Some disabled workers in the U.S. make pennies per hour. It’s legal.

Tens of thousands of disabled people in the United States are paid less than the federal minimum wage - with some workers making as little as 25 cents per hour.

These workers, most of whom have intellectual and developmental disabilities, are part of an arcane government program that is supposed to prepare them for higher-paying jobs in the community. But a Washington Post investigation has found that many disabled workers are paid low wages for years under a tangled bureaucracy that lacks accountability and oversight.

A Post analysis of Labor Department records showed that at least 38% of current employers in the program have violated compensation and other rules, and cheated disabled workers out of millions in pay.

Jaime Muniz, 33, who has autism, was recently paid about $1.22 for every hour he spent at Pathways to Independence in Kearny, N.J., the facility where he’s been working for 11 years. His tasks include sorting wire clothing hangers and unloading heavy boxes.

“I try to do better, and I’m not moving on,” Muniz said. “I don’t really know why.”

About 40,000 disabled people like Muniz work under the program, which was enacted in 1938 to provide jobs for injured veterans. Today, nearly 800 facilities in 37 states participate in what has become known as “14(c)” - a reference to Section 14(c) of the Fair Labor Standards Act, which allows employers to apply for a certificate and legally pay disabled workers less than the $7.25 federal minimum wage.

The Post analyzed 14 years of federal inspection data, examined the work practices of 228 certificate holders, and spoke with nearly 60 current and former workers and staff members. The investigation found that:

- Federal rules state that 14(c) employers must help disabled workers move on to higher-paying jobs, but many never leave the program. In 2022, just 0.5% of 14(c) workers were referred by their employers to vocational rehabilitation services, the main pathway for them to leave the program, according to data from the Rehabilitation Services Administration for 35 state agencies.

- When states have ended 14(c) subminimum wage programs, overall employment of adults with cognitive disabilities has increased. A Post analysis of eight states that ended their programs before 2022 showed that employment rates for adults with cognitive disabilities increased by at least 14% after state programs were canceled, when adjusted for overall employment rate growth.

- About 1 in 3 current 14(c) employers have failed to correctly pay wages, but that is probably an undercount because few are investigated each year. Between October 2009 and September 2023, the Labor Department ordered employers to pay $20.2 million in back wages for pay and other violations.

“Let’s be realistic: There’s no ladder for graduation out of these facilities, and there’s no state accountability enforcement mechanism,” said John Tschida, executive director of the Association of University Centers on Disabilities.

According to a Labor Department spokesperson, The Post’s findings were consistent with the department’s enforcement data, and the agency’s enforcement efforts are focused on protecting “this vulnerable workforce.”

At Pathways, where Muniz works, no workers have transitioned out of the program since 2020, said Alvin Cox, the executive director of the facility.

“Community integrated employment is not for everyone, but everyone should have the opportunity to try and experience the dignity of work,” Cox said. “These individuals need support and guidance to do the work that they’re doing.”

Growing scrutiny of the program

Businesses including Honda and other private companies contract with 14(c) facilities - which are sometimes called “sheltered workshops” - to complete what are often repetitive tasks such as packaging, assembly, manufacturing or janitorial work. Disabled workers at these workshops are typically segregated from non-disabled workers.

In a statement, Honda said they use UCO Industries in Marysville, Ohio, to prepare vehicle owner manuals and other tasks because they consider it a “positive effort to promote employment opportunities and help individuals with disabilities gain independence in life.”

Oversight of different aspects of the 14(c) program is fragmented between four federal agencies - the departments of Labor, Education, Justice, and Health and Human Services. However, no federal agency is in charge of making sure individuals move from 14(c) programs into community employment. A stream of government reports over three decades have called for additional oversight of the program or ending it entirely. In a 2020 report, the U.S. Commission on Civil Rights wrote that the 14(c) system was “rife with abuse,” with respect to wages, and found that workers were not getting the support they needed to move on into community jobs.

A 2023 report from the Government Accountability Office surveyed wage data from 2019 to 2021 and found that workers were typically making about $3.50 per hour, compared with a federal minimum wage of $7.25. About 12% made hourly wages of less than a dollar.

Only about 2% of workers fully transitioned out of 14(c) jobs into a competitive, integrated job, according to August 2021 data from the same agency.

In response to increasing scrutiny, 13 states and D.C. have phased out the use of 14(c) certificates, and four more - California, Nevada, South Carolina and Virginia - are ending it.

When states shut down their 14(c) programs, a surprising shift has occurred, with employment rates increasing for adults with cognitive disabilities. In Vermont, for instance, the employment rate for adults with cognitive disabilities has increased by 38%, relative to overall employment gains, since the state ended its program in 2016. In 2022, the employment rate for adults 18 to 64 with cognitive disabilities in Vermont was nearly 50%, up from about 30% when the state’s 14(c) program was operating, according to census data from the American Community Survey.

