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What’s a fair wage for workers with disabilities? California bill seeks end to subminimum wages

In California, unlike the majority of employees, there is no minimum wage for some disabled workers.

There are those who believe that’s a social injustice. Others contend rules allowing workers to make much less per hour provides the only way they will ever receive a paycheck.

“Every single person who works deserves to be treated with dignity and that begins with being paid at least the legal minimum wage,” state Sen. María Elena Durazo, D-Los Angeles, told the North Bay Business Journal.

Typically, the work being done for less is less skilled, like stuffing envelopes. Usually, the work is contracted between a nonprofit advocacy group and a client.

“The fact that it is legal to pay those with a disability less than minimum wage is disgraceful and a blatant violation of their civil rights. This is the year we end this outdated and unjust practice in California,” Durazo said.

She introduced a bill that would mandate disabled persons be paid the state minimum wage, reversing a federal law that established the practice in 1938. The bill, if it becomes law, would end the pay disparity provision in California on Jan. 1, 2025.

Here’s key language in the legislation:

“… there are over 5,000 Californians with disabilities who do work and are doing so in segregated settings, and are paid sometimes as low as 15 cents an hour for their work. This leads to continued poverty and dependence throughout their working years and once they are of retirement age. In 2019, the poverty rate of Californians with disabilities was 18.4 percent and 11 percent for Californians with no disabilities.”

To allow workers to be paid below the $14 an hour minimum wage, companies must obtain a federal 14(c) wage certificate. Eight agencies in the North Bay have the documentation.

Reaction in the North Bay

“It’s kind of a controversial, heated topic in the disability field,” Jeremy Hogan, disabilities services program director for California Human Development in Santa Rosa, said of wage 14(c). “Admittedly it is antiquated model. It’s a huge part of what we have done in the past. The people we support actually enjoy it, their families enjoy it … to stay busy and be productive. Even if they are making very little, they are excited to receive their check. They feel like they are giving back, contributing. For them, it’s one of their few options.”

The work they do for some North Bay agencies can be assembly type jobs or other repetitive work like shredding documents. The agency has a contract with the employer and pays the individuals directly.

These jobs usually make less than minimum wage. It is up to the agency to determine what their clients make.

The other popular work category is competitive wage employment, where a client works for a company and gets paid by that business just like anyone else would; with minimum wage being the starting pay. A job coach employed by the nonprofit agency is able to help the worker and employer resolve issues. These are often things those without a disability might take for granted like understanding how to request time off.

A wealth of companies in the North Bay offer this type of work — from a Safeway in Lake County to Sonoma County-based firms Amy’s Kitchen and Oliver’s Market.

Hogan’s agency is on the path to eliminate 14(c), though no set time line has been instituted to do so. He also admits not everyone is cut out to work in a competitive environment, acknowledging the state legislation could impact some people by eliminating their job because the agency will not be able to make up the salary difference in the contract work.

“For us, it’s all about the individuals we serve. That is who we should be asking about this type of stuff. They should be driving it,” Hogan said.

Dana Lewis, executive director of People Services in Lakeport, is apprehensive and angry about the proposed state law.

“What ruffles my feathers is people think we are making money as service providers on the backs of people with disabilities. That’s not true,” Lewis said. “The wage they are earning is meaningful to them. Who are we to propose that wage is not meaningful or deserveable?”

Lewis believes the one-size-fits-all approach to employment that the proposed bill tends to promote is not beneficial to all of her clients.

“If 14(c) went away, they would not just go into competitive employment. There is not enough work to go around,” Lewis said. “I think one of the biggest things with the bill is that it seems to be tunnel vision in the fact that everyone deserves to earn minimum wage or above without looking at the bigger picture like folks who don’t choose to do that.”

Being in a remote, rural county means the variety of jobs for anyone is more limited in Lake County compared to a more urban area like nearby Santa Rosa.

Lewis is disappointed there is nothing in the legislation to provide customized employment for those with disabilities. “We are firm believers of supporting choice.”

The Sonoma County Office of Education’s Transition Program is designed to teach independent living and vocational skills to students ages 18-22 who are receiving special education services.

The office has set a goal of getting rid of the policy allowing participants to receive less than the state minimum wage by the 2022–2023 school year.

