Section 14(c) of the Fair Labor Standards Act has been the subject of significant policy debate over the past two years. IDD agencies, sheltered workshops, and vocational rehabilitation facilities that rely on 14(c) certificates have been navigating considerable uncertainty about the program’s future. As of 2026, here is where things actually stand and what your agency needs to do to remain compliant.
What Section 14(c) Actually Allows
Section 14(c) of the Fair Labor Standards Act authorizes the Secretary of Labor to issue special certificates allowing employers to pay workers with disabilities wages commensurate with their productivity, which in some cases may be below the federal minimum wage. The program is used primarily by:
- IDD agencies operating vocational day programs
- Sheltered workshops and work centers
- Rehabilitation facilities providing supported employment
- Goodwill organizations with vocational employment components
- Arc affiliates operating work programs
Wages under 14(c) are calculated based on a prevailing wage study that compares the productivity of a worker with a disability to that of a non-disabled worker performing the same task. The certificate does not allow employers to pay whatever they choose. It requires documented productivity measurement and regular recertification through the Department of Labor’s Wage and Hour Division.
What Happened With the Proposed Phase-Out
In December 2024, the U.S. Department of Labor published a Notice of Proposed Rulemaking that would have phased out the issuance of new 14(c) certificates and established a three-year wind-down period for existing holders. The proposed rule received more than 17,000 public comments from advocates, agencies, families, and workers on both sides of the issue.
In 2025, under the Trump administration, the DOL withdrew the proposed rule, citing concerns about the agency’s statutory authority to eliminate certificates entirely through rulemaking. The federal 14(c) program remains in effect as of 2026. Existing certificate holders may continue to operate, and new applications are still being accepted.
This does not mean the policy debate is over. Several states have passed or are considering state-level legislation that restricts or phases out subminimum wage employment independently of federal action. Executive directors and compliance officers at agencies operating in multiple states should monitor state-level policy closely.
What Compliance Actually Requires
Holding a 14(c) certificate is not a one-time event. Maintaining compliance requires ongoing documentation, accurate productivity measurement, and timely renewal. The most common compliance failures include:
- Outdated prevailing wage studies that no longer reflect current rates for the work being performed
- Inaccurate time and productivity tracking that cannot support the wage calculations on file
- Missing or incomplete documentation of the individualized wage determination process for each worker
- Failing to provide required disclosures to certificate holders and their guardians or representatives
- Late certificate renewals that create gaps in authorization
The Department of Labor can and does conduct compliance reviews of 14(c) certificate holders. An agency that cannot produce documentation supporting its productivity calculations and wage determinations is exposed to back pay liability, civil penalties, and potential certificate revocation.
How Software Supports 14(c) Compliance
The documentation and calculation requirements of 14(c) compliance are difficult to manage manually, particularly at agencies serving large numbers of vocational clients across multiple work sites.
Vertex Systems was built to support the specific compliance requirements of 14(c) programs. The Client Payroll Manager simplifies tracking and reporting of client earnings and productivity, ensuring compliance with DOL regulations by centralizing the data that certification requires. The Vocational Time Manager improves wage calculation accuracy and centralizes earnings data for day and vocational programs.
Together, these tools create a documented, auditable record of how productivity was measured, how wages were calculated, and how individual client earnings were tracked over time. When a DOL compliance review happens, that record is what protects your agency.
State-Level Considerations
Because 14(c) is a federal program administered through state-level DOL field offices, compliance requirements can feel different depending on where your agency operates. Some states have moved to restrict subminimum wage employment on their own, regardless of the federal program’s status.
If your agency operates vocational programs in multiple states, it is worth conducting a state-by-state review of where 14(c) remains fully available, where restrictions have been enacted, and where legislative activity is ongoing. Agencies in states that have moved toward competitive integrated employment as the default may need to expand supported employment infrastructure alongside or instead of continuing 14(c) programs.
What to Do Now
If your agency holds a 14(c) certificate, the most important steps are straightforward:
- Confirm your certificate renewal date and begin the renewal process at least 90 days in advance
- Audit your prevailing wage studies to ensure they reflect current market rates for each job category
- Review your time and productivity tracking to confirm accuracy and documentation completeness
- Confirm that all required disclosures have been made to workers and their representatives
- Monitor state-level legislation in every state where you operate vocational programs
Vertex Systems can help your agency build the documentation and tracking infrastructure that 14(c) compliance requires. If your current system is making prevailing wage documentation and productivity tracking difficult to manage, it is worth exploring purpose-built tools designed for this exact compliance environment.
