US Department of Labor revokes Buckhannon nonprofit’s federal wage exemption for improperly paying workers with disabilities

BUCKHANNON, W.Va. – The U.S. Department of Labor’s Wage and Hour Division has revoked a West Virginia nonprofit’s ability to pay less than the current federal minimum wage to workers with disabilities after federal investigations found the organization violated provisions of the Fair Labor Standards Act and McNamara-O’Hara Service Contract Act.

The division found that Buckhannon-Upshur Work Adjustment Center – a non-profit community rehabilitation program – violated the FLSA’s section 14(c) when it failed to pay a valid subminimum wage to 12 workers with disabilities employed to do light assembly production.

The company paid 12 workers $43,370 in back wages for this violation. Additional FLSA section 14(c) violations included failure to perform annual prevailing wage surveys, and failure to conduct required time studies. Buckhannon-Upshur Work Adjustment Center also paid a civil money penalty for willfully violating the FLSA.

The investigation also revealed that the employer submitted falsified and/or inaccurate time studies and prevailing wage surveys to obtain 14(c) certification from the division. This certification allows the employer to pay wages less than the federal minimum wage to workers with disabilities when their disabilities impair their productive capacities for the work they perform. This action, in conjunction with the company’s history of violations, led the division to revoke the employer’s current and previous section 14(c) certificates for the period of Sept. 1, 2012, through Aug. 31, 2016. 

The division also found the center owed five workers an additional $4,795.84 due to SCA violations. The employer failed to adjust the prevailing wage and health and welfare benefit rates on the contract renewal date, as required, and illegally paid a subminimum wage to a worker with a disability.

“This investigation is part of an ongoing strategic enforcement initiative designed to protect workers with disabilities from exploitation. The back wages received by these workers, and the money they will earn by being paid legally, will have a significant positive impact on their lives,” said John DuMont, director of the Wage and Hour Division’s Pittsburgh District Office. “The resolution of this case should send a strong message – we take our mission very seriously, and will not hesitate to use every enforcement tool available, including revocation of certificates, to ensure that employers do not exploit our most vulnerable workers. Failing to comply with the law is not acceptable.”

Buckhannon-Upshur agreed to the following:

• Comply with all applicable provisions of the FLSA in the future.
• Not to contest the revocation of the current or prior subminimum wage certificates.
• Pay all back wages due.
• Require staff to attend 14(c) training within the next year.
• Use the division’s online section 14(c) calculators for their next two full certificate applications, which will be required prior to any future certifications being granted. 
• Educate their organization through use of the department’s online presentations.
• Take actions needed to protect employees’ eligibility for public benefits, including providing employees with benefits planning information and counseling.

The division’s Pittsburgh District Office conducted the investigation.

In general, the FLSA requires that covered, non-exempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rate of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per workweek. Section 14(c) of the act allows employers, after receiving a certificate of authorization from the division, to pay wages less than the federal minimum wage to workers with disabilities when their disabilities impair their productive capacities for the work being performed.

The division has been pursuing strategies to strengthen compliance with section 14(c) and maximize the impact of its benefits for workers with disabilities, their employers, families and communities. These strategies include using all available enforcement tools to remedy and deter future violations; providing new compliance assistance materials and tools; and hosting compliance conferences for employers, community rehabilitation programs, advocates, workers and other interested parties.

Information about subminimum wages paid to workers with disabilities can be found at http://www.dol.gov/whd/regs/compliance/whdfs39.pdf.

For more information about the FLSA and other federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd/.