“SCOE's Transition Program has been working for the last three years to eliminate use of the sub-minimum wage waiver because we think that's the right thing to do for our students. However, there is a small group of students we serve who are unable to perform work,” Mandy Corbin, assistant superintendent of Special Education, said. “Currently, we are able to connect these students with opportunities where they can experience the workplace and receive sub-minimum wage compensation for their time. Once this rule change goes into effect, we will lose that flexibility for those students because they won't be able to perform work that makes them eligible for minimum wage. We will work to provide them with work-like experience, but it won't be the real thing or come with a paycheck, unfortunately.”

Today, there are 24 people affiliated with county education office who would be affected by the state law.

Legalities of wages for disabled

When the Fair Labor Standards Act was signed by President Franklin Roosevelt in 1938 it was considered landmark civil rights legislation for worker protections. Fearful those with mental and physical disabilities would be eliminated from payrolls, section 14(c) was added to allow employers to pay these workers less than the federal minimum wage. The desire then was to help this segment of the population, not hurt them.

The U.S. Department of Labor’s website today lists 1,298 employers with 14(c) certificates. More than 70 are in California, including two in Sonoma County, two in Napa County, three in Solano County, and one in Lake County. Certificates are good for two years.

The state through the years has strengthened the rights of workers with disabilities. In 1969, Gov. Ronald Reagan signed legislation declaring people with developmental disabilities have the same legal rights and responsibilities guaranteed everyone else. In 2013, Gov. Jerry Brown signed a bill codifying the state’s Employment First Policy which called for integrated, competitive employment for workers with developmental disabilities.

In 2017, California mandated agencies with a 14(c) certificate must offer annual career counseling to clients. The state gives a presentation to workers about job possibilities and explains the competitive job concept, which is where they would work on-site at a business.

Anyone younger than 24 must discuss their options with the state Department of Rehabilitation before accepting a subminimum wage job to ensure they understand their rights. They, like all employees, are entitled to breaks and rules guided by federal and state labor laws.

Agencies with a 14(c) certificate have to revisit what they pay workers every six months. The goal is to increase worker productivity, which will then increase wages.

The state mandates disabled individuals be timed by the agency to determine how long it takes them to do a task compared to a non-disabled worker doing the same job. Their rate of pay is prorated accordingly.

For example, if a disabled person can stuff 10 envelopes in an hour and someone without a disability can stuff 100 in that same hour, the disabled worker might make 10 percent of the hourly wage of the other worker. The pay would be $1.40 an hour compared to $14 hour if California’s minimum wage were the base rate.

On May 3 the state Senate bill was placed on the Assembly Appropriations Committee’s suspense file. All bills in this file are heard at once after the state budget is prepared. The Legislature has until June 15 to pass the budget; with the fiscal year beginning July 1.

SB639 has already passed through the Senate Labor, Public Employment and Retirement Committee, Senate Human Services Committee, and Senate Appropriations Committee.

The federal Raise the Wage Act of 2021, which is stalled in the House of Representatives, would gradually eliminate 14(c) at the federal level. Starting in 2022 it would set a $5 an hour minimum wage for disabled workers, with increases each year until 2025 when this group would make $15 an hour, the same as other workers.

Setting an example

One North Bay agency has already made the transition to having all of its clients make minimum wage.

“People with disabilities deserve real rages for real work” is why Becoming Independent in Santa Rosa stopped being a 14(c) certified organization in 2018, according to CEO Luana Vaetoe.

The agency has in house work programs for clients that pay at least minimum wage. Work done for outside organizations is through a contract with Becoming Independent with the nonprofit writing the checks to the workers. There are 160 people in this program.

Prior to the pandemic beginning last year, the agency ran the concession services for SMART train. That will not return, Vaetoe said.

Since the agency moved away from subminimum wages “we didn't lose any of those contracts,” Vaetoe said. However, the employers did not incur the entire increase in wages.

“Those contracts were never designed to make any money. They were pursued to have activities for people. The bonus was they could make some money while doing them,” Vaetoe explained.

Aldo Quezada, chief operating officer with No. 8 Lighting in Cotati, was fine with paying a higher contract rate to Becoming Independent. The company provides Becoming Independent workers the appropriate tools to assemble non-complicated components of light fixtures at the agency’s office.

“It is still beneficial for us because they are good at what they do. They train their people really well. They do quality work and they are on time,” Quezada said.

For the manufacturing company it’s like having a second assembly line when things are busy. It means not having to hire more full time or temporary workers or paying overtime to the four full-timers who make between $18 and $25 an hour.

“They are integral to what we do,” Quezada said of the Becoming Independent workers. “There are people in our facility who have people with disabilities in their family and we want to help. I think what is important though in all of this is the fact they do good work. At the end of the day it is a business and you want to feel good, but you want good work.”

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