The Trump administration is withdrawing a proposed rule that sought to phase out subminimum wage employment for people with disabilities, typically at sheltered workshops.
Indiana has been in the process of phasing out sheltered workshops. Approximately 1,000 people across the state currently work at a subminimum wage. A proposed Medicaid Waiver amendment, released for public comment on July 10, would eliminate facility-based pre-vocational services as a billable service. If approved, that will take effect in January 2025.
Under a federal law dating back to 1938, employers can obtain special 14(c) certificates from the U.S. Department of Labor allowing them to pay workers with disabilities less than the federal minimum of $7.25 per hour. Late last year, the Biden administration called for the Labor Department to stop issuing new 14(c) certificates and to phase out existing ones within three years.
A notice published in the Federal Register the week of July 6th, the Labor Department indicated that it is pulling the proposed rule.
“While the department cited a substantial decline in the use of section 14(c) certificates — from approximately 424,000 workers in 2001 to approximately 40,579 in 2024 — this decline does not establish that no current need remains. To the contrary, the continued existence of tens of thousands of workers utilizing the section 14(c) program suggests a nonzero population for whom section 14(c) remains necessary. That inference is bolstered by comments asserting that many individuals with significant disabilities would face unemployment, underemployment, or loss of ancillary services if 14(c) options were eliminated.”