12

OHIO AND THE FUTURE OF SUBMINIMUM WAGES

By 1998 Nike’s manufacture of sports clothing and equipment was fully global. Founder Phil Knight had always intended to outsource the work to areas of the world where labor was cheaper, but he didn’t intend to act unethically. However, as information became available much faster through the internet, stories about working conditions in some of the factories that sewed Nike products came to light. In 1996 Life Magazine ran a story about the iconic brand that forced Knight to act. The image of a child stitching footballs with the Nike logo emblazoned on the side produced an instant outcry, with reporters using phrases like “sweatshop” and “child labor” in their coverage of the story. At first, the company denied any wrongdoing, then stated that the photo was staged, and after more pressure from the public, insisted the contractor had not followed protocols. Images of the Nike logo were circulated, with the “swoosh” used as the “v” in the word slavery.

Knight decided to act boldly and take responsibility. During a press conference he said, “The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse.”1 The company released the locations of the factories they had used, vowed to provide detailed audits and release their progress on improving safety, and immediately eliminate any contractor found using child labor. New watchdog groups popped up, like NikeWatch and an initiative called the Clean Clothes Campaign. But by 2006 a contractor in Pakistan had broken Nike’s rules and sent out soccer balls to be worked on at home. Soon the image was everywhere: an adolescent boy in a squat, surrounded by Nike soccer balls, his head bowed, as he concentrated on hand sewing a section of a ball, a concrete wall with graffiti behind him. Nike pulled the business at the cost of $100 million dollars and led the world in demanding ethical practices. The company was admired for its commitment to fair employment practices, safety, and sustainability. Other companies with similar manufacturing agreements in the Middle East and elsewhere were forced to follow Nike’s lead. The combination of social media and a new generation of shoppers with a sincere interest in the way the products they used were made created an awareness that permeated companies around the world. It was clear that consumers did not want to be associated with brands that acted irresponsibly, at least when it concerned child labor.

Over the years of operating sheltered workshops, the disability industrial complex grew ever more eager to land contracts associated with high-profile companies, believing that if they could put a prominent brand on their marketing brochures, they could interest other companies to also outsource some of their packaging and assembly tasks. At conferences there were sessions that claimed to help sheltered-workshop leaders learn how to engage with businesses; marketing and sales techniques became part of the new lingo. Board members were recruited to help “get a foot in the door” at companies in the community who had not yet participated in supplying work. Before long the strategy worked, and recognizable companies, large and small, began sending their work to the local sheltered workshops, even as other parts of the system were trying to get those same companies to hire workers with disabilities on their payroll, to do jobs on site for real pay rather than inside the sheltered workshop for subminimum wages. While trying to find employment for workers, I would often be told by someone in human resources that they preferred to send their work to the sheltered-workshop programs. Most of the time, that HR person had no idea that the tasks were being performed for subminimum wages; when I told them so, they had various reactions, from wanting to understand more fully to simply stating that they left those pay details to the sheltered workshop. One part of the system was advocating for businesses to hire workers with disabilities directly, while the other was telling them that they needn’t worry, that all would be fine if only more companies provided work to the sheltered workshops. Rarely did the nonprofits inform businesses that they had a choice in the matter. In that way, those nonprofits inside the massive disability industrial complex failed their responsibility as sound stewards of taxpayer funding.

UCO Industries sounds like a small company in a modern light-industrial park. In 2017, UCO in Marysville, Ohio, had seventy-seven workers working for subminimum wages. UCO was not much different from the thousands of other sheltered workshops in the United States; in fact, it was about a third smaller than the average nonprofit using a section 14(c) certificate. On its website, UCO states, “An employer of over 130 associates, UCO Industries, Inc. has been an active member of the Union County business community for over 40 years. We exist and love to share our mission because of our wonderful and amazing employees. They are why we’re in business. It is because of their dedication and spirit that we love coming to work each day.”2 Not a bad mission statement—with its history, concern, and passion for its employees. UCO doesn’t use the word “client,” or “patient,” or any other of the terms the disability industrial complex likes to switch up, including the vague “individual,” the food-chain-sounding “consumer,” and the strange buddy-ism, “our guys.” UCO says it’s an employer, that it has over a hundred employees. Nowhere does UCO state that it pays subminimum wages. You might think it was just a local business specializing in document handling and shredding, but above the large photo of the expansive building is a tab that reads, “Employment and Support for Individuals with Developmental Disabilities.” That link has photos that appear to highlight UCO as a healthcare provider, pictures of people using walkers and wheelchairs against a backdrop that looks like the hallway of an urgent-care facility. The duality of these programs causes confusion, not just with respect to outsiders but also with the leadership, board, and staff. Are we getting people jobs, training workers, rehabilitating patients, or billing different sources to do a little bit of each? Adding to the confusion, UCO decided to perform “reverse integration” of the sheltered-workshop operations. The faulty thinking is that if nondisabled workers labored alongside workers with disabilities, the mandates around inclusion, pay, and opportunity for advancement would simply be overlooked. This is what Henry’s Turkey Service did as well. In the regulatory change called for by the Centers for Medicare and Medicaid (CMS) for people with disabilities under the Home- and Community-Based services waiver regarding settings, CMS requires states to ensure that the funds are used in integrated, regular environments instead of segregated “disability-specific” settings. In this case, UCO was attempting to fulfill its obligations to one of its newest and most prestigious customers, Honda, while still operating as a “community rehabilitation provider.”