The employment shift in Vermont and elsewhere when 14(c) programs are phased out reflects research that has shown people who work in community jobs typically fare better, gaining more skills and independence, than those in segregated or nonwork settings.

“We’re not very good at contriving realistic learning situations and environments that mimic what a real work environment is like,” said Josh Taylor, an assistant professor of special education at Washington State University who researches employment issues for people with disabilities.

The Labor Department has submitted a rule for review by the White House Office of Management and Budget that could phase out the entire program in coming years, The Post has learned. But the proposal is expected to face significant legal and political battles.

Some of the staunchest supporters of the program are family members of the disabled workers.

Rick Wilson, a single parent caregiver for his 40-year-old son Christopher, who has Down syndrome, said he had “given up” on moving Christopher to an integrated job in the community after his vocational counselor determined there wasn’t paid work suitable for him outside of the 14(c) system.

In 2007, Christopher worked a minimum wage job in the community one or two hours a week at a dental office stuffing envelopes. He worked in a 14(c) program the rest of the week. But after nearly five years, the dental office decided to contract out their administrative work and let him go. The pair began the process to move to integrated employment again in 2014, but after struggling in a trial job, the state’s vocational rehabilitation agency suggested to Christopher a volunteer job delivering mail at a hospital.

“There was no way he could have done this job by himself, so I had to volunteer, too,” Wilson said. “It’s very tough for the vocational counselors to find work for some of these people. There just aren’t the type of jobs out there that match a lot of these individuals.”

Christopher is now employed at Kandu Industries, a 14(c) certificate holder, in Janesville, Wis., where his work includes arranging ties and tags into plastic bags intended for hazmat kits. For his piece rate work, he earns about $70 every two weeks.

Christopher said in an interview that he was happy with his current employment and the assistance he receives in the workshop. “I do stuff that my supervisors tell me, and the people are nice there,” he said.

Workers stay in the program for years

Tillie Sosnowski, 74, has worked several 14(c) jobs for more than three decades. For nearly seven years, she has worked at the Eisenhower Center in Milwaukee. She spends several hours a day packaging chocolate sauce bottle pumps for Hollander Chocolate Co. of Port Washington, Wis., into boxes or folding pieces of cardboard. In a recent paycheck, she earned $4.21 per hour and less than $100 for the month.

Sosnowski, who has an intellectual disability and mobility issues, said she once asked whether she could work in a hotel but decided against it after discussing it with her home caregiver. “I would like to do more work and make more money,” Sosnowski said.

Doug Podzilni, president and co-founder of Hollander, said its objective in working with Eisenhower is not to save money. “Our goal is to give back to the community by being a steady and reliable partner for the center,” he said. He added that the company tries to provide “just enough work to keep the clients engaged, never pushing for greater productivity or higher output.”

David Ordan, chief executive of the Eisenhower Center, said that during counseling meetings every six months, Sosnowski and other workers have “ample opportunity” to speak up about their progress and employment goals.

He said Eisenhower Center provides workers with support, but the choice to move on to community jobs is theirs. “Many clients’ disabilities are significant,” he wrote in an email. “Unfortunately, this means that not all options are open to them as a realistic employment path.”

A mandate to help workers find jobs

Helping 14(c) workers transition to jobs in the community is a federal mandate. The Workforce Innovation and Opportunity Act requires all 14(c) workers to receive annual job counseling provided by the state. And many employers in the program receive Medicaid funds on the condition that they provide prevocational job training designed to move workers into better-paying jobs that match their interests in the community.

In 2021, 26 states spent $431 million taxpayer dollars on work services in 14(c) facilities, and 88% of that funding came from Medicaid, according to data shared with The Post from UMass Boston’s Institute for Community Inclusion. (Not all 37 states in the program report this data.)

In 2022, Eisenhower Center received roughly $1.4 million in Medicaid funding - about 80% of its revenue. Eisenhower Center’s Ordan said it is trying to respond to what the government wants in terms of counseling and job training services, but it doesn’t track how many people have transitioned to community jobs.

“Our mandate is that I get them to the front door of an employer, and then there’s other state agencies that can help them get the actual job,” Ordan said. He added that the center has been regularly audited and is in compliance with Medicaid rules.

Sometimes, there’s not enough contract work to keep the 14(c) workers busy. At the Eisenhower Center, employees work for only a few hours each day and spend the rest of the day coloring, watching TV, playing games or doing math worksheets.

Ordan said that workers are given choices between many different “enrichment activities,” beyond those that The Post observed on a two-day visit. He added that in addition to life enrichment, training and socialization, the center offers “daily living activities” and “personal care assistance.”

