36,000 disabled workers are still legally paid below minimum wage — some earning $0.25/hour — under a 1938 law

Section 14(c) of the Fair Labor Standards Act, enacted in 1938, allows employers to pay disabled workers below the federal minimum wage by obtaining a special certificate from the Department of Labor. As of December 2024, 751 employers hold these certificates, employing over 36,000 disabled workers at subminimum wages. More than half earn less than $3.50/hour. Some earn as little as $0.25/hour. 93% of these employers are 'sheltered workshops' — segregated facilities where disabled people do repetitive piece work like assembling packaging or sorting recycling, isolated from the broader workforce. The justification for 14(c) has always been that these workers are 'less productive' and therefore their labor is worth less. But this framing obscures what is actually happening: disabled people are being paid pennies to do real work that generates real revenue for the organizations employing them, while being told this arrangement is for their own benefit. Research consistently shows that 14(c) programs do not lead to integrated, competitive employment — they are dead ends. Workers enter sheltered workshops and stay there for years or decades, never transitioning to real jobs. Meanwhile, the 16 states that have eliminated subminimum wages have not seen mass unemployment among disabled workers; instead, those workers have moved into competitive integrated employment or community-based programs. This persists because of an unusual coalition of interests that benefits from the status quo. Sheltered workshop operators — many of which are nonprofits like Goodwill affiliates — depend on cheap labor to run their operations and lobby against reform. Parents of adult children with intellectual disabilities sometimes prefer the predictability of a sheltered workshop over the uncertainty of competitive employment. And the federal government has been unable to act: the Department of Labor proposed phasing out 14(c) certificates in December 2024, but the Trump administration withdrew the proposed rule in July 2025, arguing that the DOL lacks statutory authority to end the program unilaterally and that Congress must act. Since Congress has not acted on this issue in 87 years, the status quo continues.