April 07, 2021 Notes

Disability Employment Policy and AbilityOne: Ending a 1930s Program in the 21st Century

Noga Baruch

Abstract

Despite the high hopes for the program when it was created in 1938, AbilityOne is in direct conflict with modern disability rights policy. For nonprofits to qualify for this government procurement program, they must have seventy-five percent of their direct labor hours be performed by people with disabilities. As a result, the AbilityOne program is the largest employer of people with disabilities in the country. However, it promotes unnecessary segregation, prevents people with disabilities from seeking competitive positions, and overly relies on paying a subminimum wage. The federal government, states, and even some participating nonprofits have been promoting efforts to help people with disabilities obtain competitive, integrated employment. Yet that goal is far off unless Congress reforms the AbilityOne program to comply with the policy standards Congress has set. This Note recommends that Congress follow Vermont’s example and phase out the AbilityOne Program. Congress should establish a new collateral socio-economic policy requiring federal contractors to hire AbilityOne nonprofit agencies as employment support providers for employees with disabilities.

I. Introduction

Bill Villemaire began his workday by following the sound of the cowbell.1 He and other workers with developmental disabilities were awoken by the ringing of a cowbell, and then marched into a windowless basement to complete repetitive tasks such as “inserting wires into air ducts, until the cowbell rang to mark the end of [their] shift.”2 “’I wanted to destroy that cowbell’” he lamented, “’They treated us like animals. . . . It was soul-draining.’”3 He worked in that sheltered workshop for thirty-six years.4 It served as a segregated facility day program attended by adults with disabilities as an alternative to working in open labor markets.5 Bill earned “as little as $2 a day.”6 Finally, at the age of fifty-four, Bill began working in a local grocery store,7 making above the federal minimum wage stocking shelves.8 The day he got his first paycheck, Bill was so proud, and “‘actually copied [his paycheck] three times and put it up on the wall . . .’”9

This may read like something from the 1940s, but this was the reality for Bill Villemaire, and many Vermont residents like him as recently as 2002,10 when Vermont became the first state to close its sheltered workshops.11 According to a 2018 report by the National Council on Disability (NCD),12 there remain approximately 321,131 people with disabilities working in sheltered workshops across the United States.13

Despite cultural changes in both the employment market and in civil rights laws for people with disabilities, many remain “locked out of these changes” and instead are “confined to physical brick-and-mortar sheltered workshops where they perform manual tasks that are often mismatched with their particular strengths and . . . interests as employees.”14 One reason that sheltered workshops and other segregated employment have remained so prominent is due to the Javits-Wagner-O’Day Act (JWOD),15 a statute first enacted in 1938 during the New Deal Era.16 JWOD mandated that federal agencies’ procurement needed products and services from nonprofits in which seventy-five percent of the agency’s total direct labor hours (DLH) are performed by people who are blind or have significant disabilities.17 The program, known as AbilityOne, “is one of the largest sources of employment in the United States for people who are blind or have significant disabilities.”18

The requirement that seventy-five percent of DLH be completed by people with disabilities is in direct contrast with federal disability civil rights laws and hurts the service providers, federal agencies, and most of all, people with disabilities whom the program is meant to benefit. The DLH ratio requirement has promoted segregation, prevented people from being otherwise gainfully employed, and limited opportunities for people with disabilities to attain competitive employment and wages. This requirement forces nonprofit agencies (NPAs) who wish to qualify to be AbilityOne contractors to discriminate against people with disabilities. Participation in segregated employment continues,19 despite advancements for people with disabilities, the need for integration into the community, and even the AbilityOne Commission calling for more competitive integrated employment opportunities.20 JWOD’s requirement of seventy-five percent personnel should be changed so contractors may comply with modern disability rights law and employment policy.

Section II of this Note discusses what AbilityOne is and how it came to be. Section III describes how disability rights law has developed since the passage of JWOD, and how AbilityOne has remained mostly unaffected by these new laws. Section IV analyzes why the requirement that people with disabilities complete seventy-five percent of direct labor hours of an AbilityOne contract is in conflict with modern disability rights policy. Finally, Section V offers recommendations on how follow Vermont’s steps and phase out the AbilityOne program.

II. Background of Javits-Wagner-O’Day & AbilityOne

Imagine you are a federal employee working at the General Services Administration. If you look around, you will likely be able to spot products created by AbilityOne: the pencil you grabbed from the office supply closet was created by AbilityOne,21 as well as the USB flash drive.22 Even the toilet paper in the bathroom was created by AbilityOne.23 Likewise, if you were an active service member in combat, the magazine cartridge for your M16 rifle,24 your explosion-suppressant foam,25 and the supplies in your first aid kit were created by AbilityOne.26 The AbilityOne program is a huge source of necessary products for the federal government—in Fiscal Year (FY) 2017 alone, the AbilityOne program made over $3.3 billion in sales to the federal government,27 $2.1 billion of which were from prime contracts with the Department of Defense.28 Subsection A describes the AbilityOne program and its structure, and Subsection B describes its original purpose and how the seventy-five percent DLH requirement came to be.

A. What Is AbilityOne?

The AbilityOne program is a noncompetitive federal government contracts program intended to “[p]rovide employment opportunities for people who are blind or have significant disabilities in the manufacture and delivery of products and services to the Federal Government.”29 Under the Javits-Wagner-O’Day Act (JWOD or “the Act”), federal agencies must procure their needed products and services from qualified nonprofits that participate in the AbilityOne program and offer those goods or services.30 The U.S. AbilityOne Commission,31 an independent federal agency, determines the fair market price for said goods and services, and regularly publishes a procurement list in the Federal Register of the products and services determined by the Commission to be suitable for the federal government to procure.32 The Commission designated three Central Nonprofit Agencies (CNAs), to distribute the orders from federal agencies among different qualified nonprofits that participate in the program.33

In order to qualify for the AbilityOne program, participating nonprofits must have people with disabilities perform at least seventy-five percent of their overall direct labor hours.34 JWOD defines direct labor as “all work required for preparation, processing, and packing of a product, or work directly relating to the performance of a service; but does not include supervision, administration, inspection, or shipping.”35 Due to this ratio requirement, the AbilityOne program is the largest employer of people who are blind or have a significant disability in the U.S.36—as of 2017, there are approximately 46,000 people who are blind or have significant disabilities employed at approximately 550 participating NPAs throughout the country.37

B. Legislative History of the Javits-Wagner-O’Day Act

Because this Note argues that the seventy-five percent direct labor hour requirement is a problem, some history is necessary understand why this requirement was thought to be a good idea. This subsection describes the legislative history of JWOD, its idealistic goals of finding employment for people with disabilities, and how the DLH ratio requirement came to be.

1. “New Deal” and a New Plan: Congress Created a Federal Procurement Program to Provide Employment Opportunities for the Blind.

