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FOH Field Operations Handbook
arrowChapter 64 Employment of Workers with Disabilities at Special Minimum Wages under Section 14(c)
arrowSection 64k Addendum

Section 64k00: Glossary

Advocacy Groups/Interest Parties: The INV may encounter various advocacy groups/interested parties - for example, NIB (National Industries for the Blind), NFB (National Federation for the Blind), NISH (formerly known as National Industries for the Severely Handicapped, but now known only as NISH), CARF (Committee on Accreditation of Rehabilitation Facilities) or The Arc (formerly known as Association for Retarded Citizens, but now known only as The Arc). Questions INVs may encounter concerning these outside groups should be addressed, through established procedures, to the Regional Section 14 Team Leader. Questions from these outside groups should also be referred to the Regional Section 14 Team Leader.

Alamo Foundation Decision: A decision in which the Supreme Court ruled that the employees of an organization that engages in commercial activities in competition with other businesses are protected by the FLSA even though the employer may be a not-for-profit organization [Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 105 S.Ct. 1953, 85 L.Ed.2d 278, 53 USLW 4489, 27 Wage and Hour Cas. (BNA) 209, 36 Empl. Prac. Dec. P 35, 147, 102 Lab.Cas. P 34,655 (U.S.Ark., Apr 23, 1985)(NO. 83-1935]. (See FOH 64b02(a)(3)).

Allowance Factor: See PF&D. (See FOH 64i01(d)).

Allowance Percentage: See PF&D. (See FOH 64i01(e)).

Americans with Disabilities Act (ADA). This Federal law, which took effect July 26, 1992, prohibits employers from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions and privileges of employment. The Solicitor's Office has reviewed the ADA and its legislative history and has concluded that the ADA does not nullify the provisions of section 14(c). ADA affords protection to individuals who, with or without reasonable accommodation, can perform the essential functions of the job. An employer is not required to lower quality or production standards to make an accommodation. (See FOH 64a02).

Branch Facilities: Physically separate establishments of the same enterprise. WH policy and procedures require that each branch establishment have its own certificate to pay SMWs. (See FOH 64d00(e)(1)).

Certification Team: The Midwest Regional Office Certification Team is the only team charged with processing applications from employers to pay workers with disabilities special minimum wages and is the only office that issues certificates authorizing the payment of special minimum wages under section 14(c) of the FLSA. The address and telephone numbers of the Wage Specialists who serve on the Certification Team are located at FOH 64d00(h).

Client/Consumers: Terms commonly refer to workers with disabilities who are employed by a work center, hospital or institution or other employer. (See FOH 64a01).

Commensurate Wage: A special minimum wage (SMW) based on the individual productivity of the worker with a disability in proportion to the productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work in the vicinity where the worker with a disability is employed. The commensurate wage in the context of DOL certification is always a special minimum wage, i.e., a wage below the applicable minimum wage required by section 6(a). When an INV finds that the wages paid are not truly commensurate, a violation has occurred and back wages are due. (See FOH 64g05).

Committee on Accreditation of Rehabilitation Facilities (CARF): A private, not-for-profit organization working to promote quality assistance for people with disabilities by accrediting the facilities that employ them. Through a long-standing agreement, CARF contacts the WH National Office regarding our record of any unresolved enforcement issues WH may have with firms seeking accreditation.

Community Rehabilitation Program (CRP): Not-for-profit agencies that provide rehabilitation and employment opportunities for people with disabilities. Some may be affiliated with national organizations such as Goodwill Industries or The Arc, while others are private not-for-profit organizations located solely within their local communities. (See FOH 64b00).

Comparable Business: A business that either employs a similar number of employees in a similar type work as the section 14(c) employer, or competes for contracts of a similar size and nature as the employer of the workers with disabilities. These are the businesses that section 14(c) employers are to contact when performing a prevailing wage study. (See FOH 64g03(e)).