On December 14, 2017, Mr. Denoewer through his attorneys, Regina Kline and Dr. Marc Maurer, who had been executive director at the National Federation of the Blind and who supported the Goodwill boycotts, filed a complaint in the United States District Court for the Southeastern District of Ohio. Tamara Basil was denoted his “next friend,” a legal term for someone who acts on behalf of another, since Denoewer was considered nonverbal. The complaint pleaded Denoewer’s subminimum wages (as low as $1.38 per hour after taxes) and his disability labels: autism, nonverbal, and epileptic. The attorneys explained that UCO had gone from being only a sheltered workshop to having employees with and without disabilities so that the employees of UCO were both subminimum-wage earners and above-minimum-wage earners. Some of the areas inside the building had nicknames, not uncommon, but unlike other businesses those nicknames also delineated workers with and without disabilities. There were the “tables” where Mr. Denoewer worked, unpacking the separate components of what would be assembled as the complete Honda owner’s manual; the separate items consisted of plastic sleeves, covers, and bound paper documents. It was boring work, at piece rate, which according to court documents ranged from $1.38 an hour but never up to minimum wage. Like Sparkle Green and many others in sheltered workshops, Denoewer’s initial productivity was higher but fell off as the years went by. Why? Most of us paid piece rate for repetitive tasks not of our choosing would steadily decline in output. If our pay were set not as an hourly wage at or above the minimum, our income would suffer. However, inside the disability industrial complex, this common human tendency to resist performing tedious tasks is not viewed the same way; rather, it’s taken as a sign of the worker’s deficits. Since the nonprofit can also bill federal and state programs for “interventions to fix these problems,” they make money off the worker either way.

Denoewer was not provided the opportunity to move from the “tables” to other areas of UCO operations that were more profitable to the worker. UCO ran a shredding operation called “File 13” and other Honda-focused work that was referred to as the “line. These jobs were not offered to Denoewer even though Tamara Basil, as his advocate, had filled out surveys from UCO in 2014 asking that Denoewer’s tasks be varied so that he might have an opportunity to learn and grow. That’s what taxpayers in Ohio are funding UCO to do—to support and assist with advancement; the funds aren’t earmarked for maintaining the productivity level of a worker with a disability but rather to “train, teach, and rehabilitate” the worker. The funds from Medicaid and vocational rehabilitation are supposed to be used to support someone in attaining new skills and abilities. But UCO represents the worst of the confusions inside the disability industrial complex when it comes to mixing purposes, pay, and profit: a nonprofit that receives taxpayer funds to pursue a mission, supporting people with disabilities; that same organization has a mixture of subminimum-wage earners and minimum-wage earners, competing with similar for-profit private companies that would also like a subcontract with Honda but can’t get it because the lowest wage in any shop lowers the wages of all. This type of amalgamation is what the advocates for abolishing subminimum wages warned Congress about decade after decade. Add to this identity maelstrom the fact that UCO as a community rehabilitation provider is mandated to carry out the ADA, Olmstead, and the Rehabilitation Act as amended. Instead, the board, leadership, and local funders are apparently unaware of the laws meant to guide their fundamental existence. The fact that the nondisabled workers brought into a rehabilitation facility are then given preferential treatment in terms of jobs and training violates the fundamental trust that taxpayers put in the nonprofits that receive local, state, and federal funding.