In 1938, the United States was recovering from the Great Depression, and President Franklin D. Roosevelt was in his second term in office.38 Under Roosevelt, the federal government implemented a series of programs and projects aimed to restore prosperity to the country, known as the New Deal.39 Congress enacted multiple bills aimed at employing U.S. citizens and protecting workers.40 One such act was the Wagner-O’Day Act. The bill proposed creating a presidentially-appointed committee which would determine the fair market price of commodities manufactured by nonprofits employing the blind, and that “all . . . suitable commodities hereafter procured . . . by or for any Federal department or agency shall be procured from such non-profit-making agencies for the blind . . .” 41

The purpose of the bill was to provide the blind with gainful employment and to prevent the blind workmen from becoming “public charges.”42 Congress recognized that the opportunities for gainful employment to those who have been afflicted with blindness are limited, and that “the Government should spare no effort to aid and assist them by means other than a relief grant.”43 At the time, there were few sheltered workshops that provided employment for the blind,44 and Congress believed that more blind individuals would be employed by creating a market for these sheltered workshops.45

2. JWOD’s Amendment to Include Seventy-Five Percent Direct Labor Performed by People with Disabilities

Thirty-three years passed and the Wagner-O’Day Act-remained untouched until 1971, when Senator Jacob Javits sponsored legislation to amend the original Wagner-O’Day Act to add service contracts and to include “other severely handicapped individuals.”46 The Wagner-O’Day Act was seen as quite successful for the blind,47 and it was thought that expanding the program would benefit many other disabled individuals, such as Vietnam War veterans.48 The amendment defined “severely handicapped” as any individual suffering from a physical or mental disability, other than blindness, constituting a substantial handicap that prevents that individual from engaging in normal competitive employment.49

Additionally, the Javits amendment specified that for NPAs to qualify for this procurement, they must employ these handicapped individuals for at least seventy-five percent of the man-hours of direct labor required for the production or provision of the commodities or services, regardless of whether those commodities or services were currently procured under the Act.50 The requirement’s purpose was “to assure that this preferential procurement program is, in fact, used to provide employment opportunities for blind and other severely handicapped individuals who are incapable of engaging in regular competitive employment.”51 Proponents of this requirement, including some disability rights advocates, argued that it was necessary to ensure that qualifying NPAs would actually employ people with disabilities who could not find other employment, rather than be an open-sesame for NPAs to qualify for noncompetitive government contracts without actually employing people with disabilities to complete such contracts.52

Since the amendment was signed into law in 1971,53 JWOD has been amended eight more times.54 Still, Congress has not enacted any legislation that fundamentally changes the requirement that seventy-five percent of DLH work to fulfill an AbilityOne Contract must be performed by blind individuals or individuals with severe disabilities.55

III. Despite Modern Disability Policy’s Efforts to End Segregation and Increase Competitive Integrated Employment, Javits-Wagner-O’Day Is Persistently an Exception to Every Rule.

Since JWOD was passed in 1971, the federal civil rights laws for people with disabilities have expanded dramatically, and JWOD’s DLH requirement is no longer “aligned with modern disability rights” law and policy.56 Congress pushed for ending segregation and increasing integrated employment opportunities for people with disabilities by passing the Americans with Disabilities Act (ADA), the Rehabilitation Act of 1973 (Rehab Act), and the Workforce Innovation and Opportunity Act of 2014 (WIOA).57 However, JWOD has remained untouched by these changes, either because Congress explicitly carved out room for it, or because it falls outside of the scope of federal disability rights laws.58 The following sections discuss how federal law prohibits segregation and employment discrimination of people with disabilities and how JWOD’s seventy-five percent DLH requirement has consistently been an exception to these federal policies.

Since JWOD’s enactment, legislators began a steady effort to move away from institutionalization, segregation, and unequal treatment of people with disabilities, and to move toward integration, inclusion, and equal treatment.59 As a result, Congress passed laws meant to combat segregation of people with disabilities, including Section 504 of the Rehab Act and Title II of the ADA.60 However, Title II and Section 504 of the Rehab Act do not apply to JWOD-qualified NPAs.61

A. Sections 503 and 504 of the Rehabilitation Act of 1973

In 1973, two years after JWOD, Congress enacted the Rehab Act62 which prohibits discrimination on the basis of disability in programs conducted by federal agencies—programs receiving federal financial assistance.63 The Rehab Act also prohibits disability discrimination in the employment practices of federal agencies64 and federal contractors.65 Section 504 of the Rehab Act prohibits discrimination against people with disabilities in all programs or activities receiving federal funding.66 As amended, Section 504’s definition of discrimination relies on the interpretation of discrimination in Title I of the ADA, which includes segregation of an employee because of their disability.67

Typically, government contractors are not considered programs or activities receiving federal financial assistance under section 504 of the Rehab Act.68 This is because federal courts have interpreted the term “receiving . . . assistance” as meaning that the government must have intended to provide a subsidy to the program, not compensate it for a service.69 Because JWOD-affiliated NPAs are federal contractors receiving compensation for the products or services they provided the government, they are not considered programs or activities receiving federal financial assistance under Section 504.70 Therefore, as a general rule, their role as contractors does not make them subject to Section 504’s prohibition on discrimination against people with disabilities.71

Section 503, which does apply to federal contractors, does not prohibit employers from segregating employees with disabilities.72 The purpose of Section 503 was to cover private businesses that only receive federal funds from contractual transactions and to direct federal purchasing power to improve employment opportunities for people with disabilities.73 Section 503 requires all contracts “in excess of [$15,000] . . . contain a provision requiring . . . affirmative action to employ and advance in employment qualified individuals with disabilities.”74

The Office of Federal Contractor Compliance Program (OFCCP), a division of the U.S. Department of Labor that oversees the employment practices of federal contractors,75 established “a utilization goal of [seven] percent for employment of qualified individuals with disabilities for each job group in the contractor’s workforce.”76 The utilization goal is not a quota, and a failure to meet the goal is not a per se violation of the law.77 Section 503 uses the same standards set in Section 504 and Title I of the ADA in determining whether a federal contractor engaged in non-affirmative action employment discrimination.78 However, OFCCP recognizes federal contractors’ use of sheltered workshops and segregated employment and simply says that they do not constitute affirmative action.79

Because this affirmative action standard applies to all federal contractors with under one hundred employees, and not just NPAs, OFCCP treats NPAs the same as they would treat any other small contractor.80 However, NPAs should also be subject to other provisions of federal disability rights laws, seeing as they are the largest employer of people with disabilities in the country with 45,000 qualifying employees.81

B. Titles I and II of the Americans with Disabilities Act of 1990

In 1990, Congress passed the ADA,82 arguably the most seminal disability civil rights law in the U.S.83 The ADA was intended “to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.”84 Additionally, Congress found that “segregation” of persons with disabilities, such as mandated isolation from nondisabled individuals, was a “for[m] of discrimination” on the basis of disability.85 Segregation, Congress recognized, is “a serious and pervasive social problem” that diminished the rights of people with disabilities “to fully participate in all aspects of society.”86 Title I of the ADA covers disability discrimination by private employers87 and Title II of the ADA covers disability discrimination by state and local government entities.88

Title I of the ADA prohibits all covered employers from discriminating “against a qualified individual on the basis of disability” including “limiting, segregating, or classifying a job applicant or employee in a way that adversely affects the opportunities or status of such applicant or employee because of the disability of such applicant or employee.”89 Under this definition, employers that follow JWOD’s seventy-five percent direct labor hours requirement may be in violation of Title I of the ADA.90 However, Congress explicitly stated in its legislative history that Title I of the ADA was not intended to apply to JWOD NPAs.91

Title II of the ADA was intended to extend the nondiscrimination policy in Section 504 of the Rehab Act to cover state and local government entities.92 Title II states that “no qualified individual with a disability shall, by reason of such disability . . . be subject to discrimination” by any public entity.93 In Olmstead v. L.C. ex rel. Zimring, the Supreme Court held that under Title II of the ADA, unjustified segregation of persons with disabilities is a form of discrimination.94 The Court recognized that unjustified segregation “perpetuates unwarranted assumptions that persons so isolated are incapable or unworthy of participating in community life,” and that such segregation diminishes the everyday life activities of individuals.95 Since Olmstead, public entities could no longer mandate the unjustified segregation of people with disabilities; instead they would have an affirmative duty to provide community-based services.96

The Department of Justice (DoJ) enforces Title II, and has applied the Olmstead holding to all state- and locally-funded services, including employment and vocational services.97 Title II of the ADA broadly defines a covered “public entity” as state and local governments, or programs and departments of state and local governments.98 However, Title II, and by extension the Olmstead decision, may not apply to federal contractors.99 As a result, the DoJ’s enforcement of Title II likely would not apply to JWOD affiliated NPAs unless they were also funded by state programs. Thus, AbilityOne contractors that receive neither state funding nor federal financial assistance may not be subject to Title II of the ADA or Section 504 of the Rehab Act and so are not prohibited from segregating people with disabilities using the seventy-five percent DLH requirement.

