Back Wage Liabilities and the Enforcement of FLSA Section 14(c)

If violations of FLSA Section 14(c), or any other section of the FLSA, result in the underpayment of wages, the Wage and Hour Division will generally supervise the restoration of back wages and work with the employer to ensure future compliance with all applicable labor standards. This is true whether or not the employees have disabilities and receive special minimum wages (SMWs).

The Wage and Hour Division realizes that a lump sum payment of back wages could, in certain cases, render workers with disabilities temporarily ineligible to receive certain financial or medical services that are crucial to the quality of their lives. Accordingly, the Wage and Hour Division is committed to working with employers when necessary to spread the payment of back wages over a sufficient number of months to ensure employees retain such eligibility.

Certificates authorizing the payment of SMWs to workers with disabilities cannot be issued retroactively. If a facility does not have a certificate but has paid workers who have disabilities wage rates below the minimum wage based on their impaired productivity, those workers are due the difference between the wage rate they received and the full minimum wage required by FLSA for every hour of covered employment. In the case of work subject to the McNamara-O'Hara Service Contract Act (SCA), workers must receive the difference between the wage paid and the full hourly rate reflected on the wage determination for the classification of work performed for every hour of covered work.

The Wage and Hour Division can request that funds be withheld from the prime contractor on a contract subject to the provisions of the SCA or the Walsh-Healey Public Contracts Act (PCA) to cover back wages due workers who performed on such contracts.

If it has been established that an employee is jointly employed by two or more employers (that is, employment by one employer is not completely disassociated from employment by the other employer(s)), all of the employee’s work for the joint employers during the workweek is considered to be one employment for purposes of the FLSA. Such joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the FLSA with respect to the entire employment for the particular workweek.

Joint employment principles may also apply to School-to-Work programs and community-based rehabilitation agencies. Where the school or agency takes responsibility for wage payments, it will also be primarily responsible for any back wages due. Should the school or agency refuse or fail to pay the back wages, the other joint employer(s) will be held responsible.

Because many facilities using the FLSA Section 14(c) exemption operate under tight budgetary constraints, the payment of large amounts of back wages may require use of an installment plan to protect the facility’s solvency. Installment plans shall normally include both the payment of interest to the underpaid employees and an acceleration clause requiring the full and immediate payment of all unpaid back wages in the event the employer fails to comply with the plan.

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FLSA Section 14(c) Advisor | Wage and Hour Division