Tuesday, March 12, 2019

Some facts about the subminimum wage bill

Based on the House floor debate for HB 1706-Ending subminimum wages for people with disabilities, there is a lot of misunderstanding about what this bill does and does not do. For starters, it has nothing to do with ending prevocational employment. That type of employment support has already ended.

Here is a Q&A to clarify some issues that have come up during hearings and floor debate.

Who can be paid subminimum wage now?

Anyone with a disability (mental, physical or because of age) whose productivity is determined to be low, as compared to a “typical” employee. This is not restricted to people with intellectual or developmental disabilities.

According to the U.S. Census 2017 American Community Survey, about 13 percent of people in the United States identify as having a disability, on average. According to current U.S. Census data for Washington state, 9 percent of our state's population is under age 65 with a disability. This means 678,203 individuals under age 65 are subject to lower wages because of a mental or physical disability. An indeterminate number over age 65 are also subject based on disabilities that occur due to age. (Source: U.S. Census Bureau Quick Facts)

Current law:

Workers with a disability: In accordance with regulation WAC 296-128-050 (app.leg.wa.gov) for workers 18 years of age or over or WAC 296-125-043 (app.leg.wa.gov) for workers under age 18, the employer requests a certificate to employ an individual whose earning capacity is impaired by reason of age, mental disability, or physical disability. (Source: Washington Department of Labor and Industries)

Sheltered workshops are most associated with subminimum wage, but the law covers both integrated and segregated settings. Anyone with a disability can be subject to a productivity test and could have their pay determined by that test. Only people with disabilities are required to prove their productivity, creating a different standard.

Apprentices and students can also be paid less while they are learning, but that aspect of the law is not part of HB 1706.

So who is actually making a subminimum wage?

The potential number is large: 678,203. Anyone with an impairment due to age, or physical or mental disabilities could be issued a certificate. The actual number is small, because Washington does not rely on paying people less to help find them employment. Our public policy is to help people find the right job, and follow up with training specific to that job.

Most of the subminimum wage certificates issued have been to people receiving support in prevocational/sheltered settings. Now that model has been phased out, the certificates are mostly issued to people supported in group supported employment settings:

Client counts for Group Supported Employment subminimum wage by county based on 12/2018 billings:
Walla Walla

Source: Megan Burr  / Employment and Day Program Unit Coordinator
DDA - HQ - Lacey / Developmental Disabilities Administration
Washington State Department of Social and Health Services

Please note these numbers from DDA do not capture everyone. DDA only tracks employment outcomes for people receiving DDA employment or community inclusion day services. But traditionally, most certificates were issued to this group, and when people bring up exemptions to minimum wage law, they typically bring up the scenario of a person with a developmental disability.

According to Labor and Industry, last year there were 194 employees in all of Washington paid a subminimum wage, and they worked for a total of 15 employers. At least two of those employers no longer pay subminimum wages, and in fact support changing the law. Here is a breakdown of certificates issued in recent years.

Year      Certificates issued
2014      46
2015      295
2016      250
2017      269
2018      194
2019      15

Source: Labor and Industry, report the state Senate

Would this bill affect sheltered work?
No. As of March 1, supported employment in prevocational settings (that is, Medicaid-supported sheltered work) ended in Washington state

This has nothing to do HB 1706 or subminimum wages.

Five years ago, the Centers for Medicare and Medicaid Services (CMS) ruled Medicaid funds could not be used in segregated settings. This applies nationally, not just in our state. Washington has been transitioning out of prevocational supports for four years and people who used these programs have transitioned to other services – such as individual or group supported employment, or community inclusion day services. Some individuals - such as those who live at home or in a shared living arrangement - have also been provided monthly Supplemental Security Payments (SSP) of $300 to help ease them into other types of community activities. (Individuals who receive community residential supports do not qualify for SSP.)

Sheltered work is still legal. Individuals just can’t use Medicaid employment funding to pay for services in these settings. If HB 1706 passes, employees could still work in sheltered settings, but they would be protected by minimum wage law that applies to everyone else.

Would this bill affect group supported work?

No. HB 1706 does not dictate what employment supports are available, only that all people, regardless of whether or not they have a disability, are protected by minimum wage law. Individuals can choose to receive supports in this setting. Their employers, however, must comply with minimum wage law.

Would this bill affect internships?

No. HB 1706 does not change the law around apprenticeships or internships. Current law has exceptions for student worker, student learner, learner, and apprentice. Those do not change and people with disabilities would be treated the same as people without disabilities (in other words - disability status does not determine who is eligible for an internship or apprenticeship).

HB 1706 changes the provision that allows subminimum wages solely due to disability.

Will people lose their employment services if HB 1706 passes?

No. HB 1706 is about labor law. It would offer people with disabilities the same wage protections as people without disabilities. It has no bearing on who qualifies for employment supports through the Developmental Disability Administration (DDA) or assistance through the Division of Vocational Rehabilitation (DVR).