When they run out of work at Avenues of PA, a 14(c) program in Pottsville, Pa., workers switch to doing simulated tasks - such as putting colored paper strips into a bag on a pretend assembly line.

Although supporters say the jobs help workers learn “soft skills” such as arriving at work on time and learning to get along with co-workers, critics say the type of work employees are often doing doesn’t help them build the skills needed for higher-paying jobs.

“The likelihood of you going out and getting a job where you’re assembling cardboard boxes is pretty low,” said Jean Winsor, a senior research associate and project manager at UMass Boston’s Institute for Community Inclusion. “Those jobs do not exist en masse in our economy. So why would you be training someone to do that?”

But supporters of the program say the goal for many of the workers isn’t a community job. Instead, they view the workshops as a safe space that gives workers with disabilities a level of support and comfort that they may not be able to find elsewhere.

Kim Coogan, 55, a Pottsville, Pa., worker who has a learning and intellectual disability, has worked for 37 years at Avenues, where she weighs bags of sand for ashtrays. She said she likes her job and goes to work for five and a half hours each weekday. For each hour she spends at Avenues, she earns between $0.31 and $1.82, typically earning between $17 and $100 every two weeks.

Her brother, Dennis Coogan, 67, of Pottsville, said the job offers her safety and continuity.

Federal data shows that Avenues has no documented wage violations, but the Labor Department hasn’t inspected the facility since 2015.

One or two Avenues workers typically transition out of the 14(c) program to community jobs each year, although in 2023, none of its 94 disabled workers moved on, executive director Peter Keitsock said. “Avenues gives all individuals the choice as to pursue competitive integrated employment,” he said.

A history of wage violations

Even though 14(c) programs allow employers to pay very low wages, the vast majority of violations discovered by the Labor Department - 88% - involve paying workers incorrectly. Employers owed workers more than $2 million in back pay for the 2023 fiscal year, according to the department.

But these violations are probably an undercount. Many current employers haven’t been investigated for years, The Post’s investigation found. In 2023, only 10% were investigated. When the department does investigate a 14(c) employer, they tend to find violations: 88% of investigations in 2023 found violations.

A Labor Department spokesman said it “investigates a greater percentage of employers with Section 14(c) certificates than in any other program area.” But the agency said its wage and hour division has fewer than 700 investigators to enforce federal labor laws in 11 million workplaces.

Consequences for repeat violations are minimal. A Post analysis found that 77 current employers - about 10% of certificate holders - violated the program’s labor laws two or more times between 2009 and 2023.

Since the program began, the Labor Department has revoked certificates for only six employers due to violations. The agency said most employers who violate the rules haven’t lost their certification because the law requires they be given the chance to “correct errors and demonstrate compliant workplace practices.”

The department investigated Eisenhower Center from 2020 to 2022 and found 132 pay violations involving 113 workers, leading to Eisenhower owing workers more than $12,300 in back wages.

A Department of Labor spokesperson said that the center violated laws related to counseling requirements and wage calculations.

The center’s chief executive, Ordan, said it was charged with violations for canceling workers’ career counseling sessions during the pandemic.

Legal action from workers in 14(c) programs is rare, in part because of potential costs and difficulties navigating the system.

“Even when it comes to enforcing their rights, people with disabilities are at a disadvantage,” said Kevin Docherty, a partner at Brown Goldstein & Levy in Baltimore, who has represented 14(c) workers in the past.

Still hoping for a new job

At Pathways, where Muniz sorts clothes hangers, three federal investigations found the company had incorrectly calculated wages for 142 workers from 2011 to 2023.

The Labor Department said Pathway’s violations involved incorrect wage calculations and failures to meet annual counseling requirements.

Cox, the executive director, said the pay violations were due to inadvertent miscalculations or “rounding errors” by staff and were “immediately rectified.”

Muniz’s mother, Yamile Corrales, 53, said that when her son joined the program a decade ago, she was told by a state worker that the 14(c) work program would train her son for a higher-paying job.

“I felt relieved because I felt that he was in a safe environment,” she said. “He loved going there. He looked forward to it, and he found himself useful.”

Muniz has had brief opportunities for other jobs. Earlier this year, he temporarily filled in as a front desk receptionist at Pathways and was paid the minimum wage in New Jersey, which is around $15 an hour. But once the staff member came back to work, Muniz returned to sorting hangers for a few dollars an hour. Cox said the short stint Muniz spent as a receptionist was a training and learning opportunity.

Muniz said he dreams of being a bartender. He has memorized drink recipes and regularly posts videos of cocktails he makes on his TikTok. He also makes coffee for the non-disabled staff.

“I need to work in the community and not in Pathways,” Muniz said. “I want to move on, but I need help.”