On November 17, the Department of Labor’s (DOL's) Wage and Hour Division issued Administrator’s Interpretation 2016-2, "Effect of state laws prohibiting the payment of subminimum wages to workers with disabilities on the enforcement of section 14(c) of the Fair Labor Standards Act."
The Administrator’s Interpretation (AI) clarifies the effect of state laws prohibiting the payment of subminimum wages to workers with disabilities on the enforcement of section 14(c) of the FLSA. It states that the FLSA does not preempt a state law that limits or prohibits the payment of wages lower than the state’s minimum wage and that section 14(c) certificate holders must comply with both federal and state laws. The AI notes that the Wage and Hour Division reviews 14(c) certificate applications on a case-by-case basis. The AI identifies that in states that limit or prohibit payment of subminimum wages, there may be circumstances in which a 14(c) certificate holder may pay commensurate wage rates to workers with disabilities under the certificate and comply with state law (e.g., if the certificate holder has a contract with the Federal Government that is covered by the Service Contract Act).