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SB 639 – Phases Out The Subminimum Wage Certificate Program
Under existing law, the Division of Labor Standards Enforcement (DLSE) is permitted to issue a person who is mentally or physically disabled, or both, a special license authorizing employers to hire such person for one year or less, at a wage below the state-wide minimum wage. The DLSE is required to fix a special minimum wage for the licensee, which may be renewed on a yearly basis. This law was originally enacted due to fears that people with disabilities would be disadvantaged if employers had to pay comparable wages to employees with and without disabilities.
Senate Bill 639 (SB 639) was enacted due to Legislative findings that despite the existence of these licenses, and despite people with disabilities often earning significantly less than minimum wage, unemployment rates among people with disabilities remains disproportionately high. For this reason, taking the lead of a number of other states, SB 639 phases out the subminimum wage certificate program, and prohibits new special licenses from being issued after January 1, 2022. Under SB 639, a special license can only be renewed for existing license-holders who meet benchmarks described in a multiyear phase out plan, to be developed by the State Council on Developmental Disabilities with input from various stakeholder organizations. The bill aims to ensure any disabled employee is paid no less than minimum wage by January 1, 2025.
In addition, SB 639 adds a sunset provision to Section 1191.5 of the Labor Code, which currently authorizes the DLSE to issue a special license to a nonprofit organization such as a sheltered workshop or rehabilitation facility to allow employment of qualified disabled employees at subminimum wage without requiring individual licenses of those employees. Under SB 639, Section 1191.5 will be repealed as of January 1, 2025.
(SB 639 amends Section 1191 of, and amends and repeals Section 1191.5 of the Labor Code.)