The U.S. Department of Labor is proposing a sweeping new rule that would put an end to the decades-old practice of allowing employers to pay workers with disabilities less than minimum wage.

The agency issued a proposed rule this week to phase out what are known as 14(c) certificates. Under a federal law dating back to 1938, employers can obtain the special certificates from the government to pay those with disabilities less than the federal minimum of $7.25 per hour.

If the rule is finalized, the Labor Department would immediately cease issuing new certificates. At that point, existing certificate holders would have three years to stop paying workers with disabilities so-called subminimum wage.

“In the decades since Section 14(c) was included in the Fair Labor Standards Act, there have been significant legal and policy developments that have dramatically expanded employment opportunities and rights for individuals with disabilities,” said Acting Secretary of Labor Julie Su. “With this proposal, the department expects that many workers currently paid subminimum wages under Section 14(c) will move into jobs that pay full wages, which will improve their economic well-being and strengthen inclusion for people with disabilities in the workforce.”

The move caps a years-long effort by many disability advocates to do away with subminimum wage employment, which they say is ripe for exploitation and unfairly limits opportunities to fully engage in the community.

Already, at least 15 states have passed laws phasing out subminimum wage employment and the number of people with disabilities working under the model has dropped sharply. As of May, the Labor Department said that 801 employers had 14(c) certificates employing about 40,000 people with disabilities. That’s fewer than a third of the workforce employed under the model in 2019.

The agency indicated that a review of data for certificates valid between October 2023 and March 2024 found that about 49% of workers employed under 14(c) made $3.50 per hour or less and roughly 10% earned $1 or less per hour.

Labor Department officials said that the proposed rule reflects the sea change in opportunities for workers with disabilities since the 1930s. It comes after the agency spent a year collecting feedback on the 14(c) program from workers with disabilities, their families, disability service providers, 14(c) certificate holders, advocates and others as part of a comprehensive review of the program.

In the proposed rule, the Labor Department notes that the Fair Labor Standards Act authorizes the issuance of 14(c) certificates “but only where such certificates are necessary to prevent the curtailment of opportunities for employment.”

“Employment opportunities for individuals with disabilities have vastly expanded in recent decades, in part due to significant legal and policy developments,” according to the proposed rule. “Based on that evidence, the department has tentatively concluded that subminimum wages are no longer necessary to prevent the curtailment of employment opportunities for individuals with disabilities and thus proposes to phase out the issuance of section 14(c) certificates.”

Despite the momentum away from subminimum wage, Hugo Dwyer, executive director of VOR, which advocates for individuals with intellectual disabilities and their families, says that there remains a specific cohort of people with developmental disabilities who benefit from 14(c), not because of the paycheck, but because it offers an opportunity for meaningful daily activities with peers in a safe environment.

“It’s difficult to place an individual who has frequent epileptic episodes or who has the potential for self-injurious or aggressive behaviors when they are upset into most work environments. It’s hard to ask co-workers to learn how to toilet folks with (intellectual disabilities and autism) or to change an adult diaper,” he said. “Sheltered workshops are able to accommodate these individuals.”

The proposed rule will be up for public comment through Jan. 17. While Labor Department officials said they will be reviewing comments as they come in, it will likely be left to the incoming Trump administration to determine whether or not to finalize the rule.

Even before the proposal was released this week, some Republican lawmakers had raised concerns about the legality of any move to end 14(c) that sidestepped Congress.

With that in mind, advocates with the Autistic Self Advocacy Network are urging Congress to pass a bill known as the Transformation to Competitive Integrated Employment Act before the end of the year, which would phase out 14(c) and provide funding and technical assistance to help transition workers with disabilities from subminimum wage work to competitive, integrated employment.

“For too long, sheltered workshops in many states have kept people with significant disabilities segregated from the wider community, paid pennies on the dollar for their work,” said Zoe Gross, director of advocacy for the nonprofit. “In states that have already eliminated sheltered workshops, we have seen an increase in employment rates for disabled workers. Ending 14(c) will have the same effect nationwide.”