Ability One and The 14(c) Requirements

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Written By: Jeff Hartnett, RVP SCA Markets

I recently attended a Department of Labor sponsored Prevailing Wage seminar where many of the sessions were geared toward new contractors. The last session I listened to discussed the 14(c) requirements and the major changes that have occurred.

Ability One contractors, through a certification process, could have employees who are severely disabled receive wages that are less than the federal minimum wage. I have read news stories that reported this violation of the federal minimum wage law, among other violations. Most of these reporters are unaware of the legislation in place that allows this to occur and write salacious reports about the employers involved. There are valid concerns that the goals of the AbilityOne program are out of alignment with the goals of subsequent legislation for the advancement of the disabled community, particularly full integration goals within the community. But, for those that don’t know about the program in general, here is some background.

The Ability One program seeks to create employment opportunities to people who are blind or have severe disabilities. It history traces back to the 1938 Wagner-O’Day Act. Over the years, the US has advanced the rights of people with disabilities as the economy has progressed to a digitally driven economy. Congress has only reconsidered the program once through the 1971 Javitz-Wagner-O’Day Act.

In recent years, the Federal Government has purchased $3.3 billion annually worth of goods and services from the 527 non-profit agencies that participate in the Ability One program. Since 2008, the Ability One non-profit agencies have employed approximately 47,000 people each year who are blind or severely disabled. In order to participate in the Ability One program, companies need to ensure at least 75% of the direct labor hours are performed by individuals with severe disabilities.

In the past, The Department of Labor has issued 14(c) certificates to Ability One participants and Non-Profit Agencies, but changes have occurred this year that intend to eliminate those certificates moving forward. The 14(c) certificates allow employers to pay workers with disabilities less than the minimum wage under a federal law dating back to the 1930s. This has always been a point of contention between employers and disability advocates who feel that integration into competitive employment is the ultimate goal of these programs. There have been a variety of studies and commissions that have attempted to study this issue and have provided recommendations to Congress to update the JWOD Act. Critics believe that the 14(c) certificates are no longer in alignment with the goals of the American Disabilities Act among other legislation.

Congress has elected to phase out the 14(c) certification process, which would effectually make Ability One contracts more margin thin than they already are. I have reached out to my clients to gauge the immediate impact of this and they believe it will make supporting these contracts more difficult. They indicate, and I have personally seen that the work performed on these contracts in the workshops is supported by additional staff that monitor these individuals working to ensure a safe and supportive environment. I have also seen how hard working and dedicated these employees are with a lower number of average sick or absentee days of work. They take great pride in their work and it provides them a great sense of purpose to be employed.

At The Contractors Plan, we work with many Ability One contractors and support their benefits administration on Service Contract Act contracts and we will continue to do so. I am offering my own experiences and knowledge to shed light on what these contractors are facing in the ever-changing regulatory environment. I would like to hear from Ability One brokers and clients on the impact this is having on their business and business partners. You can contact me at 512-527-5312.