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Original reporting by Erica E. Phillips. Compiled by Madeline Papcun.
Almost a century ago, in 1938, the Fair Labor Standards Act established the right to a minimum wage and overtime pay for working Americans. But the act carved out one segment of the population from the wage standard: individuals with disabilities.
That section of the law, known as 14(c), is still in place today, though the state of Connecticut is moving away from contracting with employers who hold what are known as 14(c) certificates.
Here’s what to know about the minimum wage exemption for individuals with disabilities.
Under the law, qualifying employers can pay some workers less than minimum wage for the work they perform.
Specifically, this applies to workers “whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury.”
Earlier versions of the law established a wage floor of 75% and later 50% of federal minimum wage. Today, there is no wage floor for individuals with disabilities working for employers who are 14(c) certificate holders.
Employers can set an employee’s wage based on the individual’s productive capacity for a specific job.
The labor department’s certificate application includes “wage calculators,” where employers enter the amount of time it takes a “standard setter” to complete a given task and the amount of time it takes a worker with a disability to complete the same task.
Each person’s wage is set based on how much longer it takes him or her to perform the task compared to a set standard.
If an employee feels they’re being paid unfairly, they or a family member can petition the department’s wage and hour division for a review.
A worker’s disability is not in and of itself sufficient to warrant the payment of a subminimum wage.
The U.S. Department of Labor says employers can’t pay someone subminimum wage “unless the disability actually impairs the worker’s earning or productive capacity for the work being performed.”
All the Connecticut employers who hold 14(c) certificates are nonprofit social service agencies that provide job assistance to people with disabilities.
Vocational programs hold 14(c) certificates for individuals in programs known as “group-supported employment,” a model intended to teach skills and prepare people for the broader job market.
The organizations say the wage exemption provides work opportunities that might not otherwise exist. Without the ability to pay subminimum wages, program leaders say their business clients wouldn’t be able to afford to hire them.
The state of Connecticut hires cleaning crews from organizations with 14(c) certificates.
The Department of Administrative Services said it currently has 64 active contracts with the CT Community Nonprofit Alliance, which manages what are known as “preferred purchasing” arrangements between the state and service providers employing people with disabilities. The majority of those contracts are for janitorial services.
Workers on those contracts “are employed and paid under the federal wage exemption by the nonprofit and not by the state,” Jesse Imse, a spokesman for DAS, said in an email.
But officials said DAS plans to transition out of those contracts.
As current agreements expire, DAS is shifting to a newer model known as “qualified partnerships,” where vocational rehab organizations place individuals in jobs with private companies, which then contract with the state.
The program aims to incentivize private companies to create more “competitive integrated” jobs for people with disabilities — jobs that pay at or above minimum wage and take place in locations where the employee interacts with people who don’t have disabilities.
Connecticut’s efforts to move away from subminimum wage work is part of a broader trend toward a model known as ‘competitive integrated employment.’
More than a dozen states, including several in New England — Rhode Island, New Hampshire and Maine — have outlawed subminimum wages for people with disabilities entirely. A bipartisan group of U.S. Senators proposed legislation earlier this year, known as the Transformation to Competitive Integrated Employment Act, that seeks to eliminate subminimum wage work for people with disabilities.
From 2010 to 2019, the number of employers with 14(c) certificates nationally declined to 1,567 from 3,117 and the number of people working for those employers fell by more than half to roughly 122,000, according to the Government Accountability Office.