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Subminimum wages for workers with disabilities: the end of Virginia's 14(c) program

An employee labels a packet of medical equipment in the warehouse of Friendship Industries in Harrisonburg. The organization hires people who face a variety of employment barriers, including disabilities. They are one of the employers in our area that have chosen to leave the 14(c) program in recent years.
Randi B. Hagi
An employee labels a packet of medical equipment in the warehouse of Friendship Industries in Harrisonburg. The organization hires people who face a variety of employment barriers, including disabilities. They are one of the employers in our area that have chosen to leave the 14(c) program in recent years.

An eighty-year-old federal program allows employers to pay certain adults with disabilities less than minimum wage. Virginia is shutting this program down, and some employers have already transitioned out. It leaves behind a complicated legacy. WMRA's Randi B. Hagi reports in the first of a two-part story.

The federal 14(c) program authorizes certain employers to pay their workers a subminimum wage. It stems from the Fair Labor Standards Act of 1938, the New Deal-era legislation that established the right to a minimum wage and overtime pay, and outlawed "oppressive" child labor. The act allowed, in an effort to expand employment opportunities, for those whose "capacity is impaired by age, physical or mental deficiency, or injury" to be paid less than the minimum wage in accordance with their productivity.

As the Virginia Mercury reported last year, no new 14(c) certificates are being issued in the commonwealth, and the six companies that still hold them will have to pay all their employees at least minimum wage by 2030. In Virginia, that's currently $12 an hour, and that rate is set to increase to $12.41 on January 1st.

A 2020 report from the U.S. Commission on Civil Rights found that the average wage under 14(c) was $3.34 per hour.

SETH WHITTEN: I know around the country there were some bad actors, and the horror stories you would hear were about people getting paid 25 cents an hour and these terrible things. And that's really what I felt like kind of drove the reaction from the disability community, from politicians, from a lot of folks to say, "we've got to phase this out."

Seth Whitten is the deputy director of the disAbility Resource Center of the Rappahannock, a support and advocacy organization run by people with disabilities.

WHITTEN: I think it is the right direction to move in, but I think that as we've been doing that, we've failed to consider, what are the other supports, what are the other services we need to put in place that, when we close these sheltered workshops, would enable people with disabilities to continue to have meaningful employment?

In other words, where does the program's absence leave the people it used to hire? I spoke with employers and advocates to find out. I had hoped to speak with someone who worked under one of these programs, but was not able to find anyone who wanted to be interviewed for this story.

Whitten, who grew up in Harrisonburg, was previously a supervisor at an organization called Friendship Industries. Friendship chose to leave 14(c) on their own in recent years, as have other employers in our broadcast region.

WHITTEN: I think the 14(c) certificates, there was a time where it was really important, and it really was a major step towards progress to say, " we can create these organizations and these facilities where we've got staff who are trained to work with people with disabilities." A lot of these places were providing transportation for their employees every day … and Friendship Industries really did great work with people, and was one that I would consider one of the really good guys.

Whitten said their jobs included assembling bulk mailings for local giving campaigns, and putting jackets on books for publishing companies. Friendship Industries still does a lot of packaging and assembly jobs, as president and CEO Piete Casius showed me on a recent tour.

Employees package coffee creamer at Friendship Industries in September.
Randi B. Hagi
Employees package coffee creamer at Friendship Industries in September.

[machinery sounds, people talking]

PIETE CASIUS: This section is dairy work, where we're packaging some creamers. … We have lots of different types of bagging machines. That's a vertical form fill seal machine – that's a customer that's in Sweden that we secured. This is a customer that makes a … portable glaucoma device, and we assemble the prophylactic barrier that goes on to keep it sanitary between uses. [forklift beeps]

Sandra "Evelyn" Martinez de Preza labels electronic devices. She shared in a marketing interview with Friendship Industries that she lost her daughter, her house, and much of her mobility in an earthquake in her home country of El Salvador. Martinez de Preza said she has always worked and did not let a disability stop her from doing so.
Randi B. Hagi
Sandra "Evelyn" Martinez de Preza labels electronic devices. She shared in a marketing interview with Friendship Industries that she lost her daughter, her house, and much of her mobility in an earthquake in her home country of El Salvador. Martinez de Preza said she has always worked and did not let a disability stop her from doing so.

When Friendship Industries employed people under 14(c), they worked on specific tasks in which their productivity was measured against a supposed standard of how quickly an average worker without disabilities could get the job done. Their wage was calculated accordingly. But Casius noted those standards change from person to person and job to job.

CASIUS: They make you look at that and the average, right, and say, "well this person is 40% productive." No, the skill you measured them against, they're 40% productive. Now let's go ahead and look at this other particular piece, and they're 130% productive.

And there was always the risk that the Department of Labor could determine they had calculated incorrectly.

CASIUS: It's very much a moving target, and the risk, when DOL comes in, and they tell me, "hey, go find three fully productive employees, put them on that job, and their production better match what this did, or all of your subminimum wage payments for the last audit period are null and void. You have to make up the difference plus fines and penalties."

So, they left 14(c) a few years ago, and diversified the types of jobs they do. They still hire people with physical and intellectual disabilities, as well as those facing employment barriers such as mental health challenges or speaking little English. But even though Casius said 14(c) was no longer right for Friendship, getting rid of it entirely –

CASIUS: I do think it leaves some of those most severely disabled individuals in a lurch, it absolutely does.

Piete Casius is the president and CEO of Friendship Industries, Inc. and Able Solutions, Inc.
Randi B. Hagi
Piete Casius is the president and CEO of Friendship Industries, Inc. and Able Solutions, Inc.

Only one organization in our area is still paying subminimum wages. Shen-Paco Industries, in Luray, offers employment, group day support, and residential programs for people with disabilities. They have 24 workers employed under 14(c), according to the Department of Labor. Shen-Paco did not respond to multiple interview requests.

In the second part of this report, we'll speak with employers in Winchester and Waynesboro about how they transitioned out of 14(c) – and with a disability advocate about where the end of this program leaves the community.

Randi B. Hagi first joined the WMRA team in 2019 as a freelance reporter. Her work has been featured on NPR and other NPR member stations; in The Harrisonburg Citizen, where she previously served as the assistant editor;The Mennonite; Mennonite World Review; and Eastern Mennonite University's Crossroads magazine.
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  • An eighty-year-old federal program allows employers to pay certain adults with disabilities less than minimum wage. Virginia is shutting this program down, and The Washington Post reported on Tuesday that the Biden administration aims to eliminate it nation-wide. It leaves behind a complicated legacy. WMRA's Randi B. Hagi reports in the second of a two-part story.