C. The Workforce Innovation and Opportunity Act of 2014

Congress passed the Workforce Innovation Opportunity Act (WIOA) to set a standard for what employment for people with disabilities should look like, but JWOD does not meet that standard. JWOD’s DLH requirement stands in direct conflict with modern-day disability employment standards set by the Workforce Innovation and Opportunity Act. In 2014, Congress began embracing “Employment First,” a policy lens based on the assumption “that all individuals with disabilities, despite the level of severity of their disability, should be provided with support, training, and opportunities to work within the general labor force.”100 WIOA reflects that new policy goal.101 WIOA redefined the standard for competitive integrated employment102 as work (1) in which the employee with a disability is paid the competitive wages comparable to workers without disabilities performing the same tasks; (2) in a location that is typically found in the community and allows person with a disability to work with individuals without disabilities; and (3) offers opportunities for advancement.103

Additionally, WIOA regulations require states’ vocational rehabilitation (VR) agencies to refer clients only to jobs that qualify as competitive integrated employment, and refer to sheltered workshops as not meeting the definition of an integrated setting.104 In 2017, the Rehabilitation Services Administration (RSA) issued guidance in which it stated that there is a strong presumption that workplaces funded by JWOD contracts would not qualify as integrated settings.105 As a result of this regulation, many VR agencies have stopped referring their clients to NPAs operating under the AbilityOne program.106 While the U.S. AbilityOne Commission believes that certain AbilityOne positions, such as service jobs, can offer integrated settings,107 there is an understanding among VR agencies that most AbilityOne NPAs do not meet that requirement.108 Overall, NPAs receiving AbilityOne contracts are inconsistent with the modern federal employment policy goals articulated in WIOA.

As explained above, the federal disability rights laws have consistently left JWOD untouched.109 AbilityOne is one of the largest employers of people with disabilities in the country with around 45,000 employees with disabilities.110 JWOD is exempted from Title I of the ADA, and is unimpacted by Title II of the ADA or Section 504 of the Rehab Act.111 As a result of these exclusions, the largest employer of people with disabilities is untouched by a lot of federal disability rights laws, and many employees with disabilities fall within a disability rights law enforcement gap.

IV. Why Is the Seventy-Five Percent Direct Labor Hour Requirement a Problem?

When Congress created the seventy-five percent DLH requirement, Congress meant to ensure that people with disabilities were actually working in the NPAs qualifying for the mandatory procurement program, not merely serving as a few “token” employees.112 However, the seventy-five percent requirement has slowed efforts to modernize employment opportunities for people with disabilities.113 The ratio requirement stands in direct contrast to modern disability civil rights laws by promoting segregation, preventing people from being otherwise gainfully employed, and discouraging people with disabilities’ opportunities to competitive employment and wages.

A. The Seventy-Five Percent Requirement Mandates That Employees with Disabilities Be Segregated from Non-Disabled Employees.

JWOD’s requirement that seventy-five percent of DLH be completed by people who are blind or have severe disabilities stands in direct conflict with federal policies prohibiting segregation, as well as with WIOA’s standards for integrated employment.114 While JWOD does not necessarily require absolutely segregated environments, in practice, the seventy-five percent requirement results in disabled employees working in environments completely separate from nondisabled individuals, much like a sheltered workshop.115 The DoJ has considered sheltered workshops to be unnecessarily segregated settings and found that other segregated state employment services are inconsistent with the ADA’s integration mandate as articulated in Olmstead.116

However, Title II does not apply to federally-funded employment services and therefore JWOD NPAs may not be subject to the integration mandate under Title II of the ADA.117 Nevertheless, this shows that this program is inconsistent with federal policy—while one federal department is combatting segregated employment, other federal departments are mandated to contract with statutorily-required segregated employers.118 AbilityOne NPAs are very much aware of this conflict. In interviews conducted by NCD, it was discussed that:

[M]ost AbilityOne providers lamented that the federal government’s competing requirements put them in a difficult position where their contracts require proof that the majority of people performing labor across their business are people with severe disabilities or blindness, on the one hand, while knowing that this increases the likelihood that they are not offering services in the most integrated setting appropriate and perhaps slowing their states’ efforts at transformation away from segregated service models, on the other hand.119

Additionally, one provider who is considered “to be a leader in supported employment in her state,” described having to separate her JWOD-funded contracts from her integrated employment services in order to maintain the mandated ratio.120 As a result, those contracts did not correspond with the integrated service model and could not be considered competitive integrated employment.121

B. The Requirement That Seventy-Five Percent Direct Labor Hours Be Completed by People with Disabilities Discourages Competitive Integrated Employment.

JWOD’s requirement that seventy-five percent of DLH be completed by people who are blind or have severe disabilities may stand in direct conflict with the purpose of WIOA because it discourages competitive integrated employment.122 “By providing relatively simple work,” NPA workshops are intended to train individuals with disabilities and assist them with finding long-term employment or helping them transition into the open labor market.123 In fact, Congress intended the qualified nonprofits to only be a starting point on the road towards full employment—NPA’s were intended to be rehabilitative and to “move the individual to full private employment and not have workshop employment as terminal.”124 In reality, AbilityOne nonprofits have had little-to-no success transitioning their employees to integrated employment.125 In fact, JWOD program data consistently shows that only five percent of JWOD workers move into supported or competitive employment each year126—this number did not change from 2001127 to 2016.128 This may be because there is a clear disincentive in the structure of JWOD to promote employees or to transfer them to competitive employment outside of the program.129

This disincentive manifests in two ways. First, the definition of DLH is limited to the work done on the line, and does not include managerial and administrative positions, thereby disincentivizing the promotion of individuals with disabilities to management positions in the company.130 At the 2019 Javits-Wagner-O’Day Legal and Policy Symposium, one head of an NPA recognized this disincentive.131 She explained that when JWOD was made into law, it did not contemplate that people with significant disabilities could move into higher, supervisory roles.132 She complained that while the law has not changed, the world has, and that NPAs need to think about people doing jobs that were never contemplated for them.133

Second, the federal contracts that NPAs participate in are demanding and require high quality products.134 NPAs offer over 15,000 products that must all meet federal requirements,135 and they are facing pressures to make the products the most cost-effective.136 As a result, NPAs that participate in these contracts may not want their most capable employees to graduate from the program and move on to regular competitive workforce.137

The definition of DLH was written at a time when lawmakers did not see a lot of employment opportunities for people with significant disabilities that did not rely on government assistance.138 However, these trends are changing: according to the U.S. Census Bureau’s Current Population Survey, more working-age people with disabilities are finding jobs, and two-thirds of those jobs are considered “high-quality jobs.”139 Likewise, people with disabilities are better educated than they were in the 1930s and 1970s.140 If AbilityOne is the largest employer of people with disabilities, it should reflect the work people with disabilities are capable of doing. While the law has not changed, the world has moved forward, and it is time for AbilityOne to reflect that.141

