For more than 85 years, federal law has let certain employers pay workers with disabilities less than the minimum wage — sometimes far less. Under Section 14(c) of the Fair Labor Standards Act, some workers earned as little as pennies an hour, tied to a "commensurate wage" formula that measured their output against a nondisabled worker doing the same task. As of mid-2026, roughly 40,000 workers nationwide are still paid this way.
Georgia just decided that era is over.
Governor Brian Kemp signed the Dignity and Pay Act in 2025, and its transition schedule is now live: as of July 1, 2026, every Georgia employer still holding a Section 14(c) certificate must pay covered workers at least half the federal minimum wage — and a full year from now, the subminimum wage option disappears from the state entirely. If your business, nonprofit, or sheltered workshop employs people with disabilities under one of these certificates, the clock is already running, and the accounting implications are bigger than a simple pay-rate bump.
What Section 14(c) Actually Is (and Why It's Controversial)
Section 14(c), enacted in 1938 as part of the original Fair Labor Standards Act, allows employers who obtain a certificate from the U.S. Department of Labor's Wage and Hour Division to pay workers with disabilities less than the federal minimum wage of $7.25 an hour. The theory was that some workers' disabilities reduce their productivity on specific tasks, so pay should scale down proportionally — calculated through periodic time studies that compare a disabled worker's output to a nondisabled worker's output on the same job.
In practice, the program has shrunk dramatically. The number of 14(c) workers nationally fell from about 296,000 in 2010 to roughly 122,000 by 2019, and employer participation dropped by about half over the same period — driven by advocacy pressure, litigation, and a broader shift toward "competitive integrated employment" models that pay disabled workers standard wages in mainstream job settings. The U.S. Department of Labor proposed a rule in late 2024 to phase out 14(c) certificates nationwide, then withdrew that proposal in July 2025, leaving the decision to the states. Georgia is one of more than two dozen states that have now enacted their own bans or restrictions, joining California, Colorado, Illinois, South Carolina, Tennessee, and Virginia among others.
Georgia's Timeline, Step by Step
The Dignity and Pay Act phases out subminimum wage in three stages:
- Through July 1, 2026: Employers who held a valid 14(c) certificate issued on or before July 1, 2025 could continue paying subminimum wages under the old rules. No new certificates could be issued after that date.
- July 1, 2026 – June 30, 2027 (the transition year): Covered employers must pay workers with disabilities at least half the federal minimum wage — currently $3.63 an hour — for the remainder of their certificate's validity or until June 30, 2027, whichever comes first.
- After June 30, 2027: Georgia prohibits the use of 14(c) certificates entirely. Every employer in the state must pay workers with disabilities no less than the standard federal (or applicable state/local) minimum wage.
For a worker who was previously earning $2 or $3 an hour under a commensurate-wage calculation, the transition-year floor alone can more than double labor costs for that role — and the second step, a year later, pushes it to full minimum wage.
Why This Is a Bookkeeping Problem, Not Just an HR One
It's tempting to treat this as a one-line payroll rate change, but the accounting impact runs deeper for employers who've relied on 14(c) certificates — typically community rehabilitation programs, sheltered workshops, and some agricultural or light-manufacturing operations:
- Payroll cost modeling. If your labor budget assumed a commensurate wage tied to individual productivity studies, you now need two new pay floors to model against — the transition-year half-minimum-wage rate and the full minimum wage a year later — layered on top of whatever your existing time-study rates were.
- Grant and contract margins. Many 14(c) certificate holders operate on state contracts, Medicaid waiver funding, or grant reimbursement rates that were priced assuming subminimum labor costs. A near-overnight wage floor increase can turn a break-even program into a loss-making one unless contracts are renegotiated.
- Job costing and rate cards. If disabled workers' labor is billed into product pricing (common in workshop-to-market and light-assembly operations), your cost-of-goods calculations need to be rebuilt around the new wage floors well before June 30, 2027, not after.
- Recordkeeping for the transition year. Because the July 2026–June 2027 window ties the wage floor to "the earlier of the certificate's expiration or June 30, 2027," employers with staggered certificate renewal dates may be paying different minimum rates to different workers simultaneously — a detail that needs to be traceable in your ledger, not just your HR system, if it's ever audited.
This is exactly the kind of transition where clear, auditable financial records matter. Whether you're a nonprofit rebudgeting a state contract or a small manufacturer recalculating job costs, having your payroll and cost data in a system you can query, diff, and reconcile — rather than buried in disconnected spreadsheets — makes it far easier to see the real cost of a wage-floor increase before it surprises you at year-end.
What Employers Should Do Now
- Check your certificate's exact expiration date. The transition-year rate applies until "the earlier of" June 30, 2027, or your certificate's expiration — so employers with certificates expiring sooner face a shorter compressed timeline, not a longer one.
- Model both wage floors against your current roster. Run every currently subminimum-wage worker through both the half-minimum-wage transition rate and the full minimum wage rate to see the total annualized cost increase at each stage.
- Revisit contracts and grant budgets now, not in 2027. If your organization bills state agencies or grant funders based on a cost structure that assumed subminimum wages, start the renegotiation conversation well before the second wage step hits.
- Talk to your workforce development agency about transition supports. Georgia Vocational Rehabilitation Agency and similar state programs typically offer job-placement and supported-employment resources for organizations moving workers from sheltered/subminimum settings into competitive integrated employment — worth exploring both for compliance and for workers' long-term outcomes.
- Don't wait for a second law. Even though the federal DOL walked back its own 14(c) phase-out proposal in 2025, more than two dozen states have moved forward on their own, and the trend line — a roughly 60% decline in program participation since 2010 — suggests subminimum wage work is heading toward elimination nationally regardless of what Washington does next.
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