Legal Loophole Allows Companies to Pay Disabled Workers Just Pennies an Hour

By | October 14, 2014

Risky investment

Some of America’s best-known charities pays disabled workers only 22 cents an hour, due to a 75-year-old legal loophole. Section 14 (c) of the Fair Labor Standards Act, passed in 1938, permits nonprofit groups to pay thousands of disabled workers far less than minimum wage.

How? Section 14 (c) grants special minimum wage certificates to employers that permit them to pay disabled workers according to their abilities, with no bottom limit to the wage The records from U.S. Department of Labor reveal that some Goodwill workers in Pennsylvania earned as little as 22, 38 and 41 cents an hour in 2009.

The non-profit certificate holders set up “sheltered workshops” for disabled employees and have them perform manual-type tasks, like pricing and hanging up clothes. They can also place employees in for-profit businesses, like restaurants, retail stores, hospitals and government offices. According to a report by NBC news, “while many disabled workers earn full minimum wage more than 216,000 workers earn less than minimum wage because of Section 14 (c) where wages can be just pennies an hour even as some of the groups receive funding from the government. At one workplace in Florida run by a nonprofit, some employees earned one cent per hour in 2011.”

When society got wind that salaries for CEOs totaled more than $30 million (for 150 Goodwills across the U.S) and the CEO of Goodwill Industries of Southern California took home $1.1 million in salary and deferred compensation while 4,000 of the 30,000 disabled Goodwill employees at 69 franchises were paid below minimum wage, people got pretty mad.

Defenders of Section 14 (c) say that Section 14 (c) “provides workers with disabilities the opportunity to be given meaningful work and receive an income.”

Disabled workers receiving below minimum wage don’t necessarily agree. One man who is legally blind and hangs clothes at a Goodwill in Great Falls says, “They certainly can pay me more than they’re paying.”. His wife, blind from birth, quit her job at the same Goodwill store when her already low wage was cut further. “I feel like a second-class citizen. And I hate it.”

Goodwill International CEO Jim Gibbons said that for many people who make below minimum wage, the experience of work is more important than the pay. “It’s typically not about their livelihood. It’s about their fulfillment. It’s about being a part of something. Another CEO of group that labels itself the “voice of disability service providers,” said scrapping the provision could “force [disabled workers] to stay at home,” enter rehabilitation, “or otherwise engage in unproductive and unsatisfactory activities.”

So why does it have to be pennies paid per hour or no work at all? Who has the right to say these people aren’t working for the money? When you think that the profit these companies make come from exploiting disabled workers and are funneled into big CEO salaries, the word GREED doesn’t begin to cover it.