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April 2, 2025
As we enter Autism Acceptance Month, it is fitting to highlight Illinois’ recently enacted law, the Dignity in Pay Act (Act), which seeks to phase out subminimum wage payments to employees with disabilities, and the country’s overall shift to more inclusive and integrated employment for those individuals.
Brief History of Subminimum Wage Authorizations
The 1938 Fair Labor Standards Act (FLSA) contains a provision (Section 14(c)) that allows for the payment of subminimum wage to certain disabled individuals by entities with special authorization from the U.S. Department of Labor, referred to as “14(c) certificates.” The original intent of Section 14(c) was to provide training for wounded veterans to transition to better-paying jobs. For the greater part of the 20th Century, subminimum wage work under the FLSA significantly expanded, mostly in segregated settings known as work activity centers or “sheltered workshops.” Over time, work activity centers shifted from serving disabled veterans to serving individuals with intellectual and developmental disabilities, with the intention to create employment opportunities for those individuals during a time when many of them were institutionalized and excluded from the education system and economic opportunities.
Unfortunately, research has shown that Section 14(c) programs actually create economic insecurity for individuals with disabilities, rather than leading to competitive integrated employment (CIE), with only 5% of workers actually transitioning to CIE without other supports. However, over the past 30 years, with the increase in disabled individuals’ rights, access to education, and access to employment opportunities, the country has gradually shifted its view on the employment of individuals with disabilities—that is, all people who want to work should have the opportunity to find competitive employment with fair wages in non-segregated workplaces.
Subminimum wage authorizations are outdated policies based on outdated beliefs that individuals with disabilities are somehow less productive than those without disabilities.[1] These policies hinder progress and innovation, limit opportunities for skill development, career advancement, and economic independence, and act to perpetuate discrimination against individuals with disabilities by devaluing their work based solely on their disability, despite evidence demonstrating that, with proper supports in place, these individuals can indeed excel in the workforce. As of July 2024, nearly 40,000 disabled individuals earned subminimum wages, with the majority of these individuals earning less than $3.50 per hour.
Illinois has now enacted legislation aimed at eliminating subminimum wage authorizations for individuals with disabilities.
The Act
On January 21, 2025, Illinois Governor JB Pritzker signed the bipartisan Act into law. The Act amends the Employment and Economic Opportunity for Persons with Disabilities Task Force Act to mandate that the Task Force develop a five-year plan to eliminate subminimum wage for individuals with disabilities by December 31, 2029. The Act requires that the five-year plan be developed by July 1, 2025.
The plan will guarantee that individuals with disabilities receive at least minimum wage. In addition to eliminating the subminimum wage, according to Governor Pritzker, the Act emphasizes the expansion of “employment opportunities for people across the disability spectrum [by] strengthening rates, programs, and training opportunities for employers who are dedicated to the independence and support of people with disabilities.” The goal of the Act is to eliminate barriers to employment and prevent workplace discrimination for individuals with disabilities throughout the state.
The Act also:
Illinois Section 14(c) Employers
The Act seeks to provide assistance to Section 14(c) employers by amending the Department of Human Services Act to establish a transition grant program that will make funds available to those employers to support the integration of individuals with disabilities into CIE. See 20 ILCS § 1305/1-95. These grants also will facilitate the development of new opportunities and programs for individuals with disabilities and increase the capacity for responding to the needs of these individuals in their communities, including through supported employment, self-employment, customized employment, community-based day programs, and entrepreneurship programs.
Illinois employers with Section 14(c) authorizations should begin preparing for the transition to paying their employees with disabilities at least the state’s minimum wage, which is currently $15.00 per hour.
The Act now enables Illinois to phase out of Section 14(c) and expand programs that increase inclusion and access for individuals with disabilities. Illinois has joined several other states[3] and the District of Columbia that have enacted similar laws to eliminate or phase out subminimum wage authorizations for individuals with disabilities. While research has yet to demonstrate the overall economic impact of eliminating subminimum wage, these states are certainly moving in the right direction for their disabled employees.
The author of this article, Peter Nakonechni, is a member of the Bars of New Jersey and Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, Pennsylvania, Illinois, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
[1] See, e.g., Illinois Department of Human Services and the Illinois Council on Developmental Disabilities 2024 Dignity in Pay Act FAQ, Mar. 2024; see also Marokey Sawo, Dana Ferrante, Alexis Weaver, It’s Legal for Some Employers to Pay Disabled Workers Less Than the Minimum Wage. Ending This Practice Is Just a First Step Toward Supporting Their Economic Stability, Urban Institute, Jan. 14, 2025.
[2] The PNA is the amount of monthly income a CILA resident can keep for personal expenses, rather than being used to cover the cost of room and board. CILA is a living arrangement for adults in a group home, or similar residence, where eight or fewer unrelated adults with developmental disabilities live under the supervision of the community developmental services agency. These residents receive complete and individualized residential habilitation, personal support services, and supports under the direction of a community support team within the local agency.
[3] Alaska, California, Colorado, Delaware, Hawaii, Kansas, Maine, Maryland, Nevada, New Hampshire, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, and Washington.
