Source: iStock

Goodwill Industries, a tax-exempt non-profit that generates more than $5 billion in annual revenue and pays its executives six-figure and seven-figure salaries, pays some of its workers as little as $0.22 per hour. Why? Because they are disabled.

Section 14(c) of the Fair Labor Standard Act (FLSA) of 1938 grants employers the right to pay people with disabilities subminimum wages. What Goodwill is doing is completely legal. The company likes to tout that it provides jobs for thousands of people with disabilities, yet after years of criticism for its exploitation of these workers, the company still neglects to pay all of its workers minimum wage.

Instead, disabled employees’ wages reflect their productivity. In 2012, Sheila Leigland, a blind former Goodwill employee, told NBC she wasn’t paid fairly and felt exploited. She was earning $3.99 per hour until she returned to work after a knee injury to find her pay was reduced even more, so she decided to resign. “At $2.75 it would barely cover my cost of getting to work. I wouldn’t make any money,” she said.

Goodwill wants to see workers hang 100 garments in 32 minutes, and depending on how badly employees miss the mark, hourly wages are cut. Leigland says she and her husband, who is also blind and worked at Goodwill, should not have been hanging clothes to begin with because they can’t see the sizes. She explained to NBC that she is college-educated and would have been more successful at a different job, such as answering phones.

To be fair, Goodwill is not the only employer paying disabled workers subminimum wages. The law, unfortunately, still permits it, so it is happening nationwide. In a statement to NBC News, the Labor Department said that the FLSA provision “provides workers with disabilities the opportunity to be given meaningful work and receive an income.” But many disability advocates say that law needs to change and companies like Goodwill ought to know better.



Not every disabled Goodwill employee has a bad experience. Geraldine Hendricks said without the job, her son, who has Down syndrome, would “just be left at home without anything to do.” Some disabled workers live on Social Security, so their experience at Goodwill might bring purpose to their lives, rather than a reasonable income. Goodwill even runs a vocational training facility for the disabled to help teach skills to the many disabled Americans who are unemployed.

Goodwill’s successes, of which there are surely many, should not excuse its failures. After all, why can’t a profitable employer like Goodwill afford to give workers both a sense of purpose and the minimum wage? Despite questions like this, the company stands by its policies. Jim Gibbons, the CEO and President of Goodwill Industries, insists the company provides jobs to those who would otherwise have “no job at all,” but this excuse only patronizes the disabled with a resounding “take what you can get.”

The organization’s critics have made noise about the issue over the past few years, sparking protests, petitions, and media coverage. More than 170,000 people have signed a Change.org petition demanding Goodwill pay its disabled workers a fair wage. The kicker for many advocates is the huge amount of money Goodwill spends on executive salaries. According to a 2013 investigation by Watchdog.org, Goodwill of Southern California paid more than $1.1 million in total compensation to its CEO in 2011.

Since Leigland first came forward to share her experience, the cause has gained at least some momentum. In February 2014, disabilities rights groups succeeded in pressuring the White House to include disabled workers in the $10.10 per hour federal contractor minimum wage. Many argue, however, it was a merely symbolic victory since it directly impacted relatively few workers.

A bill called the Transitioning to Integrated and Meaningful Employment (TIME) Act, which proposes to phase out special wage certificates, was introduced to Congress in January 2015. The bill wasn’t given a great prognosis by GovTrack.us, estimating a 3% chance of passage, but the bill is still alive, as it was referred to the Subcommittee on Workforce Protections in April 2015. Seemingly, with enough pressure, it could even gain traction.

The problem with the subminimum wage law is this: While it may have made sense when it was first instituted in 1938, it certainly doesn’t make sense now. When the 14(c) exemption was passed, it required that disabled employees in competitive industries earn at least 75% of the minimum wage. In 1966, the requirement dropped to 50%. Finally, in 1986 the floor was removed altogether, paving the way for people with disabilities to literally work for pennies, completely legally.

More from Business Cheat Sheet: