14(c) Certificate Compliance in 2026: What’s Changing and How Software Helps

May 4, 2026

If your organization holds a Section 14(c) certificate, 2026 is a year that demands attention. The regulatory and policy landscape around subminimum wage employment has shifted significantly over the past two years, and even with the federal phase-out rule currently withdrawn, the pressures on 14(c) employers are not easing.

State-level bans are expanding. Advocacy organizations are intensifying calls for transition to competitive integrated employment. Agencies across the country are making active decisions about whether to renew their certificates, transition their programs, or continue operating under the current framework while preparing for a future that looks very different.

For organizations that continue to operate under 14(c) in 2026, compliance requirements remain exacting, and software that handles piece-rate calculation, prevailing wage documentation, and productivity-based pay administration accurately is not optional. It is operationally essential.

What Is a Section 14(c) Certificate?

Section 14(c) of the Fair Labor Standards Act authorizes employers who have received a certificate from the U.S. Department of Labor’s Wage and Hour Division to pay workers with disabilities subminimum wages, wages below the federal minimum wage, when the worker’s disability impairs their productivity for the work being performed.

Wages paid under 14(c) must be “commensurate wage rates”, calculated as a proportion of the prevailing wage for non-disabled workers performing the same work in the same geographic area, adjusted to reflect the individual worker’s productivity.

The certificate program is used primarily by sheltered workshops and work centers, IDD agencies operating vocational programs, Goodwill organizations with vocational employment components, rehabilitation facilities providing supported employment, and Arc affiliates operating work programs.

The Current 14(c) Regulatory Environment

The Proposed Federal Phase-Out, and Its Withdrawal

In December 2024, the U.S. Department of Labor announced a proposed rule that would have phased out the issuance of new Section 14(c) certificates and established a three-year phase-out period for existing certificate holders. The rule received over 17,000 public comments.

In 2025, under the Trump administration, the DOL withdrew the proposed rule, stating concerns about the agency’s statutory authority to eliminate certificates entirely through rulemaking. The federal 14(c) program remains in effect as of 2026.

What this means for certificate holders: The immediate threat of federally mandated phase-out has passed. However, the withdrawal of the federal rule does not eliminate the state-level pressures that continue to reshape the 14(c) landscape.

State-Level Bans Are Expanding

Even without a federal phase-out rule, the trajectory at the state level is clear. As of 2026, more than 25 states have enacted or are pursuing state-level bans, restrictions, or limitations on the use of Section 14(c) certificates, including Alaska, Arizona, California, Colorado, Delaware, Hawaii, Illinois, Kansas, Maine, Maryland, Minnesota, Nebraska, Nevada, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, and West Virginia.

For organizations operating in these states, 14(c) may already be unavailable or subject to restrictions requiring adjustments to wage structures and program operations.

Organizations Are Making Transition Decisions Now

Many organizations are making voluntary decisions to discontinue their 14(c) certificates and transition workers to competitive integrated employment or standard minimum wage vocational programs. Some Arc affiliates and Goodwill organizations have publicly announced discontinuation of their 14(c) programs as certificates come up for renewal, often citing both regulatory trajectory and alignment with evolving disability rights values.

Active Compliance Requirements for 14(c) Certificate Holders

For organizations that hold active certificates, compliance requirements are detailed and ongoing. Failures in documentation, wage calculation, or productivity review can result in back-wage liability, certificate revocation, and DOL investigations.

Certificate Renewal

Certificates covering employees of work centers and patient workers are valid for two years and must be renewed before expiration. Annual review and renewal applications must demonstrate ongoing compliance with all wage and documentation requirements.

Prevailing Wage Surveys

Certificate holders must conduct prevailing wage surveys at least every 12 months. These surveys establish the wage rate paid to experienced non-disabled workers performing the same or comparable work in the same geographic area. When the federal or applicable state minimum wage changes, prevailing wage rates that fall below the new minimum must be updated immediately, and commensurate wage rates for all affected workers must be recalculated as of the effective date of the minimum wage increase.

Productivity Evaluations

The productivity of each worker paid on an hourly basis must be re-evaluated at least every six months. Productivity evaluations compare the output of the worker with a disability to the output of an experienced non-disabled worker performing the same work, using time studies or other accepted measurement methods. Piece-rate workers must also have their productivity evaluated in a manner that produces accurate commensurate wage rates.

Individual Worker Records

Every worker paid under a 14(c) certificate must have documentation that includes the prevailing wage basis used to calculate their commensurate rate, productivity evaluation results, the resulting commensurate wage rate, the date of the most recent wage adjustment and productivity review, and all hours worked and wages paid. These records must be maintained accurately and be available for DOL inspection during audits.

How Software Helps 14(c) Employers Maintain Compliance

Managing 14(c) compliance manually, tracking productivity evaluations, wage calculations, prevailing wage surveys, and individual worker records across dozens or hundreds of workers, creates significant administrative burden and audit risk.

Piece-Rate and Productivity Tracking

Vertex Vocational Time Manager was built specifically for the time and productivity tracking requirements of vocational programs and work centers. It supports both hourly and piece-rate tracking in real time, generating the individual productivity data that 14(c) wage calculations require. Rather than managing productivity records in spreadsheets, where calculation errors and missed review deadlines create compliance risk, Vertex tracks worker output continuously and generates the records needed for wage calculation and DOL compliance.

Commensurate Wage Calculation

When prevailing wage surveys are updated and worker productivity evaluations are complete, calculating accurate commensurate wage rates for every worker requires precision that manual processes struggle to maintain consistently. Software that connects productivity data to wage calculation, and flags workers whose rates need adjustment when minimum wages or prevailing wages change, helps organizations stay ahead of compliance requirements rather than discovering discrepancies during audits.

Client Payroll for Vocational Workers

Vertex Client Payroll Manager handles the payroll complexity of vocational programs, including the calculation and payment of commensurate wages based on individual productivity data. When payroll is integrated with productivity tracking, the connection between evaluated performance and resulting wages is documented and auditable.

Transition Planning and Program Diversification

For organizations actively planning transitions away from 14(c), Vertex Case Manager supports the person-centered planning documentation that competitive integrated employment services require, enabling organizations to operate both models simultaneously during a transition period.

Planning for the Future of Your 14(c) Program

If you are continuing to operate under 14(c):

Confirm your certificate renewal timeline and begin the renewal process well in advance of expiration
Ensure your productivity evaluation schedule is current, every worker on an hourly rate must be evaluated every six months
Conduct your prevailing wage survey on schedule and update commensurate rates promptly
Verify that your documentation practices are audit-ready
Evaluate whether your current software can support accurate piece-rate and productivity tracking, or whether manual processes are creating compliance risk

If you are planning a transition:

Assess which workers may be candidates for competitive integrated employment with supports
Evaluate the financial model for your vocational program without subminimum wage
Ensure your software can support both current 14(c) operations and new service models simultaneously

Learn more about Vertex for 14(c) employers and agencies, or schedule a demo to see how Vertex handles piece-rate tracking, commensurate wage calculation, and client payroll in a live environment.