The Philip DeFranco Show - MS 2.21 People With Disabilities Are Paid Pennies an Hour and Here's Why It's Totally Legal!

Episode Date: February 21, 2019

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Hello, hello, welcome to your Extra Morning News Show. My name is Philip DeFranco, and today we're going to be talking about something you might not be aware of, you might not have seen coverage of, and that is sub-minimum wage. Right, so not minimum wage, sub-minimum wage, because there's actually a portion of the United States workforce that's getting paid a lot less than the federal minimum wage of $7.25 an hour. And here, I'm not talking about undocumented workers, I'm also not talking about tipped workers, right? Not waitresses or bartenders who can technically make below minimum wage either I'm talking about people with disabilities and that's because in the United States

It's actually perfectly legal for a disabled person to be paid as little as a penny an hour And while that may sound shocking the issue of sub minimum wage has actually divided disability advocates for years Some have called the practice outdated and a basic civil rights issue While others say provides work for people who might never have had the chance to work otherwise So today we're gonna take a deeper look into how employers can pay disabled workers below minimum wage, and we're also gonna be hearing from people inside the disability community

on where they stand on the issue. Some of the people you'll hear from today are individuals who work at a nonprofit in Las Vegas that pays some of its workers below minimum wage. If you're a disability advocate and you're trying to make the news, then I think it's easy to launch a target at a center-based employment program that says we've left people behind, right? And

say that, you could say that publicly and you can incite a riot and you can get people excited about shutting down programs that do horrible things to people. That's not what we do. We'll also be taking a look inside that workplace and see what workers with disabilities are doing there. You'll also hear taking a look inside that workplace and see what workers with disabilities are doing there. You'll also hear from the chairman of the National Council of Disability who advises President Trump and Congress on issues like subminimum wage. I want people to come away asking themselves this. Either they believe people are equal or they don't believe people are equal. Either they believe that they should be treated fairly in the workplace or they shouldn't be treated fairly in the workplace, or they shouldn't be treated fairly in the workplace. And lastly, we hear from a man with Down syndrome

and his father who together started their own multi-million dollar business and advocate for equal pay. I was born with Down syndrome. Down syndrome never hit me back. No, it doesn't. People should be paid fairly. People should be treated fairly in the eyes of the law.

And we should not treat people as if they're subhuman and sub-minimum wage does that. With all of that said, let's just jump into it. So in order to fully understand sub-minimum wage, we have to take a look back at the Great Depression. On October 29th, 1929, the US stock market crashed in what became known as Black Tuesday. And this crash was so bad,

it triggered the worst economic collapse the world has ever seen. By 1933, 15 million Americans were unemployed and close to half the country's banks closed their doors. Now, 1933 was also the same year that Franklin D. Roosevelt took office as President of the United States. And FDR, he campaigned for office

by promising Americans a new deal that would provide them with better financial days ahead. And then when he ran for reelection, FDR continued to make jobs his focus, but this time FDR specifically vowed to end child labor, long working hours, and low wages. And he kept his promise. On June 25th, 1938, FDR signed the Fair Labor Standards Act, or the FLSA for short. And actually, here's what FDR had to say about the act at the time.

Except perhaps for the Social Security Act, it is the most far-reaching program, the most far-sighted program for the benefit of workers that has ever been adopted here or in any other country. FDR's act banned child labor and for the first time set a minimum wage and established a maximum work week. So at this point you might be thinking, well what does this have to do with disabled workers today? Well the FLSA is still in effect today. Obviously the minimum wage has gone up since 1938, but the act is still responsible for maintaining a federal minimum wage and several other things like overtime pay, record keeping, youth employment standards.

But if you were waiting for it, there's also a section of the FLSA that allows for a sub-minimum wage and it's section 14C. Today's section 14C allows employers to pay more than 130,000 persons with disabilities less than $7.25 an hour. Although it should be noted, not all of those workers are making cents per hour

some are making just under the minimum wage. And it's also important to note here that just because a person is disabled does not mean an employer has to pay that person less. 14 can only apply when a disability actually impairs a worker's productivity. And even at that an employer can always decide to pay a disabled worker the minimum wage or even more if they want to. But before we get into how hourly wage is decided, let's look at some of the specifics of 14C, starting with who is considered disabled. The Department of Labor has a fact sheet about 14C and this is how it qualifies a disability.

