An individual with a disability eligible to be paid special minimum wages is defined in the regulations as someone “whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury, for the work to be performed.” Determining the impact of the legislation on the employment opportunities of individuals with disabilities severe enough to be eligible to be paid special minimum wages, including whether the purpose of the legislation to not curtail employment opportunities for these individuals is achieved, however, is difficult. Most Employers Are Work Centers That Provide Employment and Support Services to Individuals With Disabilities

The majority of 14(c) employers are nonprofit work centers established to provide support services and employment to individuals with disabilities. About 4,700 (84 percent) of these employers were work centers. Businesses accounted for 9 percent of the employers, hospitals or other residential care facilities accounted for 5 percent, and less than 2 percent were schools. Most 14(c) Workers Have Mental Retardation and Earn Very Low Wages

From the survey, we estimate that most 14(c) workers have mental retardation or another developmental disability as their primary impairment and earn very low wages. About 46 percent of the workers had more than one disability. In the survey, work center managers also reported that most of their 14(c) workers (70 percent) had a productivity level of less than half of that of workers without disabilities performing the same jobs. Labor Does Not Effectively Manage the Special Minimum Wage Program

Labor’s management of the special minimum wage program is ineffective. Until Recently, Labor Placed a Low Priority on the Program

Labor officials told us that they have given low priority to the special minimum wage program in past years because WHD’s resources were focused on other enforcement responsibilities, such as detecting violations of child labor laws and protecting low-wage workers in the garment industry.
What GAO Found

To prevent the curtailment of employment opportunities for disabled persons, the Fair Labor Standards Act allows employers to pay individuals less than the minimum wage if they have a physical or mental disability that impairs their earning or productive capacity. The Department of Labor's Wage and Hour Division (WHD) administers the special minimum wage program. More than 5,600 employers nationwide pay special wages to workers with disabilities; about 84 percent are work centers established to provide employment opportunities and support services to individuals with disabilities. Businesses comprise about 9 percent of these employers; the remaining 7 percent are hospitals or other residential care facilities and schools. Seventy-four percent of the workers paid special minimum wages by work centers have mental retardation or another developmental disability as their primary impairment, and 46 percent have multiple disabilities. From the data received by employers on the productivity of their disabled workers, it is estimated that 70 percent of the workers are less than half as productive as workers without disabilities performing the same jobs. Labor has not effectively managed the special minimum wage program to ensure that disabled workers receive the correct wages because, according to WHD officials, the agency placed a low priority on the program in past years.