Compensable Time: Time for which the employer must pay the employee with a disability. It does not include time spent in work simulations (see below). (See FOH 64e01).

Competitive Employment: Refers to the employment of a client/consumer by private industry. (See FOH 64b02(a)(4).

De-skilling: An unacceptable method in which an arbitrary decrease is made in the prevailing wage to account for differences in methods, tasks, or equipment used by workers with disabilities as compared to workers who do not have disabilities in industry. If comparable jobs cannot be found, prevailing wage data should be collected on jobs requiring the same general skill levels. (See FOH 64g03(i)(3)). The following is an example of de-skilling:

  • Assume that the properly determined prevailing wage for hand packaging is $6.00 and that the hand packing job performed in a work center includes the following steps: counting bolts, placing a label on the bag the bolts go in, putting 10 bolts into the labeled bag, putting 24 filled bags into a box for packing and then sealing the box.
  • De-skilling would occur if the employer arbitrarily decided that labeling the bags is not as difficult as counting the bolts and therefore the SMW of an employee who only performed labeling should be based on a prevailing wage of $5.75 an hour rather than $6.00. The same would be true if the employer decided that the SMW of an employee who only sealed the boxes should be based on a prevailing wage of $5.50 an hour.

Down Time: Time when the worker with a disability is not performing direct work activity but is waiting to be engaged in work. Down time is compensable time when the worker is on the job but not producing due to factors outside of his or her control, such as lack of work, equipment breakdowns, or waiting for supplies. In the context of section 14(c), if a facility provides rehabilitation services, recreation or other clearly non-work services to workers with disabilities during periods of down time, the time will not be considered compensable, so long as the rehabilitation services provided are not primarily for the purpose of increasing job productivity. Time spent in work sampling and/or work simulation (see below) are also considered to be rehabilitation services. See FOH 64e01(b) and 64i01(a)(3)).

Enclave Work Site: A work site of a competitive employer where a worker with a disability or a group of workers with disabilities are working and supervised by staff from the work center staff . The workers remain on the work center's payroll and authorization to pay a SMW is based on the work center's certificate. (See FOH 64d00(e)(1)c).

Experienced Worker: A worker who has learned the basic elements or requirements of the work to be performed, ordinarily by completion of a probationary or training period. Typically, such a worker will have received at least one pay raise after successful completion of the probationary or training period. (See FOH 64g03(c).

Factoring: A work sampling method in which a job is broken into components and the worker with a disability is rated on each component. Factoring is not an acceptable method of work measurement when the worker with a disability is rated on a component(s) he or she cannot or will not perform. The worker with a disability must perform a component if he or she is to be rated on that component. For example, a job description may require that a groundskeeper perform the following tasks: picking up trash, sweeping the sidewalk, and operating a "weed-whacker." If the employer hires a worker with a disability who can and does pick up trash and sweep the sidewalk, yet is afraid to operate the weed whacker and refuses to do so, the employer must rate that employee only on picking up trash and sweeping the sidewalk. The employer may not penalize the employee for not operating the weed whacker. The employer, in this example, would be improperly factoring if he or she included a rating of "zero" for operating the weed whacker in the employee's rating. Such factoring would significantly reduce the employee's rating, and thus his or her commensurate wages. (See FOH 64j02(e)(2)b1).

Hospital or Institution: A public or private, not-for-profit or for-profit, facility primarily engaged in providing residential care for the sick, the aged, or the mentally ill or retarded, including but not limited to nursing homes, intermediate care facilities, rest homes, convalescent homes, homes for the elderly and infirm, halfway houses, residential centers for drug addicts or alcoholics, and the like, whether licensed or not licensed. "Primarily" means that more than 50 percent of the facility's income is attributable to this residential care. These facilities may apply for section 14(c) certificates to pay SMWs to "patient workers" (see below). (See FOH 64b02(b)).

Hours Worked: See compensable time.

Individualized Education Program (IEP): A document prepared for each student with a disability participating in a community-based work placement which lists the transition services established for exploration, assessment, training, or cooperative vocational education that the worker needs. (See FOH 64c08(c)(3)).

Individual Plan for Employment (IPE): A document prepared for each individual with a disability (not a student) participating in a community-based rehabilitation organization program. It must include a statement of needed transition services established for vocational exploration, assessment, or training for the worker with a disability. This document was formerly known as an Individualized Written Rehabilitation Plan (IWRP). (See FOH 64c08(c)(3)).

Javitts-Wagner-O'Day Act (JWOD): The JWOD Act requires Federal agencies to purchase designated products and services from certain not-for-profit organizations. Qualifying organizations must receive at least 75% of their direct labor from individuals who are blind or have severe disabilities.

Jigs or Fixtures: Modifications made to production methods to accommodate special needs of individual workers with disabilities, for example use of a device with a predetermined number of openings to help the worker "count" the correct number of items. The jig may impede the production of a worker who does not have a disability and need not be used in the time study of the worker who does not have a disability. Any jigs or fixtures used when a job is time studied must be made available to the worker with a disability who does the job. (See FOH 64i02).

Learning Disability (LD): Unlike other disabilities, the term "learning disability" does not have a precise definition. LD describes a number of learning or behavioral disabilities, ranging from mild to severe, which may be manifested by various combinations of impairments in perception, conceptualization, language, memory, and control of attention, impulse, or motor function. LD is accepted as a disability for the work to be performed when certain criteria are met. (See FOH 64a01(e)).

Leveling: See Performance Leveling.

Locality or Vicinity: The geographic area from which the labor force of the community is drawn. (See FOH 64g03(e)).

Lost Time: A term used by NISH that the INV may find on time study documents. Lost time is time excluded from a time study for an activity which is not a regularly recurring part of the job. Example: time lost when a supervisor acting as the standard setter is interrupted during the time study by an employee's question. (See FOH 64i01(d)(4) and 64j00(e)(4)b3).

McNamara-O'Hara Service Contract Act (SCA): This Act requires that federal service contracts in excess of $2,500 include wage determinations issued by DOL. The wage determination rate for the same work the worker with a disability performs is used as the prevailing wage when figuring commensurate wages. Employees with disabilities performing work on these contracts must be paid the full fringe benefit amount. (See FOH 64b03).

Methods Time Measurement-Work (MTM): A work measurement system in which a predetermined time value is assigned to every manual motion involved in performing a given task. (See FOH 64g04(c)(2)).

Modular Arrangement of Predetermined Time Standards (MODAPTS): A work measurement system. This predetermined time system deals with standard time values or units of human physical work, called "modules" or "MODS." (See FOH 64g04(c)(3)).

NIB - National Industries for the Blind: The "Central Nonprofit Agency" established by JWOD and designated by the Committee for Purchase From People Who Are Blind or Severely Disabled to provide technical assistance to qualified not-for-profit community agencies that employ people who are blind on JWOD contracts. Facilities must be associated with NISH or NIB in order to receive JWOD contracts.

NISH: The "Central Nonprofit Agency" established by JWOD and designated by the Committee for Purchase From People Who Are Blind or Severely Disabled to provide technical assistance to qualified not-for-profit community rehabilitation programs that employ people with disabilities on JWOD contracts. Facilities must be associated with NISH or NIB in order to receive JWOD contracts.

Office of Enforcement Policy (OEP): That section of WH national office that administers section 14(c).

Patient Worker: A worker with a disability who is employed by a hospital or institution that provides residential care where such worker receives treatment or care. It does not matter whether such worker is a resident of the establishment or receiving care on an outpatient basis. (See FOH 64d00(e)(2)).

Performance Leveling (or leveling): Refers to adjustments made to time study performance level results when the productivity of the person being time studied does not represent normal or near normal performance. Such adjustments should be made only by a person knowledgeable in this technique, as evidenced by successful completion of training in this area. (See FOH 64g06(c)(1)a).

