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Timeliness Issues and the Payment of Special Minimum Wages (SMWs) Under FLSA Section 14(c)

The payment of SMWs and overtime compensation must ordinarily be made at the regular payday for the workweek or, when the pay period covers more than a single week, at the regular payday for the period in which the particular workweek ends.

Employers who pay SMWs to workers with disabilities must also keep in mind the following :

  • No pay period under the McNamara-O’Hara Service Contract Act (SCA) may be longer than semi-monthly, and employers may not be more than one pay period behind in the payment of wages.
  • Prevailing wage rates must be reviewed at least once a year, and adjustments to commensurate wages must be implemented by the end of the next completed pay period after the review.
  • The productivity of workers with disabilities paid an hourly SMW rate must be measured within the first 30 days of their employment and no less then every six months thereafter. Needed adjustments to raise workers to the correct commensurate wage must be implemented by the end of the next completed pay period after the work measurement. Some consulting organizations have advised employers to pay a “training wage” amounting to a specific percentage (often 50 percent) of the prevailing wage during the initial period before the worker with a disability is evaluated. Paying such a provisional rate is acceptable so long as the employer understands that it must make up the difference if the subsequent evaluation indicates that the training rate was below the employee’s commensurate rate. Should the provisional training rate actually exceed the appropriate commensurate wage rate, employers may not recoup any overpayments in future work weeks because these employees are still being paid below the FLSA Section 6(a) minimum wage.
  • Certificates authorizing the payment of SMWs are issued with both an effective date and an expiration date. The certificate, along with the employer’s authorization to pay special minimum wages, will expire on the indicated date unless the employer properly files an application for renewal with the U.S. Department of Labor Wage and Hour Division before the expiration date. If an application for renewal has been properly and timely filed, an existing certificate shall remain in effect until the application for renewal has been granted or denied. But when a certificate expires and no application of renewal has been properly and timely filed, an employer would be required to pay all workers covered by the FLSA at least the full minimum wage (or where applicable, the full SCA wage determination rate) for all work performed after the certificate expiration date.

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FLSA Section 14(c) Advisor | Wage and Hour Division