At its April 5th, 2016 meeting, the Michigan Developmental Disabilities Council will be discussing a recommendation to support amending current state legislation to prohibit the ability under the state law of employers to pay less than the minimum wage to persons with physical or mental disabilities, without regard to an individual’s productivity and earning capacity.
The controversy over sub-minimum wages is usually framed as a difference of opinion and ideology between people who believe disabled workers have the same right as everyone else to the protection of minimum wage laws, against those who believe that a subsidy to employers through sub-minimum wage certificates is justified to assure appropriate work experiences. For people who would otherwise not be employable in integrated, competitive work environments, wage certificates assure the availability of suitable alternatives.
The problem is that the two sides in this argument are talking about different people in different circumstances who cannot be categorized by sweeping generalizations about people with disabilities. Individually, each person with a developmental disability has a right to appropriate services and a right to be protected from discrimination in the workplace. The federal law and regulations as they are now written do both, even though enforcement of the law and how it is interpreted may be open to question.
Below are references to federal regulations that define under what circumstances employers can apply for sub-minimum wage certificates for people with disabilities. These certificates are used primarily in facility-based programs or sheltered workshops that often provide an array of services beyond employment. Without the wage certificates, many of these programs would not be able to continue operating.
From the Wage and Hour Division of the U.S. Department of Labor:
The Fair Labor Standards Amendments of 1986 (Pub. L. 99-486, 100 Stat. 1229) substantially revised those provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. 201) (FLSA) permitting the employment of individuals disabled for the work to be performed (workers with disabilities) at special minimum wage rates below the rate that would otherwise be required by statute. These provisions are codified at section 14(c) of the FLSA and:
(a) Provide for the employment under certificates of individuals with disabilities at special minimum wage rates which are commensurate with those paid to workers not disabled for the work to be performed employed in the vicinity for essentially the same type, quality, and quantity of work; [emphasis added]
(b) Require employers to provide written assurances that wage rates of individuals paid on an hourly rate basis be reviewed at least once every six months and that the wages of all employees be reviewed at least annually to reflect changes in the prevailing wages paid to experienced individuals not disabled for the work to be performed employed in the locality for essentially the same type of work;
(d) Permit the continuance or establishment of work activities centers; and
(e) Provide that any employee receiving a special minimum wage rate pursuant to section 14(c), or the parent or guardian of such an employee, may petition for a review of that wage rate by an administrative law judge. [emphasis added]
Worker with a disability for the purpose of this part means an individual whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury, for the work to be performed. Disabilities which may affect earning or productive capacity include blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. The following, taken by themselves, are not considered disabilities for the purposes of this part: Vocational, social, cultural, or educational disabilities; chronic unemployment; receipt of welfare benefits; nonattendance at school; juvenile delinquency; and, correctional parole or probation. Further, a disability which may affect earning or productive capacity for one type of work may not affect such capacity for another.[emphasis added]
Special minimum wage is a wage authorized under a certificate issued to an employer under this part that is less than the statutory minimum wage…
Commensurate wage is a special minimum wage paid to a worker with a disability which is based on the worker's individual productivity in proportion to the wage and productivity of experienced nondisabled workers performing essentially the same type, quality, and quantity of work in the vicinity in which the individual under certificate is employed. For example, the commensurate wage of a worker with a disability who is 75% as productive as the average experienced nondisabled worker, taking into consideration the type, quality, and quantity of work of the disabled worker, would be set at 75% of the wage paid to the nondisabled worker. For purposes of these regulations, a commensurate wage is always a special minimum wage, i.e., a wage below the statutory minimum.
§525.5 Wage payments.
(a) An individual whose earning or productive capacity is not impaired for the work being performed cannot be employed under a certificate issued pursuant to this part and must be paid at least the applicable minimum wage. [emphasis added] An individual whose earning or productive capacity is impaired to the extent that the individual is unable to earn at least the applicable minimum wage may be paid a commensurate wage, but only after the employer has obtained a certificate authorizing payment of special minimum wages from the appropriate office of the Wage and Hour Division of the Department of Labor.
§525.9 Criteria for employment of workers with disabilities under certificates at special minimum wage rates.
(a) In order to determine that special minimum wage rates are necessary in order to prevent the curtailment of opportunities for employment, the following criteria will be considered:
(1) The nature and extent of the disabilities of the individuals employed as these disabilities relate to the individuals' productivity;
(2) The prevailing wages of experienced employees not disabled for the job who are employed in the vicinity in industry engaged in work comparable to that performed at the special minimum wage rate;
(3) The productivity of the workers with disabilities compared to the norm established for nondisabled workers through the use of a verifiable work measurement method (see §525.12(h)) or the productivity of experienced nondisabled workers employed in the vicinity on comparable work; and,
(4) The wage rates to be paid to the workers with disabilities for work comparable to that performed by experienced nondisabled workers.
(b) In order to be granted a certificate authorizing the employment of workers with disabilities at special minimum wage rates, the employer must provide the following written assurances concerning such employment:
(1) In the case of individuals paid hourly rates, the special minimum wage rates will be reviewed by the employer at periodic intervals at a minimum of once every six months; and,
(2) Wages for all employees will be adjusted by the employer at periodic intervals at a minimum of once each year to reflect changes in the prevailing wages paid to experienced nondisabled individuals employed in the locality for essentially the same type of work.
The issuance of a sub minimum wage certificate review and appeals:
Any person aggrieved by any action of the Administrator taken pursuant to this part may, within 60 days or such additional time as the Administrator may allow, file with the Administrator a petition for review. Such review, if granted, shall be made by the Administrator. Other interested persons, to the extent it is deemed appropriate, may be afforded an opportunity to present data and views. [Administrator means the Administrator of the Wage and Hour Division, U.S. Department of Labor, or the Administrator's authorized representative.]
§525.19 Investigations and hearings.
The Administrator may conduct an investigation, which may include a hearing, prior to taking any action pursuant to these regulations. To the extent it is deemed appropriate, the Administrator may provide an opportunity to other interested persons to present data and views. Proceedings initiated pursuant to this section are separate from those taken pursuant to FLSA section 14(c)(5) and §525.22.
§525.23 Work activities centers.
Nothing in these regulations shall be interpreted to prevent an employer from maintaining or establishing work activities centers to provide therapeutic activities for workers with disabilities as long as the employer complies with the requirement of these regulations. Work activities centers shall include centers planned and designed to provide therapeutic activities for workers with severe disabilities affecting their productive capacity. Any establishment whose workers with disabilities are employed at special minimum wages must comply with the requirements of this part, regardless of the designation of such establishment.