversial provision sound the same implicit warning that workers with disabilities cannot produce value to justify a minimum wage and without Section 14(c) would be relegated to rehabilitation facilities, be homebound and without any other gainful or satisfactory outlet. Some frustrated parents support the exceptional law, believing that work at any wage is a source of occupation and sense of worth for their children with disabilities.

Goodwill International CEO Jim Gibbons, who was awarded $729,000 in salary and deferred compensation in 2011, defends a system that can reward a hardworking person with a disability less than one-millionth of his own executive pay. “It’s typically not about their livelihood. It’s about their fulfillment. It’s about being a part of something. And it’s probably a small part of their overall program,” he said. At 22 cents per hour, Gibbons is right—it certainly is not about livelihood.—Louis Altman


  • Chany Ockert

    While I agree that $.22/hour is too little, another conversation we need to have is the limits on working (that is, income) while receiving disabilities payments. Too many would like to work, and work is often healthy – mentally and emotionally, but can’t. The way disability payments are set up it becomes difficult. Either you have to find a low-paid, limited hours job that you can still do with your disability (hard to find) or not work. A graduated scale for disability payment that is flexible enough to handle times when the individual can’t work and needs to rely more on the disability payments.

  • Paul Higgins

    Perhaps the real problem here is the contracting out of disabled workers to for-profits.

    We operate a non-profit residential community for about 90 developmentally-disabled adults. Each of them spends weekday mornings doing productive work to add to the life of the community (gardening, weaving, cooking, and such). If we had to pay them minimum wage for their labor, the products they produce would be so overpriced that nobody would buy them. Who would pay $25 for a woven coaster or $70 for a plastic bead wall hanging?

    Our goal in having our residents work is to provide them with opportunities to socialize, move about, develop and maintain motor skills, and gain a sense of accomplishment. Basically, we want them to be able to learn and grow, just like anyone else with a job. There is no profit motive involved for us. (Income from items our residents produce is about 0.2% of our total income.)

    If the proposed legislation passes, we’d have to increase our monthly fee by almost $500 per month to pay minimum wage. Considering that two-thirds of our residents require financial aid from donors to be here, I don’t think that would happen. Instead, we would probably have to shut down our morning vocational program and let our residents sit around and watch TV. That would be truly sad and would comprise our mission.

  • Deb

    Here’s a thought in this day of equalities, what if everybody in the work world was evaluated the same way and paid accordingly? There’s got to be a better way out there for sure because the current system is just wrong and degrading. Take a physically disabled person who can’t physically do things very fast but is oh lets say has a college degree. You going to pay them $1 per hour because they are slower but could be even more intelligent and do a better job than the next person who gets min. wage and does a crappy job? What about setting up mentoring opportunities within a business? Where one worker mentors the other, works side by side with them, they both earn min wage, but the one who isn’t as “fast” is learning and being mentored and encouraged to get the job done. Or possibly even more volunteer positions for people who don’t make the grade in the “testing’ system to earn min. wage. the volunteer works alongside a mentor within the company. So value and fulfillment is achieved for those who can’t be as fast as our world expects everyone to be. There’s got to be a better answer than 22 cents per hour!

  • Keenan Wellar

    When fundamental human rights (under which I would include labor laws) are circumvented, it may well be with the best of intentions, but the outcome is usually limited short-term benefits and long-term harm. These very conversations we are now having about work and “the disabled” used to go on about women and racial minorities, for example. “Isn’t it better that they get to work for low wages than not all?”

    I used to help operate day programs and a sheltered workshop, and over a period of 5 years we got rid of both, and the people we support have fuller lives, including for many, paid (minimum wage or better) employment. We have to think beyond “keeping people busy” in segregated warehouses (and I mean that figuratively and literally in some cases). We have to think beyond the “systems world” and focus on the responsibility of the community to include all citizens in the LIFE world.