Such a configuration is not new. From my entrance into the disability industrial complex, organizations have tried to muddy the waters when the challenges they are presented with are deemed too difficult. Our funding systems and laws require adherence to the basic belief that Burton Blatt articulated nearly sixty years earlier; that is, people with the labels of intellectual and developmental disabilities can learn, can be productive. The organizations that receive the financial benefits of that belief refuse to embrace it, or only slightly, opting instead to focus on people with “mild disabilities” as in the SourceAmerica operations, where the billions they receive in funding are not used to support those workers connected to their original name: the National Industries for the Severely Handicapped.

Citing precedent from the United States Court of Appeals for the Sixth Circuit, Denoewer’s lawyers contended, “The thesis of the ADA is simply this: That people with disabilities ought to be judged on the basis of their abilities; they should not be judged nor discriminated against based on unfounded fear, prejudice, ignorance, or mythologies; people ought to be judged on relevant evidence and the abilities they have.”3

As a culture we have reinforced outdated, ignorant views of people with disabilities. While some of that is changing, biases remain within the disability industrial complex. Court documents reveal that some UCO workers with disabilities reportedly made as little as fourteen cents an hour.4

Paragraph 33 in the First Amended Complaint in Denoewer v. UCO Industries and Honda of America alleges that the two entities “relegated Plaintiffto lower-paid, less fulfilling, and dull work, and Defendants acted in conscious disregard of his statutory rights in a way that was highly probable to cause substantial harm.” That’s what’s so wrong with the disability industrial complex in America: it knows it causes harm; it is fully aware of its responsibilities to workers with disabilities and taxpayers, but it chooses to act on interventions that are unproven and nonbeneficial to their primary stakeholders and to hide behind that insidious benevolence that Anil Lewis talked about at the beginning of this book.

To read the Denoewer complaint is akin to diving into a primer on the disability industrial complex, revealing the inherent issues that persist. One might conclude that UCO advised Honda with faulty information, without a proper knowledge of evidence-based supports, that UCO created the configuration Denoewer was subjected to, and that Honda therefore is the recipient of bad advice from an entity that is supposed to be aware of laws, interventions, and practices at the intersection of disability, employment, and training. UCO did not assess Mr. Denoewer’s individual skill and abilities to determine whether he could advance in pay, be assigned new tasks, or needed reasonable accommodations to do so. In some instances workers without disabilities were placed in positions instead of workers with disabilities in order to meet the demands of Honda’s contract. Although state and federal funding is not for the benefit of Fortune 500 companies, but rather workers with disabilities, even as late as 2017 several states proposed in their state plans to CMS that they would use “reverse integration” to address the settings rule aimed at ensuring that people receiving home- and community-based services under a Medicaid waiver have full access to integrated employment in the community. In February of 2018, Honda moved the court to be dismissed from the case, arguing that it had no connection to the plaintiff other than contracting with UCO. The motion was granted, the judge ruling that “Honda has no connection to Plaintiff. Honda simply contracted with UCO as a supplier.” Nevertheless the internationally recognized Honda name had helped shed light on the issue of subminimum wages and provided an opportunity to get the attention of policy makers who had been slow to react.

A year later, in December 2018, Kline and Maurer took the next step in the fight to highlight how corporate supply chains were the beneficiaries of the cheap labor derived from section 14(c) subminimum wages. They found other examples of abuses in Ohio. Roppe Corporation, a manufacturer of rubber and vinyl-flooring products, based in Fostoria, Ohio, had been working with its local sheltered workshop since the middle 1980s. Roppe’s annual sales in 2017 were almost $73 million. The provider agency, Seneca RE-AD Industries, located in Tiffin, Ohio, had 178 people working for subminimum wages in 2018. It had held a section 14(c) USDOL certificate for decades. Seneca RE-AD chose to leverage its subminimum-wages capabilities and partner closely with Roppe, essentially running its sampling division. Seneca invested its time and efforts as a community rehabilitation provider in focusing on the operation of Roppe’s samples division, the first examples of new flooring products their worldwide customers saw. The complaint alleged: “Seneca does not perform work for any other business beside Roppe.” Thus, Seneca didn’t have an array of tasks that workers could try; if one didn’t like manufacturing, he was out of luck. Who is the primary customer here? Roppe? People with disabilities? It seems clear that the mission of Seneca wasn’t about providing services to support workers in vocational rehabilitation, but rather the one corporate entity.

