On June 16th, 2022, the U.S. Department of Labor (DOL’s) Wage and Hour Division (WHD) published guidance on how the law limits subminimum wage for disabled workers. Limits on paying a subminimum wage may be found under Section 511 of the Rehabilitation Act (Section 511). The new guidance follows a recent WHD investigation into a Montana ranch. The investigation revealed that the employer violated Section 511’s provisions when allowing subminimum wages for disabled workers. This was one of the more unique cases to surface since the WHD hired 100 investigators to support its enforcement efforts earlier this year.

Section 511 and Subminimum Wage for Disabled Workers

One of five significant employment laws businesses should know, the Fair Labor Standards Act (FLSA) allows some employers to employ specific individuals at wage rates below the federal minimum wage. These include individuals with impaired learning or productive capacities because of a mental or physical disability. In brief, the goal of permitting subminimum wages for disabled workers is to protect their employment opportunities from becoming restricted altogether. However, paying disabled workers below the federal minimum wage is permitted only under certificates the WHD issues in pursuance of Section 14(c) of the FLSA.

Furthermore, Section 511 of the Rehabilitation Act requires that all workers with disabilities who employers pay a subminimum wage receive:

  • regular career counseling; and
  • information about self-advocacy, self-determination, and peer monitoring training in their local area.

Covered workers must receive the appropriate training and counseling every six months during their first year of employment. They must receive the same annually after that. Section 511 supplements, but does not replace, Section 14(c) of the FLSA. When employers fail to comply with Section 511, they must pay workers at the full federal minimum wage.

Brief Overview of the Montana Case

In a recent case out of Montana, investigators found that the employer, Special K Ranch, violated requirements under Section 511. Special K Ranch falsely stated that they provided required counseling and training to their disabled workers who they paid a subminimum wage when they had not. Investigators found that Special K Ranch paid 35 employees below federal minimum wage during and after the investigation. In accordance with Section 511, Special K must pay workers the full minimum wage until they receive the services required. In some cases, Special K Ranch paid workers just $1.17 per hour. This is significantly lower than the federal minimum wage rate of $7.25 an hour.

Guidance on Allowing Subminimum Wage for Disabled Workers

To support enforcement of Section 511, the WHD released Field Assistance Bulletin No. 2022-4, “Enforcement of the Rehabilitation Act Section 511 Requirements for Workers with Disabilities in the Section 14(c) Program.” Briefly, the new guidance reinforces the law and assists employers with complying with various requirements of Section 511. These requirements cover timing and documentation for workers in the Section 14(c) program, as covered in Section 511. The WHD has been monitoring and evaluating compliance with Section 511 requirements since 2016. Wage and Hour Division Deputy Administrator Patricia Davidson stated, “These requirements help ensure that workers have critical resources and information designed to improve access to competitive integrated employment.”