A worker who has disabilities for the job being performed is one who's earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury. Disabilities which may affect productive capacity include blindness, mental illness, developmental disabilities, cerebral palsy, alcoholism, and drug addiction. An employer can't just decide that because a person meets

that definition, they're going to start paying them less. There's actually a certification process required to pay someone a sub-minimum wage. An employer has to first complete these two worksheets and then submit them to the United States Department of Labor's Wage and Hour Division. And when submitting an application, employers have to calculate the productivity

of their disabled employees. That productivity level is then multiplied by the prevailing wage to determine the disabled person's wage. And prevailing wage basically means the typical hourly wage paid to the majority of workers performing a similar job in the area. And in fact, the Department of Labor

has online calculators available to help employers figure out exactly how to determine subminimum wage on their website. But for the sake of the video we're doing right now, here's kind of a simplified example of how those calculations could work. Let's say someone's job is to put stickers on a water bottle and for the sake of keeping things simple,

let's say a person without a disability can put 100 stickers on those water bottles in an hour. And that person is paid a minimum wage of $7.25 an hour because that's the typical pay for that job. Now, if you have a disabled person who can only do 25 stickers an hour, you have to do some math. So the disabled person's productivity is a quarter of the able-bodied person.

So that means we need to multiply the prevailing wage, $7.25, by the productivity, 25%, and that gives us a wage of about $1.81 an hour. And that lower wage is also called the commensurate wage, and the big thing about this wage is that there is no bottom limit to it. Which means, with everything in place right now, it's totally possible for a disabled worker to make pennies an hour. Once employers figure out the commensurate wages and submit their worksheets, the Department of Labor then reviews the information and decides whether or not

to grant the certification. As far as the numbers, there are more than 1,500 employers who have been issued a certification with another 342 employers being reviewed by the Department of Labor. But also big note here, even if an employer gets a certificate, which is good for two years, disabled employees have to be tested

at least every six months to see if their productivity has changed. And that's pretty much the basics of that law. But it does bring us to a few questions. One, where are these disabled workers employed? And two, what kind of jobs are they performing for these low wages? Well, the majority of disabled workers

receiving subminimum wage work at something usually referred to as a work center or a sheltered workshop, although the term sheltered workshop has a more negative connotation to it. But we'll get to that in a minute. Work centers are typically private non-profit state or local government entities that specifically look to hire disabled workers. The centers usually provide rehabilitation services, day treatment and training alongside employment opportunities for people with disabilities, and disabled workers hired at these places also work separately from people who don't have a disability.

And these disabled workers typically perform kind of these more menial jobs, like assembly, packing, or sorting. And the goal of most centers is to prepare and transition individuals to competitive employment. But in order for you to really understand what a work center does, I think it's really important for you to actually see one. So, that's why we sent Alyssa Shinicki from our team to visit Opportunity Village in Las Vegas, Nevada. Opportunity Village is a private nonprofit that defines itself as a community rehabilitation center that offers vocational training, art and life skill enrichment, and social recreation programs.

The nonprofit employs more than 1100 workers with disabilities and Opportunity Village has a 14C certificate from the Department of Labor. So 380 of the workers actually receive a sub-minimum wage for the work they do, but we should also mention that a sub-minimum wage isn't the only source of income for all of those 380 workers because some of them actually work multiple jobs for Opportunity Village. Now while my team was there, they got a tour of the facility from Opportunity Village's Director of Marketing, Marty Wood. And Marty showed us inside what they call

their Assembly Authority. It's basically a large warehouse where disabled workers assemble and package things for clients who outsource to Opportunity Village. A lot of Opportunity Village's clients are hotels and entertainment properties on the Vegas Strip, and disabled workers do a lot of different work for the Strip properties. Caesar's Entertainment, if you're ever at a Caesar's property throughout the entire country, and you make coffee in your room,

and you wanna put cream or sugar or whatever, that was packaged here at Opportunity Village. At the center, we saw a lot of workers putting together those coffee packets. We also saw people cutting and sewing together rags for cleaning crews and assembling toiletries Workers at the center also make VIP gift packages with chocolates and various other items Opportunity Village also has a contract with Cox Communications So some workers in the assembly authority were tasked with cleaning and disinfecting remotes for the company

We also spoke with some of the disabled workers there who wanted to share with us what they thought of Opportunity Village Opportunity Village is my home These people around me, they my hearts. Everybody here, they my hearts. You know what I'm saying? They my family here. We do a packet, in boxes. And then we put it in a cutting, cutting deco, keeping the lines together. And you like doing that? I like doing that. Do you have fun here?