The three plaintiffs were all employed in the sampling division at Roppe and alleged that they were segregated from other employees without disabilities; they were paid less; and they were denied the same benefits and privileges of their nondisabled peers. The legal basis of the litigation was Title I of the ADA and several Ohio state statutes. Besides Roppe and Seneca, plaintiffs’ lawyers named the funder, the Seneca County Board of Developmental Disabilities, as a defendant. Ohio’s system for delivering services and supports to people with intellectual and developmental disabilities is centered in county boards, which essentially coordinate, oversee, and distribute funding to the community rehabilitation providers, among others, in the county. As late as 2016, the Seneca County Board was still using the phrase “mental retardation” in its name on the USDOL 14(c) spreadsheet. Over the last decade advocates have worked diligently to rid systems of this demeaning term, and its use is a barometer of an entity’s awareness of current practices. The Seneca County Board essentially helped to recruit workers who would end up at Roppe.

The two cases in Ohio will impact not only the plaintiffs but workers with disabilities in general. The violation of the ADA and Olmstead in the context of corporate supply chains will echo across the country. Although both cases are still pending and the final outcome unknown, the practices of low pay and discriminatory practices initiated and funded by the very agencies that are supposed to put workers with disabilities first are no longer cloaked in mystery. They further demonstrate the lack of a consistent set of national policies.

The Rhode Island consent decree expires in 2024. To date, the state has worked to promote employment for people who have not had an opportunity to work outside the segregated, sheltered system. Using state dollars, BHDDH has seeded agencies to use best-practice supports. The special education-to-sheltered-workshop pipeline could be said to have been inactivated. Signed in 2014, the consent decree stipulations were essentially stalled for two years, prompting a federal judge to threaten to hold the state in contempt if it didn’t act swiftly and with increased focus on making sure the benchmarks were accomplished. By the end of 2019, roughly 860 people had been supported in real jobs in the community earning minimum wage or above, but nearly 1400 additional workers with disabilities were still waiting for services. The state monitors employment data by three categories: youth exit from special education, prior sheltered-workshop worker, and day program attendee. The total number of people with disabilities covered under the DOJ consent decree is 2,225, with 857 employed, or 38 percent. The state’s last official sheltered workshop closed in 2018. The state has invested in a process known as Person Centered Supported Employment Performance Program in order to continue to support a transformation of the state’s employment services. In March of 2020, the Rhode Island House of Representatives introduced a bill to repeal subminimum wages. House Majority Leader K. Joseph Shekarchi stated, “Disabled individuals are entitled to the same rights, protections and dignity as all Rhode Islanders. Of course, they should be protected by our minimum wage laws. While I’m relieved that state day programs for the disabled stopped engaging in this practice a few years ago, there’s no excuse for any law that allows anyone to take advantage of disabled people and pay them less than other workers. We must repeal this law to ensure that no one abuses disabled Rhode Islanders in this way ever again.”5

Oregon’s DOJ consent decree expires in December 2022. In October of 2020, the last sheltered workshop in the state closed, and subminimum wages will be phased out by 2023. Of the eight named plaintiffs, most have had opportunities to work in jobs outside the subminimum-wage setting, but their experiences, which include the typical grocery store and fast-food jobs, make clear that more needs to be done to support workers with disabilities in accessing career pathways, with opportunities for advancement, pay raises, and on-the-job-learning.

