No Items in Cart 
On July 7th, 2025, the U.S. Department of Labor (DOL) formally withdrew a Notice of Proposed Rulemaking (NPRM) involving subminimum wages. Specifically, the NPRM would have amended 29 CFR part 525. The NPRM would have phased out the issuance of certificates authorizing subminimum wages to workers with disabilities under Section 14(c) of the Fair Labor Standards Act. Explicitly, this action by the DOL means that the agency will not move forward with the proposed changes. Earlier this month, the DOL announced that it would stop seeking liquidated damages in wage and hour investigations.
Background of the Fair Labor Standards Act, Rehabilitation Act, and Subminimum Wages
One of the five significant employment laws businesses should know, the Fair Labor Standards Act (FLSA) allows some employers to employ specific individuals at wage rates below the federal minimum wage. These are known as “subminimum wages.” Affected individuals may include those with impaired learning or productive capacities because of a mental or physical disability. In brief, the goal of permitting subminimum wages for disabled workers is to protect their employment opportunities from becoming restricted altogether. However, paying disabled workers below the federal minimum wage is allowed only under certificates the DOL’s Wage and Hour Division (WHD) issues in pursuance of Section 14(c) of the FLSA.
Furthermore, Section 511 of the Rehabilitation Act requires that all workers with disabilities who employers pay a subminimum wage receive:
- regular career counseling; and
- information about self-advocacy, self-determination, and peer monitoring training in their local area.
Covered workers must receive the appropriate training and counseling every six months during their first year of employment. They must receive the same annually after that. Section 511 supplements, but does not replace, Section 14(c) of the FLSA. When employers fail to comply with Section 511, they must pay workers at the full federal minimum wage.
Overview of the 2024 Notice of Proposed Rulemaking
The NPRM was published in December 2024. In general, it proposed to gradually discontinue employers from paying subminimum wages of less than $7.25 an hour to workers with disabilities. To explain, the DOL believed that subminimum wages were no longer necessary to act as an incentive for businesses to hire individuals with disabilities. Also, within the proposed rule, the DOL, then under the Biden administration, cited numerous state laws that phased out subminimum wage provisions.
Explanation of Withdrawing the Proposed Rule
The current DOL, now part of the Trump administration, noted two reasons for the withdrawal of the NPRM. Firstly, the DOL claimed that the new rule would create very complex issues for employers. The agency cited that it received over 17,000 public comments and stated that it needs to conduct additional research to address the concerns received. Secondly, the agency claims that it might lack the authority to eliminate subminimum wages since it was initially authorized under the FLSA and not the agency itself.
Employer Takeaways
In conclusion, the withdrawal of the NPRM basically leaves the current regulation that all affected employees must follow unchanged. Notably, on the federal level, to support enforcement of Section 511, the WHD will continue to abide by Field Assistance Bulletin No. 2022-4, “Enforcement of the Rehabilitation Act Section 511 Requirements for Workers with Disabilities in the Section 14(c) Program.” Briefly, the new guidance reinforces the law and assists employers with complying with various requirements of Section 511. These requirements cover timing and documentation for workers in the Section 14(c) program, as covered in Section 511. The WHD has been monitoring and evaluating compliance with Section 511 requirements since 2016.
However, as mentioned earlier, some states have already eliminated the payment of subminimum wages to disabled workers. Employers should consult with their legal counsel or local labor offices to determine if they are already prohibited from issuing subminimum wage payments.
