News Story

Federal Rules Would Harm Work Centers for the Disabled

Proposed regulations would cause lower employment for those with special needs

Work centers for the disabled provide a useful service for businesses while allowing individuals with special needs to gain work skills and autonomy. But new federal regulations would make life difficult for these charitable operations, potentially causing some to close their doors.

These centers have historically been exempt from minimum wage laws, but proposed rules from the federal Labor Department would end the exemption. Regulators are also considering mandating "integrated work settings," which means they would have to employ more higher-priced, nondisabled workers to work with those who are disabled.

For many centers, that means they would have to fire disabled workers to hire more regular staff.

"That just doesn't make sense to me," said Charles Markey, the president of the Arnold Center in Midland.

For now, people with work challenges such as cognitive disabilities will continue to have employment options under an executive order signed by Michigan Lt. Gov. Brian Calley. The order has the effect of insulating rehabilitation work centers from attempts to impose wage and hour regulations that are not appropriate to charitable efforts to provide gainful employment for disabled individuals.

Todd Culver, the executive director of MARO, an organization that represents work centers, applauded the order, known as “Employment First in Michigan,” because it includes language that his organization supports.

“(It recognizes) a competitive employment within an integrated setting as the optimal outcome for persons with disabilities, and honors the choices and goals of individuals along their path to that optimal outcome,” Culver said.

The executive order is based on the 2013 report by the Michigan Mental Health and Wellness Commission, in which his group was involved. Originally, the report did not include choice, which would have made it difficult for work centers to stay in business.

The Arnold Center is one such place. The nonprofit organization provides jobs for the disabled by contracting with companies for a variety of tasks such as recycling and kit assembly.

“We look at it as a choice for the disabled, an option in a range of things if they can’t find community integrated work at minimum wage or better and they have low productivity; they can come here and have the feeling of work,” Markey said.

He said that to get the contract work and to be able to stay in business, the Arnold Center has to have wage flexibility. Workers are paid a piece rate based on federal formulas and their checks vary based on productivity.

“If we don’t make enough money to cover our expenses and put some money into depreciation and new programming, we’ll go out of business,” said Markey.

While their paychecks may be small, workers typically have other sources of income as well. Many qualify for Social Security disability benefits and subsidies for health care and housing.

Additionally, work centers have been free to hire who they want. Many centers focus entirely on disabled populations so that lower wages can cover more workers. Like minimum wage waivers, such nonintegrated work settings have been under attack. Critics claim workers fail to develop work skills if they are not exposed to higher skilled workers.

Markey says if the Arnold Center had to hire nondisabled workers, who would command higher wages, it would not support the same number of disabled workers on staff.

The Arnold Center has been a stable source of employment for many people. One is 54-year-old Eric Strack, who has Down syndrome and lacks the ability to communicate verbally. He has worked at the Arnold Center for 26 years and his mother says it has been a blessing.

“He would be very disappointed and if he didn’t have the Arnold Center to come to," Alice Strack said. "He’d be home and devastated. The Arnold Center is a social place. They have their friends. They would not have the energy. They would not have anything to look forward to. They have a great deal of pride in what they are accomplishing and the pride comes up each time he sees his paycheck."

The Arnold Center has also been a refuge for 27-year-old Jacob Balcirak. Balcirak has a chromosomal abnormality that has made it difficult for him to keep a job in the community.

“Sometimes he functions as a normal 27-year-old and other times it’s more at the level of a 7-year-old,” said Pamela Balcirak, his mother.

Balcirak said other employers would give her son more responsibility than he could handle. She said if he if couldn’t or didn’t want to handle a task at work, he’d hide. His co-workers became irritated with him and some threatened to beat him up.

“Finally, his supervisor said no one had the time to babysit him,” said Balcirak.

She said when he was fired, he didn’t realize what that meant and kept going back to work.

“He went through a period of depression because he has ‘failed again’ and doesn’t understand why this is happening,” said Balcirak.

Jacob is now at the Arnold Center where he has more control over his hours and responsibility and receives more support. For more challenge and money, he has worked at the center’s public auction of donated household goods.

The executive order gives the Arnold Center breathing room because it establishes a framework for state programs that administer work programs for the disabled. If individuals believe a facility-based work center is more appropriate for them, then that choice is protected for now.

But if any mandates come down from the federal level that could affect funding for state programs, the executive order would not apply. Currently, federal lawmakers are considering a ban on minimum wage waivers under the Fair Labor Standards Act.

Culver says some community rehabilitation centers, anticipating the change, have pulled their waiver applications and are seeking to support their services with funding from other sources.

The Michigan Developmental Disabilities Council did not respond to a request for comment on the executive order.

In 2014, it published a report recommending “a fair and prevailing wage” for the disabled and that they “work alongside individuals without disabilities.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.