California has enacted legislation (Senate Bill 639) that will phase out a provision that allows employers to pay a subminimum wage to employees with disabilities.
Background:
Under existing law, the state’s Industrial Welfare Commission may issue licenses to employees with physical or mental disabilities that authorize their employers to pay less than minimum wage. This is known as the state’s subminimum wage program. The licenses may be renewed on a yearly basis.
Senate Bill 639:
Under Senate Bill 639, no new licenses for the subminimum wage program will be issued beginning January 1, 2022. For existing license holders, a license will only be renewed if certain benchmarks are met.
Senate Bill 639 directs the State Council on Developmental Disabilities to develop a multiyear phaseout plan for the subminimum wage program. The plan must, among other things, entitle any employee with a disability to receive the full minimum wage no later than January 1, 2025.
Compliance Recommendations:
California employers should ensure compliance with applicable minimum wage requirements. Please contact your dedicated service professional with any questions.