Labor & Employment Law Daily Wrap Up, FEDERAL LEGISLATION—Bicameral, bipartisan bill would support fair wages for workers with disabilities, (Jul 29, 2025)

By Patricia K. Ruiz, J.D.

The legislation would create a state grant program to phase out subminimum wages for workers with disabilities.

Bipartisan legislation introduced by U.S. Representatives Bobby Scott (D-VA) and Pete Sessions (R-TX) and U.S. Senators Chris Van Hollen (D-MD) and Steve Daines (R-MT) would phase out the use of subminimum wages for workers with disabilities and transition such workers into fully integrated, competitive employment. The Transformation to Competitive Integrated Employment Act ends the practice of paying workers with disabilities less than the federal minimum wage over five years, invests $300 million in state and local transition efforts, and ensures workers with disabilities can earn fair wages.

State grant program. Section 14(c) of the Fair Labor Standards Act allows employers to pay workers with disabilities far below the federal minimum wage, sometimes less than $1 an hour. Currently, nearly 40,000 people with disabilities are employed under this policy. The Transformation to Competitive Integrated Employment Act would create a competitive state grant program to assist in transitioning all 14(c) certificate holders to models that support competitive, integrated employment. The legislation would also ensure the availability of wraparound services needed to support workers with disabilities as they move into competitive integrated employment. States would be able to apply for these grants and must establish an advisory committee that includes key stakeholders. States that successfully complete a grant would be eligible to receive a 25 percent increase in the allotment for supported employment for individuals with the most significant disabilities.

Phase-out. The legislation would immediately freeze the issuance of any new 14(c) certificates by the DOL and phase out the use of existing 14(c) certificates over five years until employees are paid at least the federal minimum wage. The legislation would also create a competitive grant program for current 14(c) certificate holders in states that do not apply for the state grant, enabling them to transition their business models to support individuals with disabilities in competitive, integrated employment.

Reporting. Finally, the legislation would require reporting and evaluation on the progress of creating and expanding the service delivery structure to support workers with disabilities in competitive, integrated settings and the inclusive wraparound services they receive when not working. States and 14(c) certificate holders will also be required to report on their grant activities, evaluate changes in employment for individuals with disabilities, report average wage information, and evaluate employer actions to comply with the phase-out of 14(c) and transformation grants.

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