At the US Department of Labor, audits of 14(c) certificate holders were increased, with the Wage and Hour Division (WHD) ramping up its oversight. The agency completed 193 subminimum-wage investigations in fiscal year 2017–2018 and ordered the payment of nearly $2 million in back wages to employees. Reports of the number of workers with disabilities still being paid subminimum wages are conflicting. The National Disability Rights Network stated in 2017 that there were half a million people on 14(c) certificates; APSE often gives a figure of approximately 100,000. In the National Council on Disability’s report to the Trump administration in October of 2018, the number of workers under 14(c) was also not clear, with a range of 141,081 workers to 321,131.6 While there has surely been a decrease in the WHD figures, there is no clear evidence that the workers who have left sheltered workshops are working in real jobs in the community. According to data submitted by the states, the number of people in facility-based work (subminimum wage) has decreased but the number of people in facility-based nonwork has increased.7 This means that those workers who had been earning subminimum wages have not left for jobs in their communities but rather have simply been moved into a day program setting where they may continue to work on prevocational tasks or spend time on supposed daily living skill building or other “habilitation” activities. This is the shell game played inside the disability industrial complex. Held to account, community rehabilitation providers did not shift their focus to supporting workers with disabilities in community jobs, but simply moved people to services inside a building, where more billing can be done under different codes. Anecdotally, I have seen this in action: agencies talk openly about shifting services to more facility-based nonwork activities in light of changes in their state to prioritize employment in the community. Participation in facility-based nonwork has grown steadily for states that report it as a service, from 18.7 percent in fiscal year 1999 to more than 40 percent in fiscal year 2017.8 Instead of work, people are spending time in day rooms participating in “activities.” From the National Disability Employment Policy report comes a staggering statement: “There is a limited amount of data on the structure, activities, and outcomes of facility-based non-work services, and states have not established clear service expectations or quality assurance strategies.” One hears the echoes from the congressional hearings on subminimum wages over the decades: data is lacking, there is no proof that the interventions produce outcomes, and the quality of the services are in question, but the disability industrial complex represents billions of dollars each year in taxpayer funding. If the trend continues, those community rehabilitation providers who were reluctant to give up subminimum wages will be able to adjust their business models not to reflect real work for real pay, but with the primary focus on continuing to bill with no clear outcome in sight.

From 2017 onward, the focus on section 14(c) produced more USDOLWHD audits, and the Rhode Island case, especially the focus on the “special education to sheltered workshop” issue, brought more attention to the use of subminimum wages outside the community rehabilitation provider system. Known innocuously as the school work experience program (SWEP) at the federal level, USDOL-WHD issues 14(c) certificates to school systems so that students can legally be paid subminimum wages. These certificates and the use of subminimum wages in special education have declined but remain legal in contradiction to the Olmstead decision and WIOA regulations. In Sonoma, California, for instance, there were nearly 1,750 students with disabilities being paid subminimum wages in 2018, the highest number in the country.

Perhaps one of the strangest circumstances of section 14(c) subminimum-wage certificates is a USDOL category termed the business establishment list (BEL). These are private employers in local communities who are legally permitted to pay workers with disabilities subminimum wages, sometimes for the same jobs performed by workers without disabilities who earn minimum wage or above. When FLSA was passed in 1938, this category envisioned veterans returning from war who had worked in manufacturing and because of a service-related disability, needed a modified job to return to. According to the report of the National Council on Disability sent to the Trump administration in October 2018, the USDOL had very little information about this category: “WHD could not identify or report its enforcements efforts of the BEL, and so the public currently has no way of knowing whether WHD has conducted oversight audits with the private businesses participating in the program.” This is an astonishing admission, given that the workers would most certainly qualify for reasonable accommodations under the ADA, which could include the use of customized employment supports codified in the law via the Workforce Innovation and Opportunity Act of 2014. One business on the BEL list, Riverview Productions in Wellston, Ohio, submitted documentation to the USDOL stating that they paid workers with disabilities as little as twenty-five cents per hour for work that involved assembly tasks that were being done by workers without disabilities for $8.15 an hour.9

As long as the use of subminimum wages remains legal pursuant to section 14(c), exploitation and abuse will follow, and the possibility remains that we will find out much later about abuse, as in the case of Henry’s Turkey Service. One bright spot from the last five years is the fact that the Goodwill boycotts, the DOJ cases, and private litigation have increased the general public’s awareness of and interest in what happens inside the disability industrial complex. It doesn’t take much research to find examples of 14(c) being at best misapplied, and at worst used as a mechanism for unscrupulous behavior.

Maine had been at the forefront of forgoing subminimum wages, with early adopters like Gail Fanjoy choosing to lead her organization, KFI, in the direction of community employment; the state’s other nonprofit agencies had followed. Over two decades Maine was pushing its funding systems toward Employment First. By 2017 there was only one organization left with an active 14(c) certificate—Skills Inc., a nonprofit based in St. Albans. A sawmill for all practical purposes, like many of the organizations that pay subminimum wages, the entity also housed people with disabilities, billing Medicaid and the state of Maine for both vocational and residential services, with total revenue in 2015 of almost $14 million dollars. Reminiscent of the big-name nonprofits in the stark difference between the pay of workers with disabilities and the CEO’s, Skills seemed to have embraced the practice. Some of the workers with disabilities made $2.14 an hour, lifting heavy wood planks, sorting, sawing, and moving thousands of pounds of lumber each day, while two administrators were paid nearly $3.5 million over seven years, with bonuses. In one year alone, the organization paid one manager $570,000, all approved by a board of directors. As far back as 2001, Skills had nearly seventy-five violations related to the Fair Labor Standards Act. Based on a Wage and Hour report from the USDOL, there were 77,855 subminimum-wage violations across the country from 1997 through 2016, requiring employers to pay their workers with disabilities about $16.5 million in back wages.10 Sixty-one of those violations occurred at Goodwill facilities. However, the abuses are widespread, and in many of the cases, the nonprofits that purport to support workers to “achieve their greatest potential” remain in business.