C. NPAs Participating in AbilityOne Often Serve People Who Are Capable of Working in the Open-Market.

AbilityOne is intended to employ only people who have “a substantial handicap . . . that prevents the individual from currently engaging in normal competitive employment.”142 In reality, individuals in AbilityOne programs are not incapable of working outside of these NPAs. For example, during a visit to an AbilityOne contractor in Virginia,143 U.S. Civil Rights Commissioner David Kladney observed employees with disabilities working hard, working independently, and working jobs similar to ones he worked when he worked in food services.144 The majority of people with disabilities in sheltered workshops such as AbilityOne NPAs are individuals with mild intellectual disabilities.145 Furthermore, a study observed the vocational outcomes of 4,904 individuals who participated in sheltered workshops and 4,904 employees who did not participate in sheltered workshops.146 These individuals were matched based on diagnosis, presence of secondary conditions, and gender.147 The study found that both groups were equally as likely to be competitively employed in the community.148

One of the reasons that people who are capable of working in the open market are working in AbilityOne NPAs is because NPAs are struggling to fill the seventy-five percent requirement.149 In a survey conducted by SourceAmerica, (one of the Central Nonprofit Agencies managing NPAs that work with people with severe disabilities), forty percent of responding agencies said that they found it difficult to maintain the ratio requirement because they are struggling to find “enough people with significant disabilities who were willing and able to work on a contract.”150 In 2015, the DoJ and several Inspectors General151 began investigating SourceAmerica because they believed “[A]s many as half the [NPAs] contracting with SourceAmerica under AbilityOne may be operating in violation of the law, without enough severely disabled employees.”152

The seventy-five percent DLH requirement places a lot of pressure on NPAs because they are at risk of losing federal contracts if they fall below that percentage.153 As a result, NPAs may be tempted to mislabel people as severely disabled, and this temptation is exacerbated by the fact that NPAs have flexibility in evaluating an individual’s “competitive employability.”154 The AbilityOne Nonprofit Agency Review Manual advises that “the review should consider whether a reasonable observer, albeit one knowledgeable of AbilityOne Program’s criteria, see this person as being severely disabled, to the point that he or she would be unable to find and maintain a normal competitive job without supports.”155 The “reasonable observer” standard is quite vague, and as NCD notes, contrasts with the original congressional findings in the ADA.156 Because people with disabilities have a long history of being “subject to ‘stereotypic assumptions not truly indicative of the individual ability,’” a reasonable observer could easily suspect a person with a disability is incapable of working in competitive setting without giving a full assessment.157

D. The Segregation of People with Disabilities in Sheltered Workshops Results in a Large Proportion of People with Disabilities Receiving Wages That Are Below Minimum Wage and Are Not Compliant with WIOA.

Finally, people with disabilities working in AbilityOne NPAs may not be receiving wages compliant with WIOA.158 In order to be considered competitive integrated employment, employees with disabilities must be paid no less than the federal minimum wage or the rate required by their state.159 However, many AbilityOne NPAs hold special certificates issued by the Department of Labor (DoL) that allow the NPAs to pay subminimum wage.160 The same year that the Wagner-O’Day Act was passed, Congress also passed the Fair Labor Standards Act (FLSA) which established a minimum wage.161 FLSA Section 14(c) allows employers of people with disabilities to pay those employees below minimum wage.162 Section 14(c) arose out of the notion that disabled employees would not be able to meet the standards of nondisabled employees, and so paying below minimum wage was meant to equal their productivity levels.163

However, the U.S. Civil Rights Commission concluded in a study that “people with intellectual and developmental disabilities who are currently earning subminimum wages under the 14(c) program are not categorically different in level of disability from people with intellectual and developmental disabilities currently working in competitive integrated employment.”164 Furthermore, people with disabilities, including those with significant disabilities who were “previously categorized for decades as ‘unable to work,’ have nevertheless obtained and maintained competitive employment through the opportunities of the ADA, new technology,” and supports from vocational rehabilitation specialists.165

Nevertheless, Section 14(c) of FLSA and the payment of a subminimum wage is engrained into the culture of AbilityOne. Despite the fact that service contractors are required to pay their employees above $10 per hour,166 nearly half of all AbilityOne employers have Section 14(c) certificates.167 In a 2018 report, NCD explained that the “workshop business model is largely unsustainable unless people are paid subminimum wages.”168 This continued use of Section 14(c) directly causes segregation, and reinforces the discriminatory premise that people of differing abilities are not capable of doing much, that they don’t warrant investment, and that they are not going anywhere.169

There have been NPAs that have been able to transition away from paying a subminimum to a minimum wage, such as Melwood, which made the transition in 2016.170 But there are 233 NPAs affiliated with AbilityOne that still possess a § 14(c) certificate,171 and in 2015, “AbilityOne contractors employed 4,426 individuals who were paid less than minimum wage.”172 Since AbilityOne is one of the largest employers of people with disabilities in the country,173 this could mean that a large portion of employed people with disabilities are in fact being paid far below the federal minimum wage.174

In September 2020, the U.S. Commission on Civil Rights published a report recommending that Congress repeal Section 14(c).175 The Commission recognized that paying low wages to people with disabilities harms their economic potential and only increases the likelihood that they will remain reliant on state and federal support, which conflicts with the purpose of Section 14(c).176

V. Phasing Out AbilityOne

There is wide consensus that JWOD is out of step with federal policies around employment of people with disabilities. In recent years, an advisory committee of the U.S. Department of Labor (ACICIEID), the National Council on Disability (NCD), the Senate Committee on Health, Education, Labor and Pensions (HELP Committee), and the Panel on Department of Defense and AbilityOne Contracting Oversight, Accountability, & Integrity (Section 898 Panel) all published reports recognizing the need to modernize AbilityOne.177

There are ways to reform the AbilityOne Program: Congress could amend JWOD so that it becomes competitive integrated employment. For work to be considered “competitive integrated employment” it must be work (1) in which the employee with a disability is paid the competitive wages comparable to workers without disabilities performing the same tasks; (2) in a location that is typically found in the community and allows person with a disability to work with individuals without disabilities; and (3) offers opportunities for advancement.178 To meet that definition, Congress would have to reduce the DLH ratio requirement,179 amend the definition of direct labor hours to include indirect labor, 180 and require that AbilityOne contractors phase out the use of Section 14(c) waivers.181

While amending JWOD’s seventy-five percent DLH requirement would make it compliant with other federal disability rights laws, this would not solve the underlying problem. AbilityOne would still fall into an enforcement gap, as it is either explicitly or practically exempt from Title I and II of the Americans with Disabilities Act and Section 504 of the Rehab Act.182 Additionally, JWOD would still treat people with disabilities as not able to work in the private labor market, and NPAs would continue to treat people with disabilities differently than other employees. AbilityOne would still limit individuals with disabilities to work that does not necessarily suit their interests and skills, and instead to work only in a few NPAs that provide the support and accommodations that persons with disabilities may need.

If the federal government really wishes to improve integrated employment outcomes for people with disabilities, it needs to stop funding entities that perpetuate segregated employment. Instead, Congress should end the AbilityOne program and adopt legislation that would transition individuals with disabilities currently working in the AbilityOne program to competitive integrated employment. Only by transitioning employees under AbilityOne to other competitive integrated employment can the federal government ensure that those employees are protected under federal disability rights laws.

