[Federal Register Volume 90, Number 127 (Monday, July 7, 2025)]
[Proposed Rules]
[Pages 29817-29818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12534]
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DEPARTMENT OF LABOR
Wage and Hour Division
29 CFR Part 525
RIN 1235-AA14
Employment of Workers With Disabilities Under Section 14(c) of
the Fair Labor Standards Act; Withdrawal
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Withdrawal of proposed rule.
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SUMMARY: 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.
DATES: The proposed rule published on December 4, 2024 (89 FR 96466),
is withdrawn as of July 7, 2025.
ADDRESSES: The docket for this withdrawn proposed rule is available at
https://www.regulations.gov/docket/WHD-2024-0001.
FOR FURTHER INFORMATION CONTACT: 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.
SUPPLEMENTARY INFORMATION:
I. Background
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.\1\
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\1\ 29 U.S.C. 206(a), 207(a).
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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, shall by regulation or order provide for the employment,
under special certificates, of [qualifying] individuals . . . at wages
which are lower than the minimum wage.'' \2\
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\2\ 29 U.S.C. 214(c)(1) (emphasis added).
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The Department's Wage and Hour Division (WHD) is responsible for
administering the section 14(c) certificate program and enforcing its
requirements.
II. Summary of the Notice of Proposed Rulemaking
On December 4, 2024, the Department published a notice of proposed
rulemaking (NPRM) in the Federal Register (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.
III. Summary of Comments
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 regulations.gov 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.\3\ 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.'' \4\
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\3\ 29 U.S.C. 214(c)(1).
\4\ 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, RIN 1235-AA14, Employment of Workers with
Disabilities Under Section 14(c) of the Fair Labor Standards Act
(Jan. 17, 2025), https://www.regulations.gov/comment/WHD-2024-0001-16506.
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[[Page 29818]]
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.
IV. Rationale for Withdrawal
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 ``may by regulation or order'' exempt certain student workers
from FLSA wage-and-hour requirements. By contrast, section 14(c) states
that the Secretary ``shall 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.'' Kingdomware
Tech., Inc. v. United States, 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). See 89 FR at 96489 (listing state legislation). The fact
that some States ended their state-law subminimum wage provisions does
not necessarily mean such provisions are no longer needed to prevent
curtailment of employment opportunities. It may simply mean that those
state legislatures made policy tradeoffs between the minimum wage and
employment opportunities. Congress may also make that policy tradeoff
with respect to certain disabled persons and eliminate the 14(c)
program.
Notwithstanding the Department's lack of statutory authority to
repeal a congressionally mandated program, the NPRM preliminarily
concluded that section 14(c) certificates ``are no longer necessary''
to prevent curtailment of employment opportunities. Id. at 96467. This
conclusion essentially presumes that no employment opportunity for
qualifying individuals with disabilities is curtailed by the federal
minimum wage.
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. See id. at 96473. 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.
Finally, commenters on all sides emphasized the importance of
ensuring that sufficient funding, resources, and support services exist
to avoid disruptions in employment and the discontinuation of services
from CRPs that could occur as a result of a transition away from
subminimum wages, as well as to enhance community integration for
individuals with disabilities.
In light of these concerns--most notably about the lack of legal
authority to tear down what Congress has mandated--the Department
concludes that it is most appropriate to withdraw the proposed rule
from consideration. Accordingly, the Department is withdrawing the NPRM
published on December 4, 2024.
V. Conclusion
By withdrawing the proposed rule, the Department is formally
concluding this rulemaking proceeding. If the Department determines in
the future that revisions to 29 CFR part 525 are warranted, it will
initiate a new rulemaking by publishing a notice of proposed rulemaking
in the Federal Register.
Accordingly, the NPRM published in the Federal Register on December
4, 2024, at 89 FR 96466 is withdrawn.
Donald Harrison,
Acting Administrator, Wage and Hour Division.
[FR Doc. 2025-12534 Filed 7-3-25; 8:45 am]
BILLING CODE 4510-27-P