An employee weighs items at Southeast Enterprises, a sheltered workshop in Kansas City on Nov. 16, 2021. Sheltered workshops are authorized to pay employees with severe disabilities below the minimum wage (Madison Hopkins/The Beacon).
This story was originally published by The Kansas City Beacon.
A new Missouri law allowing employers to continue paying some people with disabilities less than minimum wage has positioned the state at the forefront of a national debate over disability rights in the workplace.
Part of a wide-ranging piece of legislation signed by Gov. Mike Parson in July, the rule directs the state to develop its own version of a federal program that allows wages as low as pennies per hour.
Roughly 5,000 employees work at facilities with subminimum wage certificates in Missouri – called sheltered workshops because workers are kept separate from others. Missouri has the second-highest number of sheltered workshops in the country, with 95 operating locations.
Though the New Deal-era law that governs such employment was considered progressive when it was enacted, it has come under increasing criticism in recent years.
On one side of the debate are employers – along with many workers with disabilities and their families – who say the point of sheltered workshops isn’t pay, but rather the community and sense of purpose for people who wouldn’t succeed in the traditional workforce. They worry that without wage-law exemptions, sheltered workshops will be forced to close.
On the other side, disability rights advocates argue the practice is outdated, discriminatory and unnecessary when many resources are available to help employees with disabilities succeed in integrated community environments.
Paying people with disabilities less than minimum wage “devalues their time,” said Cassidi Jobe, president of the Missouri chapter of the Association of People Supporting Employment First and a mother of two teenagers with autism. “It sends a very clear message that their time is not worth the same amount as a person who doesn’t have a developmental difference.”
The push to ban subminimum wage for people with disabilities has gained momentum in recent years. At least 12 states have done so, and several more are considering it. At the federal level, lawmakers have made several attempts to wipe out the exemption, but none has succeeded.
Dan Gier, director of sheltered workshops for the Missouri Department of Elementary and Secondary Education, said the new state law is meant as a fail-safe for sheltered workshops in case a challenge to the federal law succeeds.
“It would be quickly adaptable and there would be no change at the workshop level,” Gier said. “We feel very confident we can do that.”
Missouri’s legislation could also end up serving as a guide for other states.
New Deal-era sheltered workshops law
In Missouri, 87 nonprofit organizations with 14(c) certificates – named for the provision of the Fair Labor Standards Act that authorizes the subminimum wage payments – operate 95 sheltered workshops that employ roughly 5,000 people, according to DESE.
The type of work varies. Employees at Southeast Enterprises in Kansas City take on tasks ranging from packaging cooking spices to attaching labels to medical marijuana products. Other workshops hold contracts to keep state rest areas clean or to operate recycling programs.
Sheltered workshop employees are paid hourly or on a “piece rate,” meaning they are compensated for each time they complete a unit of work, such as packing and sealing a test tube kit.
Individual pay rates are determined by comparing the amount of work a nondisabled employee completes to that of the person with disabilities. For example, if a nondisabled worker packages 100 sets of rubber gloves into boxes in one hour, but the employee with disabilities packs only 50 boxes, that worker’s pay is set at 50% of the prevailing wage for that task.
As a result, not all sheltered workshop employees earn subminimum wages. According to DESE, pay in Missouri’s sheltered workshops ranges from $1 per hour to $18.13 per hour, well above the minimum wage. The average is $5.15 per hour.
Kit Brewer, legislative chair for the Missouri Association of Sheltered Workshop Managers, or MASWM, said the wage scales are no different from other accommodations provided for workers to be successful, like a ramp for a worker with a wheelchair. The lower wage allows sheltered workshop employees to work at their own pace without the pressure to hit quotas or other standards.
“Like it or not, the competitive employment world expects production,” Brewer said. “We may not all look at it as we’re being judged on our production levels every day, but I think deep down we all know better.”
Yet a 2020 U.S. Commission on Civil Rights report found that the process can also be “rife with abuse and difficult to administer,” pointing out that each year, subminimum wage employees have been owed back pay from 14(c) employers. Between 2009 and 2020, the U.S. Department of Labor found violations in 53 investigations of Missouri sheltered workshops, resulting in more than $780,000 in back wages for employees, according to the report.
Stating that the federal exemption has kept “people with disabilities … from realizing their full potential,” the commission recommended the phaseout of 14(c), echoing other high-profile criticisms of the program in recent years. This year, the U.S. Government Accountability Office found a host of barriers hindering employees transitioning away from sheltered workshops to integrated employment – a core goal of many programs.
During his campaign, President Joe Biden promised to do away with subminimum wage for employees with disabilities, announcing support for the Transformation to Competitive Integrated Employment Act. If passed, the law would phase out subminimum wage exemptions and provide grants and other resources to help shift sheltered workshop employees to jobs integrated in communities. Despite bipartisan support, the bill stalled after it was reintroduced to Congress in April.
Language to phase out 14(c) was also included in the American Rescue Plan Act passed this year to provide COVID relief funds, but lawmakers struck out the provision before passage.
The ‘Missouri Model’ could spread
Brewer, the legislative chair for the workshop managers association, said Missouri is the first state to pass a law like this, and it could serve as a road map for others. While he expects the law to be challenged in court, he said the state is in a good position to argue its case.
First, the state’s current minimum wage offers some wiggle room. While the federal minimum wage is $7.25 per hour, Missouri’s is $10.30 and will increase to $11.15 in 2022. Federal law won’t allow any payments below its minimum, but Missouri could still authorize smaller payments to people with disabilities than the rest of the state’s workers.
Second, though Missouri is behind only Illinois in total number of subminimum wage certificates issued in the state, it is the only state that doesn’t accept federal funding for the operation or oversight of sheltered workshops. Instead, the workshops are supported by state and local funds, with the largest portion of their budgets based on revenue from the goods and services they produce, according to DESE.
The absence of federal funding in Missouri sheltered workshop budgets is in line with the focus of the state’s program. The federal funds for sheltered workshops are meant for services to help employees gain skills and enter the competitive workforce, according to the Centers for Medicare and Medicaid Services. While sheltered workshops in many other states are viewed as temporary training programs to teach employees key vocational skills before they enter the integrated workforce, Missouri’s program is all business.
“Our main core is employment and jobs,” said Gier, the DESE sheltered workshop director. He said it goes back to the core values of the legislators who founded Missouri’s program in the 1960s.
“Work brings dignity, brings pride, brings income, brings self-reliance, brings the ability to pick and choose, just as employment for the average American does.”
Gier said nothing will change immediately as DESE works on developing rules for a state program. The goal of the new law is to be prepared in case the federal shift happens.
In a recent survey by MASWM of its member shops, only 56% of the 39 that responded said they would remain open without subminimum wages. Many disability rights advocates argue that the financial fears are overblown and point to states like Vermont, which phased out 14(c) nearly two decades ago and integrated the majority of its workers into community-based jobs.
Even in Missouri, some sheltered workshops are preemptively deciding to leave behind subminimum wages. In 2018, a Sedalia sheltered workshop transitioned its focus to provide employment support for those with disabilities.
Reinhard Mabry, president and CEO of Alphapointe, a Kansas City-based nonprofit that employs people who are blind or visually impaired, said his organization ended subminimum wage payments years ago. Though it was a financial hit at the time, the organization decided it was time.
“We saw it as daunting – I think that most nonprofits would,” Mabry said. “We just knew it was the right thing to do. So we had to. We had to make some tough decisions.”
University of Missouri journalism students Skylar Laird and Bolette Elsoee contributed to this report.
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