A 1938 provision still in force

Section 14(c) of the Fair Labor Standards Act, enacted in 1938, authorizes the Secretary of Labor to issue special certificates allowing the employment of workers with disabilities at rates below the federal minimum wage.

The original premise — articulated in the legislative history of the FLSA — was that some workers with severe disabilities might otherwise be unemployed entirely if employers were required to pay them the standard minimum wage. The certificate provision was framed as a mechanism for providing employment opportunity that would not otherwise exist.

That framing has been thoroughly contested by recent disability-rights advocacy and empirical research. The contemporary record on 14(c):

• Workers employed under 14(c) certificates earn, on average, well below the federal minimum wage. Some earn pennies per hour.
• The vast majority of 14(c) employment occurs in segregated workshop settings (often called “sheltered workshops”) where disabled workers are isolated from the broader workforce.
• Transitions from 14(c) employment to competitive integrated employment are rare. The framework concentrates and retains workers in the segregated setting rather than serving as a pathway to competitive employment.
• The wages paid bear minimal relationship to the productivity of the workers, particularly given the operational and capital constraints of the workshop settings.
• States and employers that have eliminated 14(c) employment have, on the empirical record, transitioned the affected workers to competitive integrated employment with the support of properly funded supported-employment programs.

The 14(c) framework, in other words, does not function as a bridge to mainstream employment. It functions as a permanent destination — a category of below-minimum-wage employment in segregated settings that, once entered, workers rarely leave.

What’s already changed — and what reversed

Several developments have constrained 14(c) employment over the past two decades:

State-level phase-outs. This is where the action now is. More than two dozen states have enacted bans, restrictions, or phase-outs of subminimum-wage authority for disabled workers under state law. Roughly 18 states have passed legislation that has ended, or will end, the practice outright — among them Maine, New Hampshire, Maryland, Vermont, Alaska, Hawaii, Washington, Oregon, Colorado, California, Delaware, Tennessee, South Carolina, and Rhode Island — and several more have begun phasing out or disincentivizing 14(c) use through other means. Timelines vary; some phase-outs are complete, others are in progress.

Federal partial restrictions. The 2014 Workforce Innovation and Opportunity Act (WIOA) restricted subminimum-wage employment of youth with disabilities (those age 24 and under) without prior employment counseling and exhaustion of competitive employment options. The provision did not eliminate 14(c) but constrained its use for younger workers.

Department of Labor pilot programs. DOL has run various transition-support programs helping workshops convert to competitive-employment models or supported-employment frameworks.

Workshop closures. Some major workshop networks have closed or transitioned voluntarily, often citing the political and economic difficulty of continuing under existing 14(c) frameworks.

The long-running decline has been steep: the number of workers employed under 14(c) certificates fell from roughly 424,000 in 2001 to about 40,000 in 2024. But the practice is not ending on its own, and an attempt to end it by federal rule has now collapsed.

The federal rule that was proposed — and withdrawn

In December 2024, the Department of Labor published a proposed rule that would have phased out 14(c) entirely: DOL would stop issuing new certificates on a set effective date and wind down existing certificates over a three-year transition. For the first time, the federal government had moved to close the program through rulemaking.

That rule no longer exists. In July 2025, DOL formally withdrew the proposal. After reviewing more than 17,000 public comments — including organized opposition from members of Congress, some service providers, and some disabled workers and their families — the department concluded that it lacked clear statutory authority to eliminate the program by regulation. Its reasoning: Section 14(c) directs the Secretary to issue certificates to employers who qualify, which DOL read as a mandatory duty rather than a discretionary one. On that reading, ending the program is a job for Congress, not the executive branch.

The practical result is that certificates continue to be issued. The federal regulatory route to phase-out is, for now, closed — which is what has pushed the question back to the states and back to legislation.

