What is the Current Status of the 14(c) Certificate Program for Workers with Disabilities?

The US Department of Labor (DOL) has officially withdrawn a proposal to phase out a program permitting subminimum wages for workers with disabilities, maintaining the status quo for employers utilizing 14(c) certificates. This decision, reversing a Biden-era initiative, means businesses can continue to pay workers with disabilities below the federal minimum wage based on their individual productive capacity.

What is a 14(c) Certificate?

A 14(c) certificate is a special wage authorization issued by the DOL under the Fair Labor Standards Act (FLSA). It allows employers to pay workers with disabilities less than the federal minimum wage of $7.25 per hour when their disability directly impairs their earning or productive capacity for a specific job. The purpose of this program has historically been to provide employment opportunities for individuals who might not otherwise be competitive in the open labor market. Employers must apply for these certificates and conduct periodic time studies to determine the worker's commensurate wage rate, which is intended to be proportional to the wage of a non-disabled worker performing the same task.

Why Was the Phase-Out Proposed and Then Withdrawn?

In late 2023, the DOL under the Biden administration proposed a three-year phase-out of the 14(c) program. The rationale was that, based on our assessment experience, opportunities for workers with disabilities have "dramatically expanded" due to wider adoption of supported employment models and other resources that help employers with inclusion. The goal was to transition towards integrated employment at competitive wages.

However, the Trump administration's DOL has withdrawn this proposal. In a forthcoming Federal Register notice, the agency states it lacks the statutory authority to "unilaterally and permanently" end the program. This indicates that any fundamental change to the 14(c) program would likely require an act of Congress, not just a regulatory shift.

What Does This Mean for Employers and Recruiters?

For employers who currently hold or are considering applying for a 14(c) certificate, the program remains a legally available option. This decision provides continuity for organizations that rely on this model. However, it's crucial for businesses to also be aware of the growing trend toward supported employment, which integrates workers with disabilities into the general workforce at competitive wages. Many advocacy groups view this integrated model as a more equitable path forward.

For recruiters and HR professionals, this underscores the importance of:

• Understanding Compliance: Ensuring that any use of a 14(c) certificate is meticulously documented and in full compliance with DOL regulations regarding time studies and wage calculations.
• Evaluating Talent Strategy: Considering whether traditional segregated workshop models or integrated, competitive-wage models better align with company values and long-term talent acquisition goals.

The key takeaway for businesses is that the legal landscape for employing workers with disabilities under the 14(c) program has not changed. While the program remains active, employers are encouraged to stay informed about evolving best practices in disability inclusion and recruitment.