Wage and Labor Conditions in U.S. Sheltered Workshops

Author: Thomas C. Weiss
Published: 2014/03/04 - Updated: 2025/02/03
Publication Type: Informative
Topic: Editorials and Op-eds - Publications List

Page Content: Synopsis - Introduction - Main

Synopsis: This article provides critical insights into the labor conditions and wage practices within sheltered workshops, focusing on how these environments affect employees with disabilities. It discusses the exemptions from compulsory unemployment compensation under the Internal Revenue Code, the varying state-level legislative actions regarding coverage, and raises questions about whether such workshops truly offer rehabilitative or remunerative employment. The content is beneficial for people with disabilities, seniors, and their advocates by shedding light on the often overlooked economic and social implications of these work settings, potentially guiding policy discussions, personal employment choices, and advocacy efforts towards more equitable treatment and opportunities for individuals with disabilities - Disabled World (DW).

Introduction

The labor conditions in sheltered workshops are interesting, to say the least. State employees, for example, are generally excluded from compulsory cover-age of unemployment compensation under the Internal Revenue Code of 1954. The Code also exempts charitable organizations, including privately operated workshops, from compulsory coverage.

Main Item

States such as California, Oregon, Washington and Wisconsin have all taken legislative and administrative actions to extend the coverage of unemployment compensation to some or all of the workers in their state-operated sheltered workshops. In regards to privately operated workshops, the state of Hawaii is the only one of thirty-two states with sheltered workshops to take legislative action changing their status. Hawaii did this by dropping the exemptions of charitable organizations from unemployment compensation coverage. In other words - the vast majority of employees in sheltered workshops, both public and private across America, are without the protection of unemployment compensation laws.

Employees of sheltered workshops face another deprivation.

The Labor Management Relations Act excludes the states and their political subdivisions from the definition of employer for purposes of collective bargaining. A ruling of the National Labor Relations Board withheld the collective bargaining provisions of the Act from privately operated sheltered workshops. The ruling was handed down in the case of, 'Sheltered Workshops of San Diego, Inc. vs. United Association of Handicapped.'

In a majority decision of 3 to 2, the National Labor Relations Board refused to assert jurisdiction. The ground taken was that the Workshop's purposes are directed entirely toward rehabilitation of unemployable persons and that its commercial activities should be viewed only as a means to that end. The main arguments against the ruling were stated by the dissenting opinion of the 2 minority members of the National Labor Relations Board.

'Why then does the majority find that it would not effectuate the purposes of the Act to assert jurisdiction here?'

It does so because the sheltered workshop's rehabilitation work benefits the community as a whole. The members rejected the corollary that a non-profit organization engaging in socially beneficial activities therefore owes its employees less than other employers in America do. The right of employees to select a representative and bargain with their employer over work conditions and grievances is something that should not be lightly disregarded. The complete program of sheltered workshops, both rehabilitative and commercial, need to be balanced. Workers with disabilities and their rights are equally important.

The worst deprivation employees of sheltered workshops have had to endure is the exemption of these workshops from the minimum wage provisions of the Fair Labor Standards Act. Recent legislation may change this for some workers; the future is unfolding as this article is being presented. Considering that people with disabilities in general have additional expenses related to the forms of disabilities they experience - it is vitally important for these workers to earn at least minimum wage.

Considerations such as these led a special subcommittee of the House Committee on Ways and Means reporting on the Social Security Program of Disability Insurance to question whether employment in sheltered workshops should be regarded as, 'substantial gainful activity.' The subcommittee concluded that wage conditions in the workshops were generally so deplorable that it should be a rare case in which an employee of a sheltered workshop might be considered to be engaged in substantial gainful activity and held ineligible for disability insurance payments. With few exceptions, the employees of sheltered workshops, both publicly and privately operated:

• Do not have the benefits of workmen's compensation
• Do not have the benefits of unemployment compensation
• Are exempted from the minimum wage guarantees of the Fair Labor Standards Act
• Do not have the privileges of collective bargaining under the National Labor Relations Act
• Do not have the benefits of Old Age Survivors and Disability Insurance under the Social Security Program

In such circumstances of enforced insecurity, poverty and discriminatory withholding of privileges and denial of rights, can it be contended that sheltered workshops rehabilitate or supply remunerative employment for workers with disabilities?

Of the workshops holding certificates of exemption from minimum wage laws, several serve people who are blind. The Department of Labor requires that every worker on piece rates be paid the same wage as workers in adjacent private industry for the same work. The standard is not very valuable since a lot of the work done in these shops is not carried on by any appreciable segment of private industry. The standard is also not enforced by the Labor Department.

Author Credentials: Thomas C. Weiss is a researcher and editor for Disabled World. Thomas attended college and university courses earning a Masters, Bachelors and two Associate degrees, as well as pursing Disability Studies. As a CNA Thomas has providing care for people with all forms of disabilities. Explore Thomas' complete biography for comprehensive insights into his background, expertise, and accomplishments.