A. An Option for Congress: Following the National Council on Disability Report

In the latter half of 2020, the National Council on Disability published a further report on AbilityOne.183 In the report, NCD lists sixteen recommendations as part of its overall conclusion that Congress should pass legislation to phase out the AbilityOne program.184 A few notable recommendations include transitioning current AbilityOne employees and amending Section 503 to require qualified federal contractors to hire a certain percentage of people who are blind or have significant disabilities (NCD did not offer a specific percentage number and instead recommended that Congress form a two-year study that would determine the percentage).185

Additionally, “NCD recommends that existing CNAs and NPAs be used as a tool during the transition.”186 NCD recommends that “CNAs should continue to represent and assist their affiliated NPAs” and help them to “transition to competing for federal contracts, entering into subcontract arrangements, or supporting other federal contractors who would be required to employ people who are blind or have significant disabilities.”187 The report does not give CNAs or NPAs specific directions on how to make this transition.

Congress could draft legislation, similar to that which NCD recommended, that would support NPAs in transitioning their employees over the course of eight years.188 This would eliminate the noncompetitive federal government contracts program and instead open up competition to other potential contractors, not just JWOD-affiliated NPAs. These new contractors would not be subject to JWOD, and so they would not be exempt from Title I of the ADA.189 As a result, their employees with disabilities would be protected from discrimination based on disability.190

This does not mean that Congress should give up on the goal of using its procurement power to support the employment of people with disabilities. Instead, Congress could create a smaller pool of contractors for former JWOD contracts that would require private employers to hire people with disabilities (at whatever percentage the two-year study recommended by NCD would decide is appropriate) and to hire former JWOD NPAs to serve as employment support service providers in order to qualify. This would allow federal contractors wishing to hire people with disabilities to use AbilityOne NPA’s much needed expertise,191 but also remove the conflict of interest created by NPAs serving as both employers and support providers.192

B. Following the Vermont Model

Alternatively, Congress should follow Vermont’s lead in order to successfully complete a transition from sheltered workshops to community employment.193 Starting in 2000, Vermont stopped funding sheltered workshops, and the state government assisted agencies to “fully [transition] to providing supports to people with disabilities in competitive integrated employment.”194 As a result, Vermont has the highest rate of community job placement for clients with developmental disabilities—in 2013, Vermont’s employment rate for people with disabilities was nearly six times the national average.195

Vermont can be a model on how to transition AbilityOne from sheltered workshops to becoming federal employment support service providers. The federal government undoubtedly has a role to play in promoting employment of people with disabilities, and NPAs could help state VR agencies place people with disabilities into competitive integrated employment. These agencies have indicated that, for some individuals, they are struggling to find good jobs outside of AbilityOne.196 This may be due to the seemingly outdated cultural views of private employers on hiring people with disabilities,197 a lack of support from competent and well-educated employment services personnel,198 or a lack of opportunities for people with disabilities to enter training programs that better meet the needs of businesses.199 NPAs could help with all of this, and could similarly help facilitate full employment.

Vermont’s transition was successful only because the state government made a concerted effort to support the sheltered workshops in integrating their employees into competitive community employment.200 The state worked “alongside the providers to stimulate a conversion from sheltered workshops to individualized support,” aiming to prevent employees with disabilities from transitioning out of the work in a sheltered workshop and ending up with no alternative work opportunity.201 Vermont also set up vocational rehabilitation reimbursement grants to incentivize the sheltered workshops to set long-term employment goals for their former employees and to help them transition (as opposed to a fee-for-service which promotes working with clients past their needs).202 By 2002, Vermont closed all of its sheltered workshops and reallocated all the funding from sheltered workshops to individualized supports for employment.203 This is more equitable, as people with disabilities can choose different jobs based on their interests and skills, and can do this while receiving support from the service providers.204

Phasing out the AbilityOne program could create more job opportunities because more companies could compete for former JWOD contracts. Congress set a standard for the type of employment they expect for people with disabilities in all states: competitive integrated employment.205 It is time for the federal government to follow its own standards and reform AbilityOne.

VI. Conclusion

Despite the high hopes for the program when it was created, AbilityOne is in direct conflict with modern disability rights laws. For nonprofits to qualify for the mandatory procurement program, they must have seventy-five percent of their direct labor hours be performed by people with disabilities.206 As a result, the AbilityOne program is the largest employer of people with disabilities in the country, but it promotes unnecessary segregation, prevents people with disabilities from seeking competitive positions, and overly relies on paying a subminimum wage.207 The federal government and states have been promoting efforts to push people with disabilities to more competitive, integrated employment, but that goal is far off unless Congress phases out the Ability-One program to better comply with broader civil rights laws.

Endnotes

1. See Chris Serres, Today Many Disabled Vermont Residents Are Thriving in the Community- and the State Is Saving Money, Star Trib. (Nov. 11, 2015), http://www.startribune.com/vermont-took-bold-step-to-end-segregation-of-disabled-adults/330697181 [https://perma.cc/U2GJ-4UQU].

2. Id.

3. Id.

4. See id.

5. See Alberto Migliore, Sheltered Workshops, Int’l Encyclopedia of Rehabilitation 1 (2010), http://wintac-s3.s3-us-west-2.amazonaws.com/topic-areas/ta_511/Migliore-2010-sheltered_workshops_0.pdf [https://perma.cc/565J-QQXV].

6. Serres, supra note 1.

7. See Halle Stockton, Vermont Closed Workshops for People with Disabilities; What Happened Next?, Pub. Source (Sept. 24, 2014), https://www.publicsource.org/vermont-closed-workshops-for-people-with-disabilities-what-happened-next [https://perma.cc/TT3H-PSXK].

8. See Serres, supra note 1.

9. Stockton, supra note 7.

10. See id.

11. See Catia Malaquias, Closing Sheltered Workshops—A Case Study of Conflicting Interests, Starting with Julius (Apr. 25, 2019), http://www.startingwithjulius.org.au/closing-sheltered-workshops-a-us-case-study-of-conflicting-interests [http://www.startingwithjulius.org.au/closing-sheltered-workshops-a-us-case-study-of-conflicting-interests [https://perma.cc/V6NG-598K].

12. “NCD is an independent federal agency charged with advising the President, Congress, and other federal agencies regarding policies, programs, practices, and procedures that affect people with disabilities.” Nat’l Council on Disability, About Us, Nat’l Council on Disability, https://ncd.gov/about (last visited Oct. 24, 2020) [https://perma.cc/GY9P-478E].

13. Nat’l Council on Disability, From the New Deal to the Real Deal: Joining the Industries of the Future 12 (2018) (citing Letter from Patricia Davidson, Deputy Adm’r for Program Operations, U.S. Dep’t of Lab., to Elizabeth Warren, U.S. Sen. & Member of Senate Health, Educ., Lab., & Pensions Comm. (July 5, 2018)) [hereinafter New Deal to Real Deal].

14. Id. at 13.

15. 41 U.S.C. §§ 8501–8506.

16. Wagner-O’Day Act of 1938, Ch. 697, Pub. L. No. 75-739, 52 Stat. 1196 (1938).

17. 41 U.S.C. §§ 8501(6)–(7), 8504.

18. See U.S. AbilityOne Comm’n, History, U.S. AbilityOne Comm’n, https://www.abilityone.gov/abilityone_program/history.html (last visited Oct. 24, 2020) [https://perma.cc/75BW-RXYT].