Performance Measurement III (PMIII): A work measurement system developed by Goodwill Industries to measure the performance of workers with disabilities employed in sorting and salvage work (See FOH 64g07(b)(2)).

Personal Time, Fatigue, and Unavoidable Delays (PF&D): Time allowed (by established industrial work measurement methods) to cover certain periods of down time for employees paid by piece rate. Generally a PF&D of not less than 15% (9 - 10 minutes per hour) is sufficient. To achieve an acceptable PF&D the employer may: (See FOH 64i01).

  • Multiply the number of units produced by the standard setter in 60 minutes by an allowance percentage of either 85% for a 51 minute hour, or an allowance percentage of 83.33% for a 50 minute hour, or
  • Multiply the standard setter's time by an allowance factor of 1.2 for a 50-minute hour, or an allowance factor of 1.1764705 (may be rounded to 1.176) for a 51-minute hour.

Piece Rate: The amount of money paid per task performed or piece produced. A piece rate used to determine the commensurate wages, when properly established, must include consideration of quantity and quality of production and a factor covering PF&D. A proper piece rate, when multiplied by the standard of the worker who does not have a disability, should equal at least the prevailing wage rage. (See FOH 64g00).

Pooled Piece Rates (team work wages): A method of payment used when each worker's individual contribution to the finished product cannot be determined separately. In such situations, the employer should make every effort to objectively divide the earnings according to the productivity level of each individual worker. (See FOH 64g05(c)).

President's Committee on Employment of People with Disabilities: A small Federal agency created in 1947 to coordinate and promote public and private efforts to enhance the employment of people with disabilities. The Committee provides information, training and technical assistance to businesses, labor organizations, advocacy groups, rehabilitation and service providers, families and individuals with disabilities. Its activities include periodic job fairs for people with disabilities who are seeking employment. This agency is different from the Presidential Task Force on Employment of Adults with Disabilities.

Presidential Task Force on Employment of Adults with Disabilities: This task force, created by Executive Order No. 13078 signed by President Clinton on March 13, 1998, is charged with the mission of creating and coordinating an aggressive national policy to bring adults with disabilities into gainful employment at a rate that is as close as possible to that of the general adult population. Although the Task Force is headquartered within DOL's Frances Perkins building, it is not part of DOL. The Secretary of Labor is the Chair of the Task Force and several other Members of the Cabinet serve as members. The Task Force should not be confused with the President's Committee on Employment of People with Disabilities.

Prevailing Wage Rate: A wage rate paid an experienced worker, who does not have a disability, in industry in the vicinity for essentially the same type, quantity and quality of work to be performed by a worker with a disability receiving a SMW. The prevailing wage may not be less than the statutory minimum wage. (See FOH 64g03).

Productivity Time Standard: Standard time per task performed by a worker who does not have a disability, determined by established industrial work measurement methods. See also Standard for Worker who does not have a Disability. (See FOH 64i00).

Quality Standards: Standards which establish what is an acceptable product or completed task in an industry or for a particular job. This is an essential component of the productivity comparison necessary for establishing commensurate wage rates. (See FOH 64j02).

Regional Section 14 Team Leader: An experienced enforcement official located within each of the five Wage and Hour Division Regions who has administration and oversight responsibilities regarding that Region's Section 14 programs. The Regional Section 14 Team Leader is an internal and external resource with expertise in Section 14 programs and is the primary regional liaison with the Midwest Regional Office Certification Team and the NO Child Labor and Special Employment Team/OEP.

Rehabilitation Services: Services provided to workers with disabilities, including such services as counseling, psychological testing, mobility training, medical treatments, personal care, physical therapy, occupational therapy, recreation, and physical exercise. These services may also include work samples and/or work simulation. (See FOH 64e01(a)).

