A major federal program that facilitates jobs for people with disabilities working on government contracts will soon no longer allow them to be paid less than minimum wage.

Under a rule finalized this month, the AbilityOne Program will prohibit payment of what’s known as subminimum wage.

Current law allows employers to obtain special 14(c) certificates from the U.S. Department of Labor to pay people with disabilities less than the federal minimum of $7.25 per hour, but increasingly cities and states are barring the practice.

The new rule, which takes effect Oct. 19, will ban the use of 14(c) certificates to pay employees working on new AbilityOne contracts as well as extensions or renewals and when exercising options on existing contracts. However, nonprofit agencies working with AbilityOne are being given the option to request an extension of up to a year to come into compliance.

“Ending payment of subminimum wages is a major step forward for the AbilityOne Program,” said Jeffrey Koses, chairperson of the AbilityOne Commission, an independent federal agency that administers the program. “While payment of subminimum wages has been declining in the program for years, it is past time to ensure that all employees are fairly compensated for their work.”

With the change, people with disabilities employed through AbilityOne contracts will earn at least the federal, state or local minimum wage. In some cases, they will be paid even more due to federal pay requirements for certain types of jobs.

About 40,000 individuals who are blind or who have significant disabilities are employed through AbilityOne at over 1,000 locations nationwide. The program directs federal contracts to a network of some 450 nonprofit agencies, which provided nearly $4 billion in products and services to the government in fiscal year 2021 alone.

Finalizing the rule makes good on a plan that was proposed last fall. AbilityOne said it received 183 comments in response to the proposal, the “overwhelming majority” of which were supportive.

The program has been under pressure in recent years, with a 2020 report from the National Council on Disability arguing that AbilityOne promotes segregation, does not increase employment opportunities for people with disabilities and should end.

Eric Buehlmann, deputy executive director for public policy at the National Disability Rights Network, welcomed the decision by AbilityOne to stop paying subminimum wage, but said that the commission administering the program ought to do more.

“It is far past time that the commission prohibit the payment of subminimum wages for employees on AbilityOne contracts,” he said. “However, the rule does not go far enough. The commission should have also precluded participating AbilityOne nonprofits from using 14(c) certificates anywhere in their workforce, not just on AbilityOne contracts.”

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