19. See New Deal to the Real Deal, supra note 13, at 25.

20. See U.S. AbilityOne Comm’n, Declaration in Support of Minimum Wage for All People Who Are Blind or Have Significant Disabilities, U.S. AbilityOne Comm’n (Mar. 18, 2016), https://www.abilityone.gov/commission/documents/US%20abilityone%20Commission%20Declaration%2018March2016%20Final.pdf [https://perma.cc/2LYJ-4A8F] (recognizing that federal policies have changed since the JWOD was passed into law in 1971, and “to remain viable, the AbilityOne Program must be recognized as effectively offering quality employment and equitable wages, including competitive integrated employment opportunities.”).

21. See Search Products, AbilityOne (type “pencil” on to search bar under “Search Products”), https://pl.abilityone.gov/procurement_search/procurement_product_search.aspx (last visited Feb. 27, 2020) [https://perma.cc/N6CL-J7KU].

22. See id. (“USB Flash Drive with 256-bit AES Encryption—USB Flash Drive, 256-Bit AES Encryption, 2GB”).

23. See id. (“Paper, Toilet Tissue—Tissue, Toilet, 1-Ply, 4” x 4”, White, 80 Rolls”).

24. See id. (“30 Round Magazine Cartridge to support the M16 Rifle and M4 Carbine”).

25. See id. (“Explosion Suppressant Foam Segment—LG 005-1800 Benson Tank, C-130 ESF Kit”).

26. See, e.g., id. (“dressing, chest seal wound, 6” x 8”).

27. See U.S. AbilityOne Comm’n, Fiscal Year 2018 Performance and Accountability Report 3 (2018).

28. See Panel on Dep’t of Def. & AbilityOne Contracting Oversight, Accountability, & Integrity, 2018 First Annual Report to Congress 5 (2018) [hereinafter Section 898 Panel].

29. U.S. AbilityOne Comm’n, AbilityOne Program Fact Sheet, U.S. AbilityOne Comm’n, (Oct. 2020), https://www.abilityone.gov/media_room/documents/2020_AbilityOne_Fact_Sheet_v20201020.pdf [https://perma.cc/D3FV-5C5W] [hereinafter Fact Sheet].

30. 41 U.S.C. § 8504 (“[a]n entity of the Federal Government intending to procure a product or service on the procurement list referred to in section 8503 of this title shall procure the product or service from a qualified nonprofit agency for the blind or a qualified nonprofit agency for other severely disabled . . .”); FAR 8.704 (requiring the government to purchase supplies and services from AbilityOne participating nonprofit agencies if the products needed are available within the period required).

31. The U.S. AbilityOne Commission is also known as the Committee for Purchase from People Who Are Blind or Severely Disabled in statutes. U.S. AbilityOne Comm’n, FAQs, AbilityOne, https://www.abilityone.gov/abilityone_program/faqs.html (last visited Oct. 24, 2020). [https://perma.cc/9G8L-M69D] (go to “what is the AbilityOne Program?”).

32. 41 U.S.C. § 8503(a)–(b), (d).

33. Id. § 8503(c). The three CNAs are National Industries for the Blind (NIB), SourceAmerica (working with NPAs that serve people with severe disabilities), and American Foundation for the Blind (AFB) (AFB only became a CNA in 2018 and is currently working on the research phase). U.S. AbilityOne Comm’n, See Central Nonprofit Agencies, U.S. AbilityOne Comm’n, https://www.abilityone.gov/abilityone_network/cnas.html (last visited Feb. 29, 2020) [https://perma.cc/VU8D-TJSJ].

34. 41 U.S.C. §§ 8501(6)(c), 8501(7)(c).

35. Id. § 8501(3); 41 C.F.R. § 51-1.3 (2019).

36. See Minority Staff of S. Comm. On Health, Educ., Labor, & Pensions, 115th Cong., Rep. On Disability Employment: Outdated Laws Leave People with Disabilities Behind in Today’s Economy 19 (2018) (“As it stands, the AbilityOne program is not aligned with the goals of competitive integrated employment in modern disability employment policy”) [hereinafter 2018 HELP Comm. Report].

37. See Section 898 Panel, supra note 28, at 5.

38. See Franklin Delano Roosevelt Presidential Libr., FDR Timeline, Franklin D. Roosevelt Presidential Libr. & Museum, http://www.fdrlibrary.marist.edu/archives/resources/timeline.html (last visited Nov. 16, 2019) [https://perma.cc/FNR8-MKRN].

39. See History.com Editors, New Deal, History (Oct. 29, 2019), https://www.history.com/topics/great-depression/new-deal [https://perma.cc/4NBV-89QW].

40. See id.

41. See Wagner-O’Day Act of 1938, Ch. 697, Pub. L. No. 75-739, § 3, 52 Stat. 1196, 1196 (emphasis added).

42. S. Rep. No. 75-1330, at 2 (1938).

43. Id.

44. See id. The first sheltered workshop for the blind in the U.S. was established in 1840 at the Perkins Institute for the Blind. Laura C. Hoffman, An Employment Opportunity or a Discrimination Dilemma?: Sheltered Workshops and the Employment of the Disabled, 16 U. Pa. J.L. & Soc. Change 151, 153–54 (2013).

45. See S. Rep. No. 75-1330, at 2 (1938). For example, when the statute was drafted, these sheltered workshops principally made brooms and mops, and so the statute specifically mentions brooms and mops as products the federal government will purchase. See id.

46. S. Rep. No. 92-41, at 1 (1971).

47. See, e.g., H.R. Rep. No. 92-228, at 5 (1971) (noting that the Wagner-O’Day act was “a classic example of how . . . a program was formulated under which actual recipients of public assistance . . . were transformed into tax-paying citizens. Under the mechanism of the Act the blind have been offered an opportunity to support themselves, and have thus gained personal dignity.”); S. Rep. No. 92-41, at 5–8 (citing letters showing widespread support from federal agency officials).

48. S. Rep. No. 92-41, at 3 (1971) (“[M]any of the more than 120000 Vietnam veterans now drawing compensation for service-connected disabilities would be eligible for employment in workshops . . . under the expanded Wagner-O’Day Act.”)

49. Javits-Wagner-O’Day Act of 1971, Pub. L. No. 92-28, § 6, 85 Stat. 77, 81, 82 (1971).

50. Id. at § 5(4)(c) (emphasis added).

51. H.R. Rep. No. 92-228, at 14 (1971).

52. See Amend the Wagner-O’Day Act to Extend the Provisions Thereof to Severely Handicapped Individuals Who Are Not Blind, and for Other Purposes: Hearing on H.R. 2310 and Related Bills Before the H. Comm. On Gov’t Operations, 92nd Cong. 93 (1971) (statement of John F. Nagle, Chief of Wash. Office. National Federation for the Blind) (“[n]ot only do we think the [seventy-five] percent should be maintained, but the [seventy-five] percent requirement in the existing regulations is that there be [seventy-five] percent direct blind labor during the entire year on all work done . . . it should be [seventy-five] percent for any work done on any job or any service provided.”) [hereinafter Hearing JWOD 1971].

53. See Javits-Wagner-O’Day Act of 1971, § 5(2), Pub. L. No. 92-28, 85 Stat. 77, 81. (1971).

54. Pub. L. No. 11-350, § 3, 124 Stat. 3677 (2011); Pub. L. No. 103-55, § 10005(f)(6), 108 Stat. 3409 (1994); Pub. L. No. 103-73, § 301, 107 Stat. 736 (1993); Pub. L. No. 102-54, § 13(p), 105 Stat. 278 (1991); Pub. L. No. 94-273, §§ 3(22), 8(2), 90 Stat. 377, 378 (1976); Pub. L. No. 93-358, 88 Stat. 393 (1974); Pub. L. No. 93-76, 87 Stat. 176 (1973); Pub. L. No. 93-76, 87 Stat. 176 (1971).

55. See Nat’l Council on Disability, A Cursory Look at AbilityOne 26 (2019) [hereinafter A Cursory Look at AbilityOne].

56. See 2018 HELP Comm. Report, supra note 36, at 19 (“As it stands, the AbilityOne program is not aligned with the goals of competitive integrated employment in modern disability employment policy.”).

57. Americans with Disabilities Act of 1990, Pub. L. No. 101-336, 104 Stat. 327; Rehabilitation Act of 1973, Pub. L. No. 93-112, 87 Stat. 355; Workforce Innovation and Opportunity Act of 2014, Pub. L. No. 113-128, 128 Stat. 1425. Fifty-eight Federal contractors such as JWOD NPAs

58. are not programs or activities receiving federal assistance and therefore not affected by section 504 of the Rehabilitation Act. See 29 U.S.C. § 794(a); see also supra III.A. Additionally, Congress explicitly excluded JWOD NPAs from ADA Title I’s enforcement against segregation and discrimination in employment settings. See S. Rep. No. 101-116, at 30 (1989); supra Section III.B. Finally, JWOD NPAs are not “public entities” as defined by Title II of the ADA and therefore are not affected by Title II’s prohibition of discrimination. See 42 U.S.C. § 12131(1); see also supra Section III.B.

59. See A Cursory Look at AbilityOne, supra note 55, at 10.

60. 42 U.S.C. § 12101 (recognizing that segregation is “a serious and pervasive social problem” that diminished the rights of people with disabilities to “fully participate in all aspects of society”) (describing Congress’s findings that led to the passage of the ADA); 29 U.S.C. § 794 (prohibiting disability discrimination in programs receiving federal funding).

61. See infra Section III.A & B.

62. See 29 U.S.C. §§ 791–794; Emp. Assistance & Resources Network, The Rehabilitation Act of 1973 (Rehab Act), Emp. Assistance & Resources Network on Disability Inclusion, https://askearn.org/topics/laws-regulations/rehabilitation-act/ (last visited Jan. 16, 2020) [https://perma.cc/8HER-CR5L].

63. See Rehabilitation Act of 1973, Pub. L. No. 93-112, § 504, 87 Stat. 355, at 361, codified as amended at 29 U.S.C. § 794.

64. Id.

65. Id.

66. 29 U.S.C. § 794(a) (“No otherwise qualified individual with a disability . . . shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency.”).

67. See id. § 794(d) (incorporating the discrimination standard set forth in 42 U.S.C. § 12112(b)(1)). Title I of the ADA defines discrimination as “limiting, segregating or classifying . . . [an] employee in a way that adversely affects the opportunities or status of such . . . employee because of [their] disability.” 42 U.S.C. § 12112(b)(1).

68. See, e.g., DeVargas v. Mason & Hanger-Silas Mason Co., 911 F.2d 1377, 1382–83 (10th Cir. 1990) (determining that the government did not intend to subsidize the contractor by giving him a good price for their lab services, and therefore were not subject to § 504); Abdus-Sabur v. Hope Vill., Inc., 221 F. Supp. 3d 3, 10 (D.D.C. 2016) (determining that the contractor that operated a halfway house for disabled former inmates and receives funds from the Bureau of Prisons is justly compensated, and is therefore not subject to § 504).

69. See Abdus-Sabur, 221 F. Supp. 3d at 13 (determining that a federal contractor is not a recipient of federal assistance because he is not receiving a subsidy, instead he is merely compensated for the services he provided).

70. 29 U.S.C. § 794.

71. Some of the individual NPAs may be subject to that prohibition if they receive some other form of funding from federal assistance, such as funding from state vocational rehabilitation service. See Graves v. Methodist Youth Servs., Inc., 624 F. Supp. 429, 433 (N.D. Ill. 1985) (determining that a charitable organization was considered a program or activity receiving federal financial assistance because it received funds disbursed by state agency which were later reimbursed by the federal government).

72. See 41 C.F.R. § 60-741.47 (interpreting 29 U.S.C. § 793 to allow federal contractors to have sheltered workshops but does not allow them to consider the sheltered workshops as part of their affirmative action).

73. See Rogers v. Frito-Lay, Inc., 433 F. Supp. 200, 202 (N.D. Tex. 1977).

74. The original language of the statute sets a $10,000 threshold, but the Federal Acquisition Regulatory Council adjusted that threshold to $15,000. 29 U.S.C. § 793(a); 41 C.F.R. § 60-741(b). Affirmative action obligations for contractors includes inviting applicants to identify themselves, recruiting people with disabilities, collection data pertaining to applicants and hires with disabilities, and establishing a utilization goal for individuals with disabilities to assist in measuring the effectiveness of the contractor’s affirmative action efforts. Rogers, 433 F. Supp. at 202; Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals with Disabilities, 78 Fed. Reg. 58,682 (Sept. 24, 2013) (to be codified as 41 C.F.R. pts. 60-741).

75. See generally Off. of Fed. Contract Compliance Programs, About Us, Off. of Fed. Contract Compliance Programs, https://www.dol.gov/agencies/ofccp/about (last visited Oct. 25, 2020) [https://perma.cc/2CAG-9T6Z].

76. 41 C.F.R. § 60-741.45 (2019)

77. See Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals with Disabilities, 78 Fed. Reg. 58,682, 58,707 (Sept. 24, 2013) (to be codified at 41 C.F.R. pts. 60-741).

78. 29 U.S.C. § 793(d).

79. 41 C.F.R. § 60-741.47 (2019).

80. See 41 C.F.R. § 60-741.45(a), (d)(2)(i) (2019).

81. AbilityOne employs approximately 45,000 people who are blind or have significant disabilities. Fact Sheet, supra note 29.

82. Americans with Disabilities Act of 1990, Pub. L. No.101-336, 104 Stat. 327 (codified as amended at 42 U.S.C. §§ 12101–12213).

83. See A Cursory Look at AbilityOne, supra note 55, at 9.

84. 42 U.S.C. § 12101(b)(1).

85. Id. § 12101(a)(2).

86. Id. § 12101 (describing Congress’s findings that led to the passage of the ADA).

87. Id. § 12111(5)(a) (defining employer as a “person engaged in an industry affecting commerce who has [fifteen] or more employees for each working day in each of [twenty] or more calendar weeks in the current or preceding calendar year . . .”).

88. Id. § 12131(1).

89. Id. § 12112(b)(1).

90. See infra Sec. IV. IV.A–IV.B

91. Congress explicitly stated that Title I of the ADA is “in no way is intended to diminish the continued viability of sheltered workshops and programs implementing the Javits-Wagner O’Day Act.” S. Rep. No. 101-116, at 30 (1989).

92. Id. at 44 (“Section 504 prohibits discrimination only by recipients of [f]ederal financial assistance.”).

93. 42 U.S.C. § 12132.

94. See Olmstead v. L.C. ex. rel. Zimring, 527 U.S. 581, 600 (1999) (citing 42 U.S.C. § 12101(a)(2)) (arguing that state and local public entities must avoid unnecessary segregation of people with disabilities and make services available in the most integrated setting possible); Id. at 582 (concluding that under Title II, unnecessary segregation is discrimination per se); A Cursory Look at AbilityOne, supra note 55, at 9–10.

