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Wage and Hour Division

Wage and Hour Division (WHD)


FOH Field Operations Handbook
arrowChapter 64 Employment of Workers with Disabilities at Special Minimum Wages under Section 14(c)
arrowSection 64e Section 14(c) Investigation Procedures and Considerations

Section 64e02: Section 3(m) Considerations

  • If a facility deducts the cost of board and lodging from the wages of workers with disabilities, the INV should follow the instructions in Regulations 29 CFR Part 531 and FOH 30c to ensure the deduction represents the fair value or reasonable cost of the board, lodging, or other facility. Note: See FOH 64e02(d) for special instructions regarding deductions from the wages earned by patient workers.
  • Employers may incur costs directly related to providing room and board to workers with disabilities and these costs could be credited toward wage obligations to the extent the costs are incurred to the benefit of the workers with disabilities and would not otherwise be incurred by the employer.
    1. To convert the annual cost of board, lodging, or another facility into the average equivalent weekly cost per worker, divide the reasonable annual cost of items provided by the organization (consistent with the requirements of 29 CFR Part 531) by 52 weeks and then by the total number of workers with disabilities who received the benefit of these items.
  • The following are examples of costs a facility might incur that could be directly related to providing room and board and could be credited toward wage obligations to the extent the costs are incurred to the benefit of the workers with disabilities and would not otherwise be incurred by the employer:
    • cost to the facility of renting dormitories, kitchens, and recreational areas;
    • cost of depreciation (including the depreciation of furniture and other equipment used by the worker with a disability) if the buildings comprising the facility are owned by the facility;
    • laundry costs;
    • food costs;
    • cost of fire and similar insurance;
    • utility costs;
    • salaries paid to employees whose jobs are an integral part of providing the room and board (such as cooks, janitors, kitchen helpers, and maintenance personnel); and
    • cost to the employer of providing home to work transportation to the client (see FOH 64e01(d)).
  • Two examples will illustrate the point that the costs must be incurred for the benefit of the workers with disabilities and not otherwise incurred by the employer:
    • A work center employs a cook to prepare meals for the workers with disabilities. The cook, however, spends 25% of his or her time preparing meals for individuals who do not have disabilities that are receiving job training at the facility. The work center may only take 75% of the cook's compensation as a credit toward wages due workers with disabilities.
    • A worker center pays mortgage interest on a building in which the workers with disabilities dine. If this space would otherwise be empty or used for other purposes by the work center, no portion of the mortgage interest could be considered a reasonable cost of furnishing board and lodging.
  • If the worker with a disability or a third party has made a contribution toward the cost of the board, lodging or another facility, the employer may not take credit for that contribution when determining the fair value or reasonable cost. The following examples are not wage payments and may not be credited toward wage obligations:
    1. the value of employees' food stamps that are used to purchase food for the facility when the employer calculates the reasonable cost of board;
    2. donated clothing worn by workers with disabilities unless the employer incurs a cost in making the clothes wearable;
    3. stipends or living allowances paid to a worker with a disability by a third party rehabilitation organization or a government agency;
    4. reimbursement for transportation to and from home (dormitory or group home) and the job site (work center) provided by some other organization or governmental agency (federal, State, or local); and
    5. employer provided transportation between job sites (not normal home-to-work travel).
  • Hospitals and institutions may not make deductions from patient workers' commensurate wages to cover the cost of board, lodging, and other services, unless (and to the extent) such deductions are permitted by applicable federal or State law, and the deductions are made on the same basis and collected from non-working patients as well (see Regulations 29 CFR Part 525.5(b)).