In the Randolph County Sheltered Workshop in West Virginia, workers with disabilities spent their days assembling and packing fishing lures for Leland’s Lures in Arkansas. While Randolph County Sheltered Workshop had previously obtained a legal section 14(c) certificate authorizing the provider agency to pay subminimum wages, it had lapsed, and in late 2017 and early 2018, the agency was audited. In the past this had not been much of an issue; over the last three decades there has been an informal approach to making sure the paperwork is in line, resulting in laxity in performing correct time studies, making certain productivity is measured per each worker rather than as a team, and permitting an overall laissez-faire approach on the part of USDOL-WHD and the community rehabilitation providers paying subminimum wages. This attitude was evident not just in the Congressional Hearings, but in relation to viewing these issues with the same sense of urgency we see elsewhere in labor, law, pay, and worker’s rights. It seemed, since this financial configuration had to do with workers with disabilities—and more specifically “clients” with intellectual disabilities—it just wasn’t necessary in the eyes of policy makers, enforcement personnel, and leaders at provider agencies to get too concerned about the details.

The Wage and Hour Division at the USDOL, however, was trying to ramp up oversight considering the effective efforts from the NFB and other advocacy organizations in getting section 14(c) on the journalists’ radar. Tips started to arrive, and concerned citizens and family members began to inquire about the practices of the sheltered workshops in their communities. Randolph County Sheltered Workshop in West Virginia was ordered by the US district court to pay $119,040 in back wages to thirty-four employees. Through an analysis of payroll data, the investigation found that the organization had violated the minimum-wage provisions of the Fair Labor Standards Act (FLSA) and failed to post and make available in alternative formats the rights that workers with disabilities have under the law, especially the procedures for filing a complaint if the worker feels her pay is not correct.

In Lowndes County, Georgia, USDOL investigators found that the sheltered workshop run by Lowndes Advocacy Resource Center (LARC), a nonprofit, had underpaid 130 workers with disabilities by $160,000 in 2018 and 2019. Most ordinary citizens would think the organization’s name would imply it did the opposite of exploiting people and that’s precisely how the assistant director responded to the media. “It was a 1,600-page document. We missed one sentence. Yes, we take responsibility for missing that sentence,” said Steve Jaramillo, the assistant director, trying to make it sound as if all would be fine if it not for the cumbersome feds and their bureaucratic red tape.11

In the spring of 2018, USDOL-WHD found violations serious enough to revoke the section 14(c) certificates from Rock River Valley Self Help Enterprises, Inc., a community rehabilitation provider in Chicago. According to the press release on the USDOL’s website, the violations were significant, persistent, and even involved obstruction. “The WHD investigation revealed a failure to timely perform appropriate wage surveys and failure to conduct proper time studies on all jobs performed by workers with disabilities. The investigation also revealed that the employer attempted to mislead and obstruct WHD’s investigation by concealing relevant information from WHD during the investigation, hiding work that the employer had not time studied but had the workers perform. On some weekends, Self Help unlawfully paid workers with gift cards instead of wages.”12 This is painful to read even in brief. Perhaps it’s the ridiculous name, or the fact that leaders in a nonprofit believed it was fine to provide trivial payment through gift cards, or the fact that USDOL states clearly that NONE of the time studies were conducted properly on ALL the jobs performed by workers with disabilities, but it is disheartening that this type of brazenness inside the disability industrial complex persists despite all the warnings, hearings, news stories, and legislative committees that have occurred. These cases highlight the fallacy of one of the claims that trade groups and large provider agencies make regarding section14(c), that more oversight will correct the inherent problems. After eighty-two years the field still cannot perform its rudimentary tasks of properly documenting wage and hour studies, proving that the practice of using subminimum wages in supposed vocational rehabilitation is rotten at the roots, is fundamentally bad public policy that will only continue to permit more exploitation under the guise of self-help, as in the widespread violations in Chicago. Rock River Valley Self Help Enterprises was ordered to pay back wages up to at least $7.25 an hour for all workers dating back two years, totaling $575,000.

