By Jared Gardner, Perkins Coie LLP

Federal law has permitted employers to pay persons with disabilities less than minimum wage since 1938. Alaska law has done the same since 1978. But on February 16, 2018, as part of a push to expand notions of providing livable wages to persons with disabilities, Alaska repealed its law permitting subminimum wages for disabled persons. Alaska employers now must pay all employees the state minimum wage.

Minimum Wage Exemptions Have Lengthy Pedigree

Recently, the country has seen a push to increase the minimum wage at both federal and state levels. Many of the efforts have left out a constituency that has been subject to minimum wage exemptions since the Fair Labor Standards Act (FLSA) was passed in 1938: persons with disabilities. Under Section 14c of the FLSA, employers may obtain special certificates from the U.S. Department of Labor (DOL) that waive their obligation to pay the federal minimum wage to persons with disabilities. Between 250,000 and 420,000 Americans with disabilities are subject to the exemptions. Historically, states have permitted similar exemptions under their wage and hour laws.

One original rationale for the exemptions was to encourage employers to hire veterans with disabilities who were struggling to find work in a growing manufacturing economy. The exemptions were thought to encourage a form of training that would guide persons with disabilities into normal work environments. But less than five percent of workers in such programs ever leave them for jobs in the broader community.

Exemptions Draw Scrutiny

Minimum wage exemptions for persons with disabilities have seen increased scrutiny in recent years, reflecting evolving perspectives on both the value of a living wage and the value of empowerment and self-determination for persons with disabilities. Thus, when President Barack Obama proposed an Executive Order to raise the minimum wage for federally contracted workers that excluded workers subject to Section 14c exemptions, he faced immediate pushback. The National Council on Disability, among other groups, argued that the motivation for President Obama’s order—that workers who cook troops’ meals or wash their clothes should not live in poverty—applies to Americans who have disabilities just as it applies to those who do not. Those arguments were heard, and the final Executive Order applied the new minimum wage to federally contracted workers with disabilities.

Alaska Repeals Its Minimum Wage Exemption

The arguments have also started to affect state legislatures. Alaska recently joined New Hampshire and Maryland as the only states to eliminate exemptions that permit paying subminimum wages to persons with disabilities. Effective February 16, 2018, Alaska’s regulations permitting such wages are off the books. The regulations had been in place since 1978.

A press release from the Alaska Department of Labor and Workforce Development explained that the exemptions were originally considered necessary to help people with disabilities gain employment and that experience over the past several decades has shown that workers with disabilities can succeed in jobs earning minimum wage or more. Eliminating the exemptions also helped bring employment practices into alignment with the Alaska Employment First Act of 2014, which requires vocational services to help people with disabilities become gainfully employed at or above minimum wage.

Takeaways

The repeal of Alaska’s subminimum wage regulations means that employers with an exemption to pay less than minimum wage may no longer rely on it. Employers must pay all employees—including those with disabilities—the state minimum wage. The forces that led Alaska to repeal its exemption may soon lead other states—and perhaps the federal government—to follow suit.

Jared Gardner can be reached at jgardner@perkinscoie.com.