DOL Withdraws Rule Aimed at Eliminating Subminimum Wages for Workers with Disabilities

On July 7, 2025, the U.S. Department of Labor (DOL) formally withdrew its Notice of Proposed Rulemaking (NPRM) that would have amended 29 C.F.R. part 525 by phasing out the issuance of certificates authorizing subminimum wages to workers with disabilities under Section 14(c) of the Fair Labor Standards Act (FLSA). In doing so, the DOL cemented its position not to move forward with the proposed regulatory changes, declining to pursue formal rulemaking on this issue at this time. 

Under Section 14(c) of the FLSA, employers can seek certification from the DOL to pay subminimum wages to workers who have disabilities for the work being performed. The certificate also allows for the payment of less than the prevailing wages to workers who have disabilities for the work being performed on contracts subject to the McNamara-O’Hara Service Contract Act and the Walsh-Healey Public Contracts Act.

The NPRM was published on December 4, 2024, and proposed gradually discontinuing the long-standing program that allows certain employers to pay individuals with disabilities less than the federal minimum wage of $7.25. The NPRM was prompted by the DOL’s perception that subminimum wages were no longer necessary to prevent curtailment of employment opportunities for individuals with disabilities.  In issuing the proposed rule, the DOL, under the Biden administration, also cited numerous state laws that have phased out comparable subminimum wage provisions as well as the declining use of Section 14(c) certificates. 

In announcing the decision to withdraw the proposed rule, the DOL, now under the Trump administration, noted the complexity of issues raised as evidenced by the over 17,000 public comments received as the primary reasons for the withdrawal and indicated the need for additional engagement and analysis before determining a path forward. In addition, the Department cited concerns expressed by members of Congress and others that the DOL lacks authority to unilaterally and permanently terminate the issuance of Section 14(c) certificates, considering that the certification program was authorized by the FLSA itself.

With the withdrawal, the Department leaves the current regulatory framework unchanged. While Section 14(c) certificates thus remain available at the federal level, over a dozen states have taken legislative or administrative action to phase out or even prohibit the use of Section 14(c) certificates, and legislation is pending in several other states seeking to eliminate the payment of subminimum wages to workers with disabilities. Thus, employers requesting Section 14(c) certificates should first review the permissibility under applicable state law and evaluate their ongoing utility.

Employers with questions should contact employment counsel for additional guidance and resources.