In October 2018 USDOL’s investigators found that ninety-two workers at a sheltered workshop in Selma, North Carolina, had not only been paid incorrectly ($52,000 in back pay), but youth with disabilities under the age of twenty-four had also not been provided services under the Workforce Innovation and Opportunity Act. Under WIOA, the youth should have had opportunities for regular training and employment supports rather than simply being put into work for subminimum wages. Johnson County Industries violated both the FLSA of 1938 and the WIOA of 2014.

In 2019 USDOL investigations in Montgomery, Alabama, found that the local Arc had violated workers’ rights by deducting thirty minutes each day for breaks whether the worker took the break or not. The larger portion of the case, though, found that workers at two of the Arc’s ancillary sites, the Hanan Center and the McInnis Recycling Center, were not provided the mandated services under WIOA regarding learning about options other than subminimum wages. The press release from USDOL states in part, “Individuals with disabilities receive career counseling, information and referral services from the state vocational rehabilitation agency and information about local opportunities for self-advocacy, self-determination and peer-mentoring training from the employer each year while working at subminimum wages under the FLSA’s Section 14(c). WHD found Hanan Center and McInnis Recycling Center failed to ensure workers were provided these services during subminimum wage employment. Investigators also determined the employers failed to conduct a prevailing wage survey and to adjust wage rates annually, as required.” The subminimum-wage worker with disabilities is entitled to counseling about jobs outside the sheltered workshop by the very entity (the employer) who benefits the most by not providing the worker with employment options for minimum wages and above, a significant flaw in the regulations. These are the most recent stories reported by USDOL and reflect only a fraction of the oversight audits performed under section 14(c).

Even when not pressured by USDOL Wage and Hour investigations, the disability industrial complex reacts to oversight in some predictable ways. In July of 2019, in response to the state’s increase in minimum wages, Sharon Durbin, CEO of the Land of Lincoln Goodwill told dozens of employees with disabilities that they would no longer receive paychecks due to the Illinois legislation on livable wages. Durbin made an annual salary in 2018 of $164,000 plus a bonus of $6,000.13 The wage law in Illinois was set to increase the state minimum wage gradually through 2025. Durbin and Goodwill tried an old trick of the disability industrial complex, claiming that the state vocational rehabilitation program only pays for part of their thrift-store employees. Most of the successful human-service nonprofits don’t rely on only one or two funding sources; they find foundations, donors, and grants to make up the mix of the operating budget. Every year, in every state capital, budgets are passed related to workers with disabilities and employment supports; and the standard approach for trade groups and community rehabilitation providers is to plead that they are not sufficiently funded by the state.

By the fall of 2019, advocates for the abolishment of section 14(c) had managed to get hearings before the US Commission on Civil Rights (USCCR) in Washington. Those hearings focused on the same issues that have been addressed in countless other settings, from Congress to national and state self-advocacy groups. There were references to the Oregon and Rhode Island lawsuits and what had been learned about transforming state systems away from segregated and exploitative sheltered workshops and toward jobs in the community for at least minimum wages. The USCCR hearings created another step forward, however, one that would live on, presided over and documented by one of the country’s most focused federal entities concerned with fair and equal opportunities for all Americans. The commissioners at the USCCR spent the next ten months engaged in research, site visits, and a review of stakeholder public comments with the hope of issuing a report on 14(c) by the fall of 2020.

Sometimes, the financial abuse of subminimum wages and segregated settings is linked to other types of mistreatment. In September 2020, during the same week that the USCCR issued its full report with recommendations, a sheltered-workshop director in Bartow County, Georgia, was arrested on forty counts of felony theft by taking, plus two counts of exploitation and intimidation of adults with disabilities. Misty Dawn Baynard directed the program at Good Shepherd Foundation that also paid workers subminimum wages. Just a year earlier, the organization had received $750,000 to renovate its buildings from the county’s community development block grant administration.