Yes, I have. I've been here for 15 years. Marty here is an awesome guy. And all the staff here- No, you're the awesome one, you know that. Oh, yeah. But all the staff here are very, very awesome. And we also sat down with Tracey May Brown,

Director of Advocacy Board and Government Relations at Opportunity Village, so we could get a better idea of why she says she supports subminimum wage. And something that she told us several times throughout our visit is that Opportunity Village feels that individuals who work for them need a program like 14C in order to work at all. Opportunity Village serves people with intellectual

and developmental disabilities, much, many times at a very significant and debilitating level that would not have the opportunity to otherwise be engaged in employment without special minimum wages. Tracy also told us she believes that a place like Opportunity Village is better designed for disabled workers than a typical workplace in a lot of different ways. The important thing here is that wages that are paid under a 14C wage certificate are not, it's not an employer-employee relationship, right?

There is, people who are employed here that are earning 14C wages are not at risk's not an employer-employee relationship, right? There is, people who are employed here that are earning 14C wages are not at risk of being fired. There's no coaching and counseling or disciplinary action that's gonna go into your employee record. 911 is called pretty regularly because we do have a lot of medical instances that happen here, but it's part of our day and we know how to support that.

But centers like Opportunity Village have become really controversial over the years. And that's where the term sheltered workshop comes in. Disability advocates against work centers use the term sheltered workshops because they argue that segregating disabled workers prevents them from really learning how to work in their community.

Also arguing that work centers are just companies based entirely around exploiting people for cheap labor. And there have been cases where work centers have violated labor laws. In April of last year, the US Department of Labor found that a single non-profit, Rock River Valley Self Help Enterprises, exploited nearly 250 disabled workers in Illinois.

Reportedly, the company didn't conduct timed productivity tests and therefore cheated employees out of money they should have been owed. And that doesn't even hit on the full extent of the company's exploitation. This is a press release from the Department of Labor that details how Self Help violated the law beyond that. It reads, The investigation also revealed that the employer attempted to mislead and obstruct WHD's investigation by concealing relevant information from WHD during the investigation,

hiding work that the employer had not time-studied but had the workers perform. On some weekends, self-help unlawfully paid workers with gift cards instead of wages. And because of this, the organization had its 14C certification revoked after the investigation. And in fact, because of exploitive situations like self-help, several states have actually outlawed sub-minimum wage. Maryland, New Hampshire, and Alaska don't allow employers to pay sub-minimum wage. Vermont eliminated sheltered workshops back in 2003. But advocates for 14C, like Tracy, worry that eliminating sub-minimum wage federally means getting rid of thousands of jobs for the disabled. Truck month is on at Chevrolet. Get 0% financing for up to 72 months on a 2025 Silverado 1500 custom blackout or custom trail boss. With custom trail bosses available, class exclusive

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Vodka, soda, natural flavors. So, Vodka, soda, natural flavors. So what should we talk about? No sugar added? Neutral. Refreshingly simple. If the 14C certificates were to be phased out, providers would have to pay more if they paid people minimum wages. But honestly, that employment opportunity will go away for people with a very significant level of disability. They're the people that'll get hurt.

They won't have the opportunity to try employment at a rate that is appropriate for them. So that brings us to the question of well, what are the chances that 14C will end? Well, one of the most influential voices out there on this issue is the National Council on Disability or the NCD for short. And the NCD is a federal agency whose whole job is to make recommendations to the President of the United States and Congress on issues surrounding the disability community. And one of the suggestions council members have made to President Trump and Congress is to phase out 14-C. So he caught up with the NCD's chairman, Neil Romano, at a meeting for the National Council of Disability to see why they stand pretty firmly against sub-minimum wage.

What we're talking about is plain and simple, garden variety, old-fashioned discrimination against people. That's all it is. I have never heard anyone advocate for other minority groups to be paid less than minimum wage, which in and of itself screams at the fact that this is an antiquated model that needs to be eliminated.

I can just envision some member of Congress or some governor or someone saying, well, I think we should pay X minority group in America 25 cents an hour, a dollar an hour, until they learn how to work. It would, I mean, it would be totally unacceptable.

