Finance News & Insights

When is it OK to pay less than minimum wage? DOL offers guidance

Recently, it’s been the upcoming change to the FLSA’s overtime rules that’s gotten all the wage-related media attention.  

But the Dept. of Labor (DOL) recently announced new guidance for another group of workers: those receiving subminimum wages.

Those new requirements kicked in on July 22, 2016, so you’ll want to work quickly to make sure your company’s in compliance.

There are two new rules from the DOL that you should be aware of:

1. Protection for youth

Rule #1: Before paying a subminimum wage to a disabled individual 24 years old or younger, three criteria must be met.

The individual should receive:

  • transition services
  • vocational rehabilitation, and
  • career counseling services.

Your Designated State Unit (DSU) – often the state Vocational Rehabilitation agency – is responsible for providing the services.

The DSU will provide proof of the service to the youth, and the youth needs to provide you with that documentation before you pay them a subminimum wage.

Note: This latest guidance applies only to youths hired on or after July 22, 2016.

2. Ongoing training

Rule #2: Workers being paid a subminimum wage must receive the training from Rule #1 every six months in their first year of employment, and be trained annually after that.

Your company is responsible for providing information to the workers about local self-advocacy, self-determination and peer mentoring training opportunities.

This training may also be provided by federal or state programs or other sources, but not by any group that has a financial interest in the individual’s employment outcome.

Meanwhile, the DSU is responsible for providing career counseling and referrals.

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