In 2018 NPR launched a multiday exposé on the rampant rate of sexual assault on people with intellectual disabilities, calling it “the sexual assault epidemic no one talks about.”14 Several brave men and women came forward to tell their stories. James Meadours, a self-advocate who exudes dignity and unwavering commitment to honesty, shared his story, including sexual abuse and mistreatment while living in a group home. Meadours also spoke about being paid fifty cents an hour in a sheltered workshop. People with intellectual disabilities, who represent the largest number of workers being paid subminimum wages, are sexually abused at seven times the rate of people without disabilities.15 Being segregated in a sheltered workshop or work activity center puts people with disabilities at risk for exploitive wages, as well as other forms of abuse, verbal, sexual, and physical.16

On September 17, 2020, just a few days before the director of the Good Shepherd Foundation was arrested, the US Commission on Civil Rights released its report “Subminimum Wages: Impacts on the Civil Rights of People with Disabilities.” It called for the repeal of section 14(c), albeit once again “a planned phase-out.” Harkening back to the work of Dr. Paul Wehman at Virginia Commonwealth University, the commission also suggested ramping up funding to supported-employment programs. There were the familiar nods to “more oversight” during the phaseout and more stringent reporting, very much as had been heard during the numerous congressional hearings over the decades. But there was also a recommendation to “increase enforcement of the Olmstead integration mandate to determine whether state systems are inappropriately relying on providers using 14(c) certificates to provide non-integrated employment in violation of Olmstead.”17 Overall, the commission stated, the practice of subminimum wages is inconsistent with the civil-rights protections to which people with disabilities are entitled. “The Commission today calls for the end of the Section 14(c) program, because it continues to limit people with disabilities from realizing their full potential,” said commission chair Catherine E. Lhamon. “In addition, the program suffers from wildly insufficient federal oversight and civil rights review, and apparently routine noncompliance, begging the question why we as a nation continue its operation.”18

The USCCR report made national, mainstream news, with pieces on NPR and elsewhere. In January 2019 a bill was passed in the House to address the issue. The Transformation to Competitive Employment Act (H.R. 873) mandates that states, service providers, and subminimum-wage certificate holders transform their business models to help workers with disabilities transition into competitive, integrated employment. Another bill, known as the Raise the Wage Act (H.R. 582), also addressed subminimum wages.

A handful of states have already banned subminimum wages for workers with disabilities; these include Vermont, New Hampshire, Maine, Alaska, Oregon, and others (by 2023). Other states have tried to address the issue by ceasing the entry of new workers with disabilities into sheltered workshops or have passed state legislation with a focus on employment in the local economies at minimum wage or above. In the United States in 2022, however, it will still be legal to pay workers with disabilities pennies on the hour and enshrine the practice in shades of goodwill, altruism, charity, and best practices, all while billing state and federal funding sources for billions of dollars a year.

If the phaseout occurs through 2027 following the recommendations of the US Commission on Civil Rights, or if either of the two House resolutions reaches the Senate for a vote, subminimum wages for people with disabilities pursuant to section 14(c) will have been the law of the land for ninety years. It will have taken us nearly half a century from the exposure of the abuses at Henry’s Turkey Service in 1979 to abolish the law that encouraged the abuse. More insidious, we have allowed large trade groups to lobby Congress; we have permitted multinational community rehabilitation providers to design the funding they receive; and we have turned away when these entities have repeatedly abused the very constituents they claim to fight for. It has been difficult for me to admit to myself that I’m part of the American disability industrial complex. We are all part of the disability industrial complex. Our tax dollars go to its machinations and prop up the false assumptions and discriminatory practices invoked in our names.

It is entirely likely, though not a foregone conclusion, that subminimum wages will be wholly abolished by at least 2030, an important, long overdue step in reconciling what we tell ourselves about how we care for people with disabilities and the kind of public policy we make. But industrial complexes do not just go away; they find other ways to make sure the funding keeps flowing. In addition to the recommendations from the US Commission on Civil Rights, let’s add a caveat. If you represent or work for an organization that has spent time and money advocating to keep workers with disabilities earning pennies per hour, you have forfeited your right to help fix the issue. You and your organization, board members, staffers, lobbyists, and highly paid CEOs don’t deserve a seat at the table. Fill those spots with people with lived experience, with those who have had to endure ridicule, mistreatment, and abuse. Unfortunately, there are hundreds of thousands of American citizens who can fulfill those descriptions. Self-determination and informed choice belong to people, not organizations. The story of subminimum wages for Americans with disabilities is one whose painful consequences must not be forgotten. The disability industrial complex has shown us who they are; we should believe them.19