On Monday, the federal Department of Labor announced a proposed rule that eliminates a special subminimum wage for certain employees with disabilities under the Fair Labor Standards Act. The current rule has been in place for decades and allows qualified employers to pay below the current $7.25 federal minimum, sometimes less than $3.50 per hour. The current rule was intended to incentivize employers to hire disabled workers who may need additional training and assistance to perform their job duties.

In announcing the proposed rule, DOL said that inflation has reduced the regular minimum wage to the point where employers do not need the additional incentive to hire disabled persons. In addition, a growing number of states have passed laws requiring that employers pay the state minimum wage to all workers, including disabled persons. In order to use the current subminimum wage, employers must obtain a certificate from DOL. The agency reported that the number of employers holding certificates continues to drop, numbering about 750 nationwide in the last fiscal year.

For existing certificate holders, the final rule gives employers three years to come into compliance with regular minimum wage requirements. DOL is taking comments on the proposed rule through January 17. DOL may issue the final rule prior to the change in administrations next month, under the assumption that it would be withdrawn. However, given the small and diminishing number of companies seeking to use the subminimum wage, the new requirement may not attract much protest.

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