Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act; Withdrawal

DEPARTMENT OF LABOR <SUBAGY>Wage and Hour Division</SUBAGY> <CFR>29 CFR Part 525</CFR> <RIN>RIN 1235-AA14</RIN> <SUBJECT>Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act; Withdrawal</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Wage and Hour Division, Department of Labor. <HD SOURCE="HED">ACTION:</HD> Withdrawal of proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Labor (Department) is withdrawing its notice of proposed rulemaking (NPRM) published on December 4, 2024 (89 FR 96466), which proposed to amend 29 CFR part 525 to phase out the issuance of subminimum wage certificates under section 14(c) of the Fair Labor Standards Act (FLSA). With this action, the Department is formally discontinuing the rulemaking process and removing the proposal from further consideration. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The proposed rule published on December 4, 2024 (89 FR 96466), is withdrawn as of July 7, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> The docket for this withdrawn proposed rule is available at <E T="03">https://www.regulations.gov/docket/WHD-2024-0001.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Daniel Navarrete, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division (WHD), U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Alternative formats are available upon request by calling 1-866-487-9243. If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The FLSA generally requires that employees be paid at least the Federal minimum wage, currently $7.25 per hour, for every hour worked and at least one and one-half times their regular rate of pay for each hour worked over 40 in a single workweek. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>  29 U.S.C. 206(a), 207(a). </FTNT> Since its enactment in 1938, section 14 of the FLSA has required the Department to provide for the issuance of certificates permitting employers to pay workers at wage rates below the federal minimum wage when the worker's disability impairs his or her earning or productive capacity. Specifically, section 14(c) states that the Department, “to the extent necessary to prevent curtailment of opportunities for employment, <E T="03">shall</E> by regulation or order provide for the employment, under special certificates, of [qualifying] individuals . . . at wages which are lower than the minimum wage.”  <SU>2</SU> <FTREF/> <FTNT> <SU>2</SU>  29 U.S.C. 214(c)(1) (emphasis added). </FTNT> The Department's Wage and Hour Division (WHD) is responsible for administering the section 14(c) certificate program and enforcing its requirements. <HD SOURCE="HD1">II. Summary of the Notice of Proposed Rulemaking</HD> On December 4, 2024, the Department published a notice of proposed rulemaking (NPRM) in the <E T="04">Federal Register</E> (89 FR 96466), in which it reviewed a number of legal and policy developments that have expanded employment opportunities and protections for individuals with disabilities since Congress first enacted the subminimum wage provision in 1938 and since the Department last substantively revised its section 14(c) regulations in 1989. Based on this review, the Department preliminarily concluded that subminimum wages are no longer necessary to prevent the curtailment of employment opportunities for individuals with disabilities. This preliminary conclusion largely rested on its evaluation of legal and policy developments, including the enactment of state laws phasing out comparable subminimum wage provisions and the declining use of section 14(c) certificates. Based on this preliminary conclusion, the proposed rule would have amended 29 CFR part 525 to cease issuance of new section 14(c) certificates to employers submitting an initial application on or after the effective date of a final rule, and to permit existing section 14(c) certificate holders—assuming all legal requirements were met—to continue to operate under section 14(c) certificate authority for up to 3 years after the effective date of a final rule. <HD SOURCE="HD1">III. Summary of Comments</HD> The Department received over 17,000 comment submissions, including more than 11,000 unique comments, in response to the NPRM. Commenters represented a broad array of stakeholders, including individuals with disabilities and their family members, disability rights advocates, Members of Congress, service providers, section 14(c) certificate holders, their employees who work with individuals with disabilities, and others. The Department appreciates the wide range of comments from a variety of stakeholders and notes that the unique perspectives provided underscore the broad array of interest in this issue. Comments may be viewed on the <E T="03">regulations.gov</E> website, docket