  • DVR provides short term employment services and counseling to individuals with disabilities who want to work but experience barriers to work because of a physical, sensory, and/or mental disability. Learn more here.
  • DDA administers Medicaid home and community based services (HCBS) waivers to qualifying individuals with developmental disabilities. The "waiver" means the individual has waived access to supports in an institution in favor of supports in the community. Three of these waivers offer employment services. In the past several operating budgets, the state has funded an increase in slots on one of the waivers, Basic Plus, to accommodate young adults transitioning out of special education services and into jobs. You can learn more about DDA here.
  • Washington also offers supported employment through its Medicaid Transformation waiver. Transformation waiver information here

Will this cost the state more?

No. It should not affect the level of employment services.

People who were making subminimum wages in prevocational settings were being supported through a Medicaid-funded program. Those individuals did not lose services when those programs ended – they transitioned to a Medicaid-approved employment service model - either individual or group supported options - or Medicaid-approved community inclusion day services.

People who are currently making subminimum wages in group-supported employment settings will not lose services; they WILL now be protected by minimum wage law. (About 8 percent of people getting employment support through the DDA are in group-supported employment.)

People served by individual supported employment (the other 92 percent getting DDA employment services) already make minimum wage or better. It is a requirement. Some people in this program are not yet making a wage, perhaps because they are still in discovery or

Whether or not people are eligible for supported employment or related technical assistance is determined by whether they qualify for DDA services, and if so which waiver they are on. It has no bearing on whether they earn subminimum wages.

Is Washington ready for the transition?

Yes. Washington is arguably the readiest of all the states to make the transition. Nationally, just 19 percent of people using DD employment services are supported to work in integrated settings. In Washington, 87 percent are. Statewide, about 60 percent of people receiving DD supported employment or community inclusion day services are making minimum wage or better.

According to the breakdown by county (see link, below):
  • 5,058 out of 8,234 make minimum wage or better
  • This includes people receiving community inclusion day services instead of job support, who are mostly not employed, though some may be. (A qualifying person can opt for community inclusion after trying employment support. This individual can receive one service or the other, not both)
  • This also includes people who received services in prevocational/sheltered settings, where only 8 percent made minimum wage or better (that support model has been phased out)
  • If you back out supported employment numbers and just consider people specifically supported to work in an integrated setting, then the number making minimum wage or better increases
  • Close to 72 percent of people receiving DDA-funded employment supports make minimum wage or better in King County; in Pierce County it is 60 percent. In Snohomish it is 66 percent.
Here is the breakdown, by county, as of fall 2018.

DDA has a slightly different data pull (came from a different date) posted online. In that breakdown:
  • 7,102 received individual supported employment; 58 percent made minimum wage or better 
  • 610 received group supported employment (similar to a work crew); 33 percent made minimum wage or better
  • 132 received services in prevocational/sheltered settings; 8 percent made minimum wage or better
  • These numbers reflect programs in transition, as people left prevocational services and moved into individual or group supported employment, or into community inclusion day services
It is important to note that because of the decision by the Center for Medicare and Medicaid Services (CMS) to stop funding prevocational/sheltered workshops, Washington has already spent four years transitioning most of the people who were making subminimum wages into supports for integrated work settings. The heavy lift is done.

DDA is also providing individuals who left prevocational work - and who do not receive community residential supports - with monthly Supplemental Security Payments of $300 to help ease them into additional community activities.  

Are any other states changing their minimum wage laws?

Yes. Vermont closed its sheltered workshops in the 1990s and abolished subminimum wage certificates for people with disabilities. New Hampshire, Maryland and Alaska all passed legislation to abolish subminimum wages for people with disabilities. Legislation has been introduced in Kentucky, Oregon and Hawaii to outlaw subminimum wages for people with disabilities. At the federal level, Congresswoman Cathy McMorris Rodgers of Eastern Washington co-sponsored the bipartisan HR 873; there is also a bill in the U.S. Senate. Ending subminimum wages was part of both major party platforms in 2016.

Will people earn "too much" for Medicaid?

Washington offers a Healthcare for Workers with Disabilities program in which people with disabilities who are working can buy into Medicaid. They are charged a monthly premium that is based on their income. Currently it has an income limit, and some people have to choose between work and Medicaid. However, a separate bill, HB 1199, would remove that cap. It passed the House unanimously.

What about people most impacted by their disabilities? (“High acuity”)

People with significant disabilities are already being supported in integrated settings. Over the past 7 years, the number of individuals in Washington most impacted by their disabilities who are working in competitive, integrated environments has nearly tripled from 405 to 1,211. (see “All Means All”)

Interestingly, a May review found fewer than 40 percent of the people making subminimum wages were considered “high acuity.”

Shown here, the transition from prevocational/sheltered services and growth in people with high acuity making minimum wage or better.


Is there a transition plan? What happens to employees who have certificates to work for less than minimum wage?

Currently, employers need to secure a certificate to pay employees less than minimum wage. Under the striker* bill that passed the House:
  • No new certificates could be issued. Existing certificates would remain valid until they were due to expire.
  • People who meet the state’s definition of having a developmental disability can apply for a limited extension of their certificate (employer must agree).
  • Individual technical assistance will be offered to eligible individuals working under expiring certificates, as they transition into integrated employment.
  • The Department of Labor and the Department of Social and Health Services must collaborate on a report about how the legislation impacts the employment of people with developmental disabilities.
  * A “striker” keeps the same bill number and title but swaps in new bill language

You can find more information on disability in the 2017 Disability Statistics Annual report
You can find out more about Washington's employment success here, All Means All.