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GAO Report on Subminimum Wage – Factsheet

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Key Facts:

The Fair Labor Standards Act of 1938 permits the payment of subminimum wages that are below the federal minimum wage to people with disabilities who often work in segregated environments.  This factsheet outlines U.S. Government Accountability Office (GAO) data on people with disabilities working in competitive integrated employment (CIE).

Fact 1:

Employers who apply for and hold a 14(c) certificate from the U.S. Department of Labor’s Wage and Hour Division are allowed to pay people with disabilities less than the federal minimum wage.

Fact 2:

As of October 2020, more than 1,200 organizations held or had applied for 14(c) certificates to employ workers with disabilities, often in segregated settings, where coworkers are exclusively individuals with disabilities.

Fact 3:

Subminimum wage continues as an option despite years of data of people with significant disabilities benefiting from competitive integrated employment (CIE), defined by:

  • paid work at or above the applicable minimum wage and commensurate with coworkers performing the same work;
  • work occurring in integrated business settings with coworkers with and without disabilities; and
  • opportunities for job advancement.

Fact 4:

GAO grouped the factors that influence the transition from 14(c) to CIE to include 1) Employee, 2) Employers, 3) Public Policy and, 4) Local Economy:

  • concern for maintaining Social Security benefits (employee)
  • sufficiency of CIE resources for 14(c) certificate holder such as job coaching (employers)
  • state resources for CIE (public policy)
  • availability of transportation (local economy)

Fact 5:

GAO identified the above list of factors by reviewing the literature, interviewing 14(c) employers and officials in two states, receiving input from 17 interviewees and 12 disability and employment experts as well as officials from five additional states in varying stages of progress toward increasing CIE opportunities.
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