Rework: Time spent by the worker redoing a product or work activity of unacceptable quality, i.e., that does not meet the industry quality standard, in order to bring the work product up to the acceptable level of quality. (See FOH 64j02(b)).

School Work Experience Program (SWEP): A program in which a school system may place students with disabilities in jobs in the community at SMWs. Child labor restrictions still apply. The school applies for the certificate, which names the location at which the student(s) will be placed. Separate certificates are required for each business at which students are placed. The original certificate is maintained at the school and the school provides a copy to the business. (See FOH 64d00(e)(3)b).

Sheltered Workshop or Work Center: Centers that have historically provided rehabilitation services, day treatment, training, and/or employment opportunities to individuals with disabilities. Work centers no longer refer to themselves as "sheltered workshops" nor do they perceive themselves as offering "sheltered" employment. See also Work Center. (See FOH 64b00).

Skills Training and Employment Preparation Services (STEPS): An employment project funded by the U.S. Department of Health and Human Services. It is designed to serve people whose primary disability is epilepsy and whose condition is severe enough to meet the definition of developmentally disabled. The program consists of prevocational group classes, transitional employment experiences, and closely supported job placement.

Souder Decision: A court decision holding that the MW and OT provisions of the FLSA generally apply to patient workers. The determination of an employment relationship does not depend on the level of performance of the patient or on whether the work is of therapeutic value to the patient. In general, an employment relationship exists where a patient is performing work that is of any consequential economic benefit to the residential care facility or institution. Consequential economic benefit generally means that the work would have to be done by employees of the employer who do not have disabilities, if the worker/patient with a disability did not do it. This applies whether the patient is voluntarily committed or committed pursuant to a civil court order. (U.S. District Court for the District of Columbia decision. Souder v Brennan, 72 CCH LAB.Cas.32,980(D.D.C. 1973)

Special Minimum Wage (SMW): A wage paid a worker with a disability that is commensurate with that worker's individual productivity as compared to the wage and productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work in the vicinity where the worker with a disability is employed. The commensurate wage is always a special minimum wage, i.e., a wage below that required by section 6(a). Before a SMW rate may be paid, the employer must obtain a certificate under section 14(c). (See FOH 64a00(a)).

Spoilage Allowance: An allowance generally given for unacceptable or spoiled work. The work is acceptable so long as the allowance is not exceeded. The allowance, if used, must be the same for both the standard setter and the worker with a disability who is being evaluated.

Standard for Worker who does not have a Disability (sometimes called "the norm" or "normal productivity"): That amount of work which describes the level of production expected of the worker who does not have a disability. Usually it is expressed as a standard number of units per hour or time per task performed by worker who does not have a disability. It is determined by established industrial work measurement methods, generally using the same production method as the workers with disabilities will use. It is the basic objective gauge against which the productivity of the worker with a disability is measured. See also Productivity Time Standard and Standard Production Rate. (See FOH 64g05(b)).

Standard Production Rate: The number of units an experienced worker who does not have a disability for the work is expected to produce per hour, determined by established industrial work measurement methods. See also Standard for Worker who does not have a Disability and Productivity Time Standard and Standard Production Rate. (See FOH 64g05(b)).

Standard Setter: The average, experienced, worker who does not have a disability for the work being performed whom the employer time studies to set the performance standard. See FOH 64i00(d)(3)).

Supported Employment/Work: Term referring to work programs in which job coaches work with individuals with disabilities who are placed in employment settings (outside of the work center or rehabilitation center) with workers who do not have disabilities. The job coaches typically provide extensive training and actually perform the job where necessary. (See FOH 64d00(e)(1)c).

Task Analysis: The process of identifying the manageable components, tasks, and subtasks of the job to be performed. (See FOH 64i00(d)(2) and 64j00(e)(2)).

Vicinity or Locality: The geographic area from which the labor force of the community is drawn (See FOH 64g03(e)).