ID WHD-2024-0001. Some comments expressed general support for or opposition to the proposed rule. Others raised more specific legal and policy concerns. Several commenters addressed the Department's authority under section 14(c) of the FLSA. That provision states that “[t]he Secretary, to the extent necessary to prevent curtailment of opportunities for employment, shall by regulation or order provide for the employment, under special certificates, of individuals . . . whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury” at subminimum wage rates. <SU>3</SU> <FTREF/> Some commenters agreed with the Department's preliminary conclusion that section 14(c) certificates are no longer necessary and that the FLSA provides authority for the Department to determine when that is the case. However, others—including the Chairman and several Members of the U.S. House of Representatives Committee on Education and Workforce—asserted that “DOL does not have the statutory authority to stop issuing 14(c) certificates.”  <SU>4</SU> <FTREF/> <FTNT> <SU>3</SU>  29 U.S.C. 214(c)(1). </FTNT> <FTNT> <SU>4</SU>  Letter from Hon. Tim Walberg, Hon. Virginia Foxx, Hon. Glenn Thompson, and Hon. Glenn Grothman, Chairman and members of the House Committee on Education and Workforce, to Acting Secretary Julie Su, U.S. Department of Labor, <E T="03"> RIN 1235-AA14, Employment of Workers with Disabilities Under Section 14(c) of the Fair Labor Standards Act </E> (Jan. 17, 2025), <E T="03">https://www.regulations.gov/comment/WHD-2024-0001-16506.</E> </FTNT> Commenters also expressed opposition to the Department's proposal to phase out the issuance of section 14(c) certificates on consequential grounds, focusing on: (1) that the proposed rule could lead to the closure or downsizing of community rehabilitation programs (CRPs), which hold the vast majority of section 14(c) certificates and provide many services to individuals with disabilities beyond employment, (2) that some individuals with disabilities are not able to work in competitive integrated employment (CIE) and would face unemployment or reduced employment opportunities without the option of working under a section 14(c) certificate, and (3) that workers with disabilities should be able to choose between subminimum wage employment and CIE. Commenters supporting the Department's proposal focused on, among other things: (1) that all workers with disabilities have a right to be paid at least the Federal minimum wage, (2) that the payment of subminimum wages is an unfair, antiquated, and discriminatory pay practice, and (3) that section 14(c) certificates are no longer necessary for individuals with disabilities to successfully obtain employment at or above the full Federal minimum wage, as demonstrated by several states that have already moved away from the payment of subminimum wages. <HD SOURCE="HD1">IV. Rationale for Withdrawal</HD> The Department has carefully considered the wide range of views, information, analysis, and proposed alternatives submitted in response to the NPRM. In light of the record and for the reasons set forth below, the Department has decided to withdraw the NPRM. The Department takes seriously the concerns expressed by Members of Congress and others that it lacks statutory authority to unilaterally and permanently terminate the issuance of section 14(c) certificates. Section 14 of the FLSA includes both permissive and mandatory provisions. For example, section 14(d) provides that the Secretary of Labor “ <E T="03">may</E> by regulation or order” exempt certain student workers from FLSA wage-and-hour requirements. By contrast, section 14(c) states that the Secretary “ <E T="03">shall</E> by regulation or order provide for the employment, under special certificates, of individuals . . . at wages which are . . . lower than the minimum wage” when the individual's disability impairs their earning or productive capacity. Where, as here, “a statute distinguishes between `may' and `shall,' it is generally clear that `shall' imposes a mandatory duty.” <E T="03">Kingdomware Tech., Inc.</E> v. <E T="03">United States,</E> 579 U.S. 162, 172 (2016) (citation omitted). Thus, section 14(c) imposes a mandatory duty on the Department to provide for the issuance of subminimum wage certificates “to the extent necessary to prevent curtailment of opportunities for employment.” Further, although some states have ended subminimum wage programs, they have done so through state legislation consistent with their respective constitutional frameworks, and the existence of such state laws do not bear on the Department's statutory obligations under section 14(c). <E T="03">See</E> 89 FR ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 13k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━