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Special Sub-minimum Wages

Reference Number: MTAS-1514
Reviewed Date: 09/23/2021

The FLSA allows sub-minimum wages for learners, student-learners, messengers, apprentices, disabled workers, patient workers and full-time students of institutes of higher learning. Special certificates must be obtained from the Wage and Hour Division for workers to be employed at sub-minimum rates (except for workers qualifying for the youth “opportunity wage”). Employers may not displace other employees to hire workers at the lower rate of pay or make partial displacements by reducing hours, wages or employment benefits. 29 C.F.R. § 520.408(d).

“Employers are allowed to pay employees less than 20 years of age an ‘opportunity’ wage of $4.25 per hour for the first 90 days of their employment. Similarly, hiring an employee less than 20 years of age and then discharging them at the end of the 90-day period is illegal. Approval/certificates of the ‘opportunity wage’ are not issued if lower wage rates limit full-time job opportunities for others in the work place.” 29 U.S.C. § 206(g); 29 C.F.R. §§ 520.201 – 520.503 also provide the procedures to apply for special certification. 29 C.F.R. § 520.506 provides information about how to comply with the terms of the certificate, and 29 C.F.R. § 520.508 provides record keeping compliance information.

“Students in institutions of higher education may be employed at a sub-minimum wage. If the appropriate certificate procedures are followed and regulatory requirements are met, then full-time students of institutions of higher education may be paid no less than 85 percent of the federal minimum wage for work they perform for their school.” 29 C.F.R. § 519.11. “Full-time students at any educational level (but at least 14 years of age) employed by retail or service establishments, or in agriculture, may be paid wages no less than 85 percent of the minimum wage.” 29 C.F.R. § 519.2(a). “Additionally, student-learners who receive instruction at an accredited school, college or university and work part-time in a bona-fide vocational training program may be paid no less than 75 percent of the minimum wage.” 29 C.F.R. Part 520, Subpart E.

Special certificates authorizing the employment of apprentices in skilled trades at sub-minimum wages may also be requested. Section 29 C.F.R. § 520.300 defines a “skilled trade” as one with the following characteristics:

  1. It is customarily learned in a practical way through a structured, systematic program of on-the-job supervised training
  2. It is clearly identified and commonly recognized throughout an industry
  3. It involves manual, mechanical or technical skills and knowledge which require a minimum of 2,000 hours of on-the-job work experience
  4. It requires related instruction to supplement the on-the-job training
  5. It is not merely part of an apprentice occupation and does not fall into any of the following categories: marketing; sales administration; administrative support; executive and managerial; professional and semi-professional occupations (occupations for which entrance requirements customarily include education of college level)

A special sub-minimum wage also may be paid to learners. “A learner is a worker ‘who is being trained’ for an occupation, which is not customarily recognized as an apprentice trade, for which skill, dexterity and judgment must be learned and who, when initially employed produces little or nothing of value.” 29 C.F.R. § 520.300. “Learners must be paid no less than 95 percent of the minimum wage (special rules apply for piece rate wages). An employee cannot, however, be considered a learner once he or she has acquired 240 hours of job-related and/or vocational training with the same employer or training facility during the past three years. Employers must also apply to DOL for learners’ certificates prior to employing learners at the sub-minimum wage rate.” 29 C.F.R. §§ 520.201 – 520.503.

29 C.F.R. Part 525 provides greater flexibility in establishing the hourly wages paid to disabled workers in sheltered workshops. “A worker with a disability" is one whose earning or productive capacity is impaired by age, physical or mental deficiency or injury.” 29 C.F.R. § 525.3(d). “The regulations stipulate that certificates will be issued only to those individuals whose earning capacity is impaired to the extent that the individual is unable to earn at least the minimum wage.” 29 C.F.R. § 525.12. No fixed percentage is set. The rate is subject to DOL approval and may be appealed by the worker.