Feature Issue on Employment and IDD

Clear-language summary

Most people think that people with IDD must be paid fairly. That means they should be paid the same as all people doing the same kind of work. Since the 1940s, there has been a federal law that allows service providers to pay people less than minimum wage. Some states are now ending this practice.

Several national laws have been passed or revised to prioritize fair pay for people with IDD. The Wagner O’Day Act requires that everyone working on federal contracts must be paid at least $17 per hour. The Workforce Innovation and Opportunity Act requires that state vocational rehabilitation agencies provide subminimum wage earners with information about how they can get a better-paying job in the community, and with training about self-determination and self-advocacy. The Olmstead court decision and HCBS Settings rule have been used to say that people with disabilities have the right to work in the community and be paid at least minimum wage.

Fifteen states have laws that say that no people with disabilities should be paid less than minimum wage. Other states have adopted Employment First policies through legislation, policy directives, and executive orders that say that working in a community-based job and being should be a priority for all people who receive training paid for by the government.

All these examples show how policies at the federal and state level are making community-based employment a priority. They are showing that sheltered work and subminimum wage are outdated and need to be phased out.

Over the past two decades, there have been a series of policy initiatives at the federal and state levels with a consistent message: People with disabilities have the right to be employed in the mainstream workforce earning the same wages and benefits as other workers, with publicly funded services that fully support these efforts. In turn, public policies have also been clear that alternative options previously considered best practice (sheltered workshops, non-work facility-based day programs, subminimum wage, etc.), should be either reduced or eliminated altogether. This article provides an overview of these various public policy efforts, and their implications for the continued expansion of employment in the community.

Subminimum Wage

Since 1938, under the federal Fair Labor Standards Act, individuals with disabilities can be paid less than minimum wage if an employer has a special certificate. Virtually all of these 14(c) certificates are currently held by disability service providers, to employ individuals in sheltered workshops or group/enclave settings. There have been a variety of ongoing efforts at the state and federal level to reduce and eliminate the use of subminimum wage.

State Actions

While federal law allows payment of subminimum wages, states are allowed to prohibit payment of subminimum wages for people with disabilities. Since 2015, 15 states have passed legislation to phase out subminimum wage: California, Colorado, Delaware, Hawaii, Maine, Maryland, New Hampshire, Nevada, Oregon, Rhode Island, Tennessee, South Carolina, Washington, Virginia. Twelve of these states have completely eliminated payment of subminimum wages, and by July 1, 2025, the remaining three (California, Nevada, and Virginia) will also have completed the process. In addition to legislation, administrative directives have also led to phasing out of the subminimum wage, by ending funding of services that pay subminimum wage. Vermont was the first state do so in 2002, followed by the District of Columbia, Wyoming, and Massachusetts.

Federal Actions

While payment of subminimum wage is still permitted under federal law, there have been a number of efforts at the federal level to limit the use of subminimum wage.

• Federal contractor wages: Since 2014, via presidential executive orders, there have been a series of increases in the minimum wage for individuals working on federal contracts, that have been inclusive of people with disabilities. The current minimum wage for federal contracts is $17 per hour as of January 1, 2024. In July 2022, a federal rule was issued that eliminated the payment of subminimum wages by the AbilityOne program, a program authorized by the Javits Wagner O’Day Act for targeted employment of people with disabilities via federal contracts.
• WIOA Section 511: In July 2016, Section 511 of the Workforce Innovation and Opportunity Act (WIOA) went into effect, which created new limitations on the use of subminimum wages. On an annual basis, everyone currently earning subminimum wage must receive career counselling from their state’s public vocational rehabilitation (VR) agency, with the opportunity to consider and explore options for competitive integrated employment through an informed choice process. Individuals earning subminimum wage must also annually receive information about training opportunities where they can learn about self-advocacy, self-determination, and peer mentoring. Also under Section 511, youth 24 years and under may not enter subminimum wage employment, until a series of steps have been taken, including referral to VR and career counseling to fully explore competitive, integrated employment as an option.
• Federal legislation to eliminate subminimum wage: Over the past decade, several bills have been introduced in Congress to eliminate subminimum wage. A bill currently being considered in Congress, the Transformation to Competitive Employment Act (https://bit.ly/4e1SsGi) has bipartisan support, and if passed, would phase out subminimum wage nationally in combination with provision of funding for states to undertake systems change to expand employment in the community for people with disabilities.

Source: APSE (July 2024) - Trends and Current Status of 14(c) - https://apse.org/home-v2-2/public-policy-priorities/

The Interplay of Subminimum Wage and Sheltered Work

Within the public policy arena, there is often an equivalence expressed between phasing out of subminimum wage and sheltered work. The reality is these are separate but inter-related issues. Many individuals in sheltered workshops earn subminimum wage, but some do not. In addition, individuals can earn subminimum wages outside of sheltered workshops (such as in group employment or enclaves). Therefore, it is important to not presume that phaseout of subminimum wage will result in the ending of sheltered work, and additional efforts are typically needed to support sheltered workshops in transitioning to community employment services. Also, as a result of WIOA Section 511 and state laws eliminating subminimum wage, in an example of unintended consequences of public policy, numerous sheltered workshops are now paying minimum wage. While it is good to see the increased wages for people with disabilities, they are still spending their days in segregated facilities, at odds with overall public policy.

Olmstead Decision and DOJ Actions

In 1999, based on the Americans with Disabilities Act (ADA), the U.S. Supreme Court ruled that people with disabilities have a qualified right to receive state funded supports and services in the community. As a result of this ruling, known as the Olmstead Decision , each state was required to develop an Olmstead plan, indicating how they would comply with the decision. Minnesota’s Employment First policy resulted from the development of the state’s Olmstead plan. Initially in its enforcement of the Olmstead decision, the U.S. Department of Justice (DOJ) focused primarily on residential settings. Over time, DOJ actions with states regarding residential settings also included a focus on day and employment services (e.g., Virginia and North Carolina). Ultimately, DOJ began taking actions against states, most prominently in Rhode Island and Oregon, that specifically focused on and day and employment services that were unnecessarily segregating individuals, in violation of the ADA and Olmstead. Via settlement agreements with DOJ, states have reduced their reliance on sheltered work and other segregated day services and expanded their capacity to support individuals in integrated employment.

CMS Settings Rule

In 2014, the Centers for Medicare and Medicaid Services (CMS) issued updated regulations for Home and Community Based Services (HCBS), funded by Medicaid. This included changes to the definition of home and community-based settings, with specific qualities required for services to qualify for HCBS funding. This change became known as the Settings Rule. (The vast majority of community-based services for individuals with intellectual and developmental disabilities are funded by Medicaid via HCBS.) The regulations specifically stated that, “The State must ensure that the setting chosen by the individual is integrated in and supports full access of individuals receiving Medicaid HCBS to the greater community, including opportunities to seek employment and work in competitive integrated settings, engage in community life, control personal resources, and receive services in the community to the same degree of access as individuals not receiving Medicaid HCBS.”

As a result of the rule, each state was required to develop and submit to CMS a plan for transitioning services to comply with the new rule. States were required to comply with the rule by May 2023. States generally cannot use HCBS funds from Medicaid to support services that do not provide full access to the community, including employment.

Defining Competitive Integrated Employment

Over the past two decades, a number of actions have been taken to increase the focus of the public vocational rehabilitation (VR) system on employment in the community. In 2001, a regulation was issued that defined an “employment outcome” under VR as employment in an integrated setting. Over the next several years, guidance was issued that detailed the definition of employment in an integrated setting. Subsequently, in 2014 the Workforce Innovation and Opportunity Act defined competitive, integrated employment (CIE), as the expected and successful outcome of VR services. Summing up the legislation, the Office of Disability Employment Policy said that CIE is defined as employment performed on a full-time or part-time basis for which an individual:

• is compensated at or above minimum wage and comparable to the customary rate paid by the employer to employees without disabilities performing similar duties and with similar training and experience.
• receives the same level of benefits provided to other employees without disabilities in similar positions.
• is employed at a location where the employee interacts with other individuals without disabilities.
• is presented opportunities for advancement similar to other employees without disabilities in similar positions.

This definition has resulted in clarity regarding the focus and goals of VR services. Also, while only applying to services funded by VR, it has resulted in a more universal definition regarding the expectations of employment of people with disabilities and in some cases has been adopted by other public systems as an optimal outcome.

Employment First Movement

Employment First is a movement that emerged in the early 2000s that prioritizes integration within the general workforce as an expected outcome of publicly funded services. Thirty-nine states now have Employment First policies, through legislation, policy directive, or executive order, and there is some type of Employment First movement in every state. Employment First has created a national brand and helped support a national movement regarding employment of people with disabilities and has served as a catalyst in many states for fundamental systems transformation.

The Emergence and Consistency of Public Policies Focused on Integrated Employment

In examining these policy efforts at the federal and state level over the past quarter century, a clear picture emerges of a national priority to emphasize employment of people with disabilities that is fully integrated within the general workforce. This is part of a vision of the inclusion of people with disabilities as fully participating members of our communities and society, side-by-side with those without disabilities. Efforts to reduce and eliminate reliance on segregated services such as sheltered work and other segregated day programs are part of this vision, which views disability from a social model perspective, rather than from a medical model. In a social construct, the exclusion of people with disabilities is not the fault of the individuals, but the result of an environment that does not account for the needs of people with disabilities. It is based on individuals with disabilities having the same rights as those without disabilities and places them at the center of all decisions affecting them. This evolution in disability rights is reflective of international movements for the rights and inclusion of all individuals who have too often been marginalized by society at large. Through various technologies, supports, accommodations, person-centered planning, and customization, it has been clearly demonstrated that people with significant disabilities who were previously considered unemployable can work successfully in the community. As a result, as with many societal changes, methods that were previously considered to be best practice for people with disabilities (such as institutions, sheltered work, subminimum wage), are now considered to be outdated. Grassroots advocates have pushed to move away from these outdated practices, and our public policies are reflective of that.

Next Steps

The policy framework that has emerged over the past generation provides a strong basis for continued advancements in employment of people with disabilities. However, there remains an ongoing need for examining how our public policies can continue to evolve to reflect the vision of Employment First, and a society that is fully inclusive and welcoming to people with disabilities. In addition to ongoing efforts to phase out subminimum wage, there is for example the need to ensure that the use and impact of technology is fully reflected in employment policy. There is also clearly a need for major reforms of Social Security disability programs to eliminate disincentives to employment. It is also important to recognize that “paper never refuses ink.” While strong public policies are important to creating a framework for advancing employment, it is only through enforcement of these policies, and advocacy by people with disabilities and their allies, that these policies will result in true transformation in the lives of people with disabilities and our society’s willingness and capacity to fully welcome and include them into the economic mainstream.

Disability Benefits 101

This site offers tools and information on employment and benefits in different states.