WHD revokes rehabilitation center’s exemption from federal minimum wage

Agency cites FLSA violations, including failing to properly pay disabled workers

Posted August 16, 2016

The Wage and Hour Division (WHD) has revoked a nonprofit rehabilitation center’s ability to pay less than the current federal minimum wage to workers with disabilities after federal investigations found the organization violated provisions of the Fair Labor Standards (FLSA) Act and McNamara-O’Hara Service Contract Act (SCA).

The division found that the West Virginia rehabilitation program violated FLSA’s section 14(c) by failing to pay a valid subminimum wage to 12 workers with disabilities employed to do light assembly production.

Section 14(c) of the act allows employers, after receiving a certificate of authorization from the division, to pay wages less than the federal minimum wage to workers with disabilities when their disabilities impair their productive capacities for the work being performed.

The company paid 12 workers $43,370 in back wages for this violation. Additional FLSA section 14(c) violations included failure to perform annual prevailing wage surveys, and failure to conduct required time studies. The company also paid a civil money penalty for willfully violating the FLSA.

The investigation also revealed that the employer submitted falsified and/or inaccurate time studies and prevailing wage surveys to obtain 14(c) certification from the division. This action, in conjunction with the company’s history of violations, led the division to revoke the employer’s current and previous section 14(c) certificates for the period of September 1, 2012, through Aug. 31, 2016.

The division also found the center owed five workers an additional $4,795.84 due to SCA violations. The employer failed to adjust the prevailing wage and health and welfare benefit rates on the contract renewal date, as required, and illegally paid a subminimum wage to a worker with a disability.

The company agreed to the following:

  • Comply with all applicable provisions of the FLSA in the future.
  • Not to contest the revocation of the current or prior subminimum wage certificates.
  • Pay all back wages due.
  • Require staff to attend 14(c) training within the next year.
  • Use the division’s online section 14(c) calculators for their next two full certificate applications, which will be required prior to any future certifications being granted.
  • Educate their organization through use of the department’s online presentations.
  • Take actions needed to protect employees’ eligibility for public benefits, including providing employees with benefits planning information and counseling.

Wage and Hour Compliance with FLSA Manual J. J. Keller's Wage and Hour Compliance with FLSA Manual provides critical info to help you comply with the Fair Labor Standards Act (FLSA) and state wage and hour laws.


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