The Transformation to Competitive Integrated Employment Act

With the regulatory route closed, the legislative route is the one that remains. The Transformation to Competitive Integrated Employment Act was reintroduced in the 119th Congress in July 2025 — H.R. 4771 in the House and S. 2438 in the Senate — with bipartisan, bicameral sponsorship. It would phase out 14(c) certificates over a defined transition period and, unlike the withdrawn DOL rule, would not face the statutory-authority objection: a statute repealing or sunsetting 14(c) is squarely within Congress’s power. The substantive provisions:

• A schedule for phasing out new certificate issuances and existing certificate renewals over five to seven years.
• Federal funding for transition support — helping workshops convert their operations or close, and helping individual workers transition to competitive employment.
• Expanded funding for supported-employment services that connect disabled workers to integrated workplaces with the supports needed to succeed.
• Conversion grants for workshops moving toward competitive-employment business models or other community-integration models.
• Worker-protection provisions during the transition: no abrupt job losses, continuity of supports, and pathway to competitive employment for affected workers.

The bill has had bipartisan support in principle for years. Republican and Democratic cosponsors have introduced it in multiple sessions. It has not yet cleared either chamber, and in the current Congress both versions sit in committee.

The political constraint

The institutional constituency for continued 14(c) employment includes several elements:

Workshop networks. Some workshops are major employers in their communities and have organized resistance to phase-out. The argument is that workshop closure would harm both the workers and the local economic ecosystem.

Some family advocates. Family members of some workers in workshop settings have, in some cases, opposed phase-out — concerned about what alternative options would exist and skeptical of state-system capacity to deliver supported-employment services at scale.

Cost concerns. Federal phase-out with adequate transition support costs money. Federal phase-out without adequate transition support produces hardship for affected workers and is politically difficult.

The substantive political challenge is producing a phase-out structure that has adequate transition support to take care of affected workers, sufficient time to allow workshops to convert or close in orderly fashion, and durable commitment to the supported-employment infrastructure that the post-phase-out system depends on.

What works after 14(c) phase-out

Several state experiences provide working models. Vermont eliminated 14(c) earlier than most states; the post-phase-out outcomes have been broadly positive on competitive-employment and worker-wellbeing metrics. Maine’s phase-out has produced similar outcomes. Other states have varying records depending on the strength of supported-employment infrastructure they invested in alongside the phase-out.

The structural elements that support successful phase-out:

Robust supported-employment funding. Job coaches, on-site supports, transition services, and ongoing employment supports must be available at sufficient scale.

Employer engagement. Competitive employers — public sector, private sector, nonprofits — willing to hire workers with disabilities, with the supports needed for integration. Project SEARCH and similar models provide working frameworks.

Worker-driven planning. Person-centered planning processes that match workers with appropriate competitive-employment placements rather than uniform mass-transition approaches.

Continued case management. Long-term case management to support workers as employment situations change, jobs end, or new opportunities arise.

What to watch

• TCIE Act (H.R. 4771 / S. 2438) committee action and any floor consideration.
• DOL 14(c) certificate issuance rates now that the phase-out rule is withdrawn and certificates continue.
• State-level phase-out activity as more legislatures take up bans and the practical center of gravity stays at the state level.
• Supported-employment funding in Medicaid HCBS and IDEA pre-employment transition services — and how it holds up under the 2025 Medicaid reconciliation cuts.
• Workshop conversion examples where major workshop networks transition successfully to integrated-employment models.

Bottom line

The disability subminimum wage is a 1938 provision that does not, on the empirical record, function as the framework its original supporters intended. Phase-out is technically tractable, has bipartisan support in principle, and has been demonstrated to work at the state level. The 2024 effort to end it by federal rule was withdrawn in 2025 on statutory-authority grounds, so the regulatory shortcut is closed: federal phase-out now depends on Congress passing the TCIE Act, while the practical momentum continues to come from the states. Completing the phase-out — through legislation rather than rulemaking — remains one of the cleaner structural reforms in disability policy.