Work Activity Center (WAC): Referred to centers which served individuals with the most severe disabilities, those whose physical or mental impairment was so severe that their productive capacity was so inconsequential that they could not earn even 50% of the MW (former section 14(c)(3)(A) of the FLSA). There was no minimum guarantee in a WAC, only the requirement that a commensurate wage be paid.

  • Prior to the 1986 FLSA amendments, two separate SMW certificates were issued: one for work activities centers (WAC) and one for regular work programs (RWP). The regular work program certificates (RWP) applied to workers with disabilities who could earn at least 50% of the minimum wage and contained a requirement that guaranteed them payment of at least 50% of the minimum wage. Participants in the two programs were to be physically separated in a work center.

Work Center (Formerly Sheltered Workshop or SWS): Centers that have historically provided rehabilitation services, day treatment, training, and/or employment opportunities to individuals with disabilities. (See FOH 64b00).

Work Measurement: A determination of the time it should take to perform an operation, or element of an operation, using a prescribed method. (See FOH 64g04).

Work Samples/Simulation: Work samples or simulations are activities which are structured to resemble the work performed in the facility but are performed away from the normal production area. These activities are for the benefit of the client and do not yield a product used to fulfill any of the facility's contracts. None of the materials, goods or services produced is intermingled with the normal work product of the employer and the facility does not derive any economic benefit from them. Clients are supervised by non-production personnel and the clients' activities must be a specific part of a well-defined program of rehabilitation. When the above criteria are met, work simulation is not hours worked under FLSA and need not be compensated. (See FOH 64e01(c)).

Worker With a Disability: An individual whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury, for the work to be performed. (See FOH 64a01).

Vision Center Decision: A district court decision that held once the Secretary issues a certificate approving an SMW, the Secretary must have concluded that the SMW must have complied with the law before the certificate was issued. The court noted that the Secretary has additional authority to investigate and to revoke the certificate of a non-complying employer and that a worker with a disability who is being paid an SMW also may petition the Secretary to review the rate he or she is receiving. The impact of this decision is that SOL will not initiate actions to recover section 6 back wages due employees paid SMWs until after WH has retroactively revoked (back to the date the violations began) the employer's certificate which authorized the payment of SMWs. [Herman v. Vision Center of Central Ohio, Inc., S.D. Ohio, Case No. C2-94-657 (Dec. 16, 1997)]. (See FOH 64h00(a)(1)).

90/10 Quantity/Quality Hourly Rating: One common and acceptable work measurement method used to determine an hourly commensurate rate where a 90 percent rating factor is assigned to the quantity of work performed and a 10 percent rating factor is assigned to quality of the work performed. The practice developed from a 1973 DOL demonstration study which determined that this method resulted in the closest correlation to objectively determined actual earnings. The quantity and quality ratings for the worker with a disability must be based on the same quantity and quality standards used when evaluating the worker who does not have a disability. (See FOH 64j02(b)(2)).

Common Acronyms:

CARF-Committee on Accreditation of Rehabilitation Facilities

CRP-Community Rehabilitation Program.

IDEA-Individuals with Disabilities Education Act

IEP-Individualized Education Program

IPE-Individual Plan for Employment (formerly called an Individualized Written Rehabilitation Plan - IWRP)

MODAPTS-Modular Arrangement of Predetermined Time Standards

MTM-Methods Time Measurement-Work

NFB-National Federation for the Blind

NIB-National Industries for the Blind

NISH-formerly known as National Industries for the Severely Handicapped, but now known only as NISH. The name "NISH" is no longer an acronym but the full name of the organization.

OEP-Office of Enforcement Policy

PF&D-Personal Fatigue and Delay

PMIII-Performance Measurement III

SCA-Service Contract Act (formerly abbreviated MOSCA, at times, for the McNamara-O'Hara Service Contract Act)

STEPS-Skills Training and Employment Preparation Services

SWEP-School Work Experience Program

The Arc-formerly known as Association for Retarded Citizens, but now known only as The Arc

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