Department of Labor Withdraws Proposal to Phase Out Subminimum Wages for Workers with Disabilities Under the FLSA

Department of Labor Withdraws Proposal to Phase Out Subminimum Wages for Workers with Disabilities Under the FLSA

Laura Aghwana, Law Clerk

            On July 7, 2025, the Wage and Hour Division of the Department of Labor (DOL) announced its withdrawal of its proposed rule published on December 4, 2024, which purposed to phase out the issuance of subminimum wage certificates to workers with disabilities under section 14(c) of the Fair Labor Standards Act (FLSA). With this withdrawal, the DOL formally discontinues the proposed rule and removes it from further consideration.

 Synopsis of the Proposed Rule

            Campbell Litigation previously discussed the DOL’s proposed rule in a prior blog post.[1]  To summarize, the DOL proposed a rule on December 4, 2024, to withdraw issuance of subminimum wage certificates under Section 14(c) of the FLSA,[2] which allows employers to pay wage rates below the federal minimum wage to workers whose disabilities affect their productivity.

            Section 14(c) introduced the subminimum wage certificate to prevent the curtailment of employment opportunities for individuals with disabilities and to provide job opportunities to individuals whose disability might impair their productive capacities at work or who might struggle to find employment.  However, after the DOL reviewed several legal and policy developments that extended employment opportunities and protections for individuals with disabilities since Congress enacted the provision, coupled with the substantial decline in the use of section 14(c) certificates (from approximately 424,000 workers in 2001 to approximately 40,579 in 2024), the DOL initially concluded that subminimum wages were no longer needed to prevent the curtailment of employment opportunities.[3] As a result, the DOL published the proposed rule to eliminate the issuance of the subminimum wages certificate.

 Withdrawal of the Proposed Rule and Reason for Withdrawal    

            Upon publishing the proposed rule, the DOL surmised that it lacked statutory authority to unilaterally and permanently eliminate the issuance of section 14(c) certificates. This conclusion came to the fore after the DOL reviewed the text of section 14(c) and found that the section imposes a mandatory duty on the DOL to make provision for the issuance of subminimum wage certificates in every way possible to prevent curtailment of employment opportunities.  This means that only Congress, having enacted section 14(c), retains the authority to terminate the section. Until Congress exercises that power, section 14(c) continues to be an active provision with which the DOL must comply.

 Colorado Law Nonetheless Protects Against Subminimum Wages for Disabled Individuals

            Notwithstanding section 14(c), Colorado law, codified at Colo. Rev. Stat. § 8-6-108.7, eliminates subminimum wage programs and controls the wage rates of individuals with disabilities in Colorado. This is due to the legal principle that while federal law sets the floor for wage and hour protections, state law sets the ceiling. Meaning that even though disabled individuals could be paid less than minimum wage under federal law, if Colorado law eliminates subminimum wage programs, then Colorado law governs. This position is also applicable to other states that have eliminated the subminimum programs.

            The above position is supported by the United States Supreme Court’s interpretation that the FLSA does not create barriers or preclude state laws that provide greater protection to workers.[4] The Colorado Court of Appeals has also upheld the state's authority to regulate wages independently of federal law.[5] These court interpretations underscore the balance between federal authority and state sovereignty in wage and hour laws.

 Key Takeaways/ Employer Considerations

             The fact that Section 14(c) still exists might create confusion for Colorado employers on whether to comply with federal or Colorado law regarding minimum wage standards. However, Colorado employers must bear in mind that despite the existence of Section 14(c), Colorado’s legislation, which eliminates subminimum wage programs, governs wage standards in Colorado. This requires Colorado employers to carefully evaluate their payment policies to ensure they are complying with the minimum wage laws of Colorado regarding individuals with disabilities, as well as Colorado law generally since it tends to be much more worker-friendly than parallel federal laws. Campbell Litigation is available to assist with compliance strategies regarding these and other wage-related developments.

[1] See  https://www.rockymountainemployersblog.com/blog/2024/12/19/department-of-labor-proposes-to-phase-out-subminimum-wages-for-workers-with-disabilities-under-the-flsa

[2] https://www.govinfo.gov/link/uscode/29/214

[3] https://www.federalregister.gov/documents/2025/07/07/2025-12534/employment-of-workers-with-disabilities-under-section-14c-of-the-fair-labor-standards-act-withdrawal

[4] See Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740, 101 S. Ct. 1437, 1444, 67 L. Ed. 2d 641 (1981).

[5]See Redmond v. Chains, Inc., 996 P.2d 759 (Colo. App. 2000).