And another major reason why Mr. Romano and the NCD-114C phased out has to do with poverty levels and the disability community. If you're a person with a disability, you're twice as likely to be in poverty, and you're twice as likely to be unemployed. It is a virtual impossibility to be making 25, 50, 60 cents an hour and be able to pull yourself into the mainstream of the United States. People with disabilities who are making those kinds of wages, they can't even go to a Walmart and buy a pair of sneakers and take a friend to the movies with the wages they make for two weeks.

I think the American people, if they hear that, would be appalled. But, just like work centers, the NCD also has its critics. The majority of NCD council members are people with disabilities, but some minimum wage supporters say that would be appalled. But just like work centers, the NCD also has its critics. The majority of NCD council members are people with disabilities, but some minimum wage supporters say that's not good enough. And this is something that Tracy hit on when we asked her why she thinks NCD, a federal agency, would want to phase out 14C.

Because they're made up primarily of people who don't have that level of disability and they see the abuses that happen nationally. We don't wanna be a part of the abuse system. But everything we've talked about so far leaves us with this question. If we get rid of 14C, are there other options for people who are disabled and want to work?

And so here we spoke with two people who say they've developed a business model where a company can thrive and workers with disabilities can be paid more than minimum wage. My name is John, J-O-N-N. My name is, my last name is Cronin. My name is Cronin. C-R-O-N-I-N. I am Steve's Habitat Officer. And I am Mark X. Cronin, best known nowadays as John's Dad. But along with John, we're co-founders. Together they created a company called John's Crazy Socks

after John came to his father with the idea for the business. I want to start crazy socks. Why socks? Because I want crazy socks my entire life. Because I will always let me be me. The pair sells their socks online and this is the real deal. Last year they brought in $5.5 million in revenue.

And of immense note to this story, the two also employ 39 people, 23 of which are workers who are disabled. And all of John and Mark's employees, regardless of ability, make above minimum wage. And unlike work center employees, both disabled and able-bodied workers work together, which they said actually has several benefits for their company. The results we see are wonderful. Productivity is up. Morale is sky high. Retention is through the roof. Nobody leaves.

And it helps us recruit people. But John and Mark say they don't hire disabled workers because it's this act of kindness. They argue it's just smart business. We want to show that this social enterprise and a unified workplace is an important model that all businesses can follow. Certainly it's right for a lot of businesses. I want people to know this is not altruism, that it's good business. We have a growing labor shortage in this country,

and yet we have this vast untapped pool of labor. And other advocates for getting rid of subminimum wage have argued this as well, and they've pointed out numbers like this one. The World Bank previously estimated the global GDP loss from excluding disabled people from the workplace was between 1.71 trillion to 2.23 trillion annually. But also in speaking with Mark, he told us hiring disabled workers isn't all about making a profit. He sees improvements in the lives of his workers daily. For example, Mark told us about a man named Andrew, who he believes is an example of a man who would have made very little at a work center, but has thrived under the right working environment. When he was in school, he was on the autism spectrum. Teachers would approach him and he'd hide under the desk, because he didn't want to talk to anybody. They wouldn't talk.

They wouldn't do anything. Now he supervises other people. People come in, he greets them at the door. Now Mark and John told us also that their company may not be the right fit for everyone, but they strongly believe that work is out there for people with disabilities and that 14C and work centers should be eliminated. And they're not just speaking to us about it. The pair have actually spoken to Congress multiple times

to advocate for a change to the law and they feel that 14 will be eliminated in the next two years. Ultimately though, this story was really about bringing light to the topic of sub-minimum wage. Every single person we interviewed, whether they stood one way on the issue or another way, they agreed that sub-minimum wage is a story

that the media largely ignores. So hopefully today, thanks to this video, you come away with an understanding of the law, why it's so controversial, the different opinions on the matter, and then from that, of course, like I always do, I pass the question off to you. What are your thoughts on this? What are your thoughts on 14, the work centers, really anything we talked about today? I'm really interested to find out where you guys land on this one. But with that said, it brings us to that point where I say, if you like this video,

you like these deep dives, what we try and do every day on this one. But with that said, it brings us to that point where I say, if you like this video, you like these deep dives, what we try and do every day on this channel, let us know. Also, if you're new here, you want more of these daily dives in the Philip DeFranco Show, any and all of the goodness, be sure to hit subscribe, maybe even ring that bell to turn on notifications. Also, if you missed and you wanna catch up on the last Philip DeFranco Show,

the last Extra Morning News deep dive before this, you can click or tap right there to watch those. But with that said, of course, as always, I love your face, hope you have a fantastic day, and I'll see you later today on the brand new Philip DeFranco Show.