95. Olmstead, 527 U.S. at 600–01.

96. Id. at 607 (holding that there is an affirmative duty to provide community-based services when (1) community-based services would be appropriate for the person with a disability, (2) the person with a disability is not opposed to community-based services, and (3) the services could be reasonably accommodated).

97. See, e.g., Letter from Thomas E. Perez, Assistant Attorney General, to John Kroger, Attorney General for the State of Oregon (June 29, 2012) (on file with the Department of Justice) (noting that “the civil rights of persons with disabilities are isolated by unnecessary segregation in a wide variety of settings including in segregated, non–residential employment and vocational programs”).

98. 42 U.S.C. § 12131(1).

99. This may be because Congress believed that Section 504 of the Rehab Act sufficiently covered the federal government and Title II was meant to cover the remaining states and local governments so that people with disabilities will receive uniform treatment. Compare id., with 29 U.S.C. § 794; see also S. Rep. No. 101-116, at 2, 57 (1989) (explaining that the DoJ will enforce Title II of the ADA like it enforces Section 504 of the Rehab Act); Establish a Clear and Comprehensive Prohibition of Discrimination on the Basis of Disability: Hearing on S. 933 Before the Subcomm. of the Handicapped of the S. Comm. on Labor & Human Res., 101st Cong. 488–89 (1989) (statement of Neil F. Hartigan, Illinois Attorney General) (asserting that there is a need for uniformity in ending discrimination against people with disabilities because programs that are identical in practice can treat people with disabilities completely differently based on their sources of funding).

100. See 2018 HELP Comm. Report, supra note 36, at 8.

101. See id. at 9.

102. See id.

103. See Workforce Innovation and Opportunity Act of 2014, Pub. L. No. 113-128, § 404(5), 128 Stat, 1425, 1633–34 (2014).

104. See State Vocational Rehabilitation Services Program, 81 Fed. Reg. 55,630, 55,638 (Aug. 19, 2016) (to be codified at 34 C.F.R. §§ 361, 363, 394).

105. Off. of Special. Educ. & Rehab. Servs., RSA: Integrated Location Criteria of the Definition of Competitive Integrated Employment FAQs, U.S. Dep’t of Educ. (Jan. 18, 2017), https://www2.ed.gov/about/offices/list/osers/rsa/wioa/competitive-integrated-employment-faq.html?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=#question1 [https://perma.cc/2PKP-2W2L]; see also supra Section III.A.

106. See U.S. Gov’t Accountability Office, GAO-18-577, Vocational Rehabilitation: Additional Federal Information Could Help States Serve Employers and Find Jobs for People with Disabilities 19 (2018) (in interviews, some VR officials noted that employees at AbilityOne NPAs tend to only work with other employees with disabilities, which they see as inconsistent with regulations requiring work settings to be integrated).

107. See Comm. for Purchase from People Who are Blind or Severely Disabled, Fiscal Year 2019 Budget Justification 7 (2019) [hereinafter FY 2019 Budget].

108. See GAO-18-577, supra note 106 at 19 (thirty-one of seventy-four VR agencies reporting that they have either decreased or completely stopped referring clients to AbilityOne).

109. Federal contractors such as JWOD NPAs are not programs or activities receiving federal assistance, and therefore they are not affected by section 504 of the Rehabilitation Act. See 29 U.S.C. § 794(a); see also supra Section III.A. Additionally, Congress explicitly excluded JWOD NPAs from ADA Title I’s enforcement against segregation and discrimination in employment settings. See S. REP. No. 101-116, at 30 (1989); supra Section III.B. Finally, JWOD NPAs are not “public entities” as defined by Title II of the ADA and therefore are not affected by Title II’s prohibition of discrimination. See 42 U.S.C. § 12131(1); see also supra Section III.B.

110. Nat’l Council on Disability, Policies from the Past in a Modern Era: The Unintended Consequence of AbilityOne & 14(c) 15 (2020) [hereinafter Policies from the Past]; see U.S. AbilityOne Comm’n, supra note 18 (“one of the largest sources of employment in the United States for people who are blind or have significant disabilities.”).

111. See supra Section III.A–B.

112. See Hearing JWOD 1971, supra note 52, at 97 (statement of John F. Nagle, Chief of Wash. Off., National Federation for the Blind) (“[W]e believe the goal, and the only goal of the Wagner-O’Day Act, of providing maximum employment opportunities for blind workers and for other severely handicapped workers . . . will be best served by requiring at least [seventy-five] percent direct blind labor . . . .”); H.R. Rep. No. 92-228, at 14 (“to assure that this preferential procurement program is, in fact, used to provide employment opportunities for blind and other severely handicapped individuals who are incapable of engaging in regular competitive employment”).

113. See New Deal to Real Deal, supra note 13, at 35.

114. See discussion supra Section II.A, III.

115. During site visits, “a number of NPA work environments were segregated. NCD observed several NPA call centers and heard about others where the most direct interaction at the worksite was only between people with disabilities, or supervisors and managers without disabilities.” Policies from the Past, supra note 110, at 61.

116. See generally Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999); see also U.S. Dep’t of Justice, Fighting Discrimination in Employment Under the ADA, ADA.gov, https://www.ada.gov/employment.htm (last visited Jan. 23, 2020) [https://perma.cc/6DY8-PR6N] (“Historically, many states have provided . . . employment services to individuals with disabilities in unnecessarily segregated settings, such as sheltered workshops . . . [DoJ has resolved claims] that state funded and administered employment service systems violated the ADA’s integration mandate.”).

117. See discussion supra Section III.A.

118. JWOD requires many federal departments to procure from qualified NPAs. 41 U.S.C. § 8504.

119. New Deal to Real Deal, supra note 13, at 41.

120. Id.

121. See id. at 42.

122. Compare 41 U.S.C. §§ 8501(6)(c), 8501(7)(c), with Workforce Innovation & Opportunity Act of 2014, Pub. L. No. 113-128, §2, § 4,404(5), 128 Stat. 1425, 1428–29, 1633 (2014).

123. Hoffman, supra note 44, at 151.

124. Hearing JWOD 1971, supra note 52, at 42 (statement of Ben P. Robertson, Deputy Admin. of Wage & Hour Divs. & Pub. Contract Div., U.S. Dep’t of Labor).

125. Examining Federal Employment Programs for Persons with Disabilities: Hearing of the S. Comm. on Health, Educ., Labor, & Pensions, 109th Cong. 63 (2005) (statement of Bob Lawhead, Exec. Dir. Employment Link) [hereinafter 2005 S. HELP Comm. Hearing].

126. Id.

127. U.S. Gov’t Accountability Office, GAO-01-886, Special Minimum Wage Program: Centers Offer Employment and Support Services to Workers with Disabilities, but Labor Should Improve Oversight 4 (2001) (reporting that only five percent of workers left work centers to take a job in the community).

128. See FY 2019 Budget, supra note 107, at 25 (describing that in FY 2016, 2,100 employees out of 45,000 received assistance to move to integrated employment).

129. A Cursory Look at AbilityOne, supra note 55, at 14.

130. See 41 C.F.R. § 51-1.3 (2019); 2005 S. HELP Comm. Hearing, supra note 126, at 63–64 (statement of Bob Lawhead, Exec. Dir. Employment Link) (explaining that JWOD-affiliated sheltered workshops do not place employees into competitive employment at very high rates “largely because they would lose the workers they need to perform those contracts.”); id. at 87 (statement of Jim Gibbons, President, Nat. Indus. for the Blind) (“[T]here is little incentive to move individuals from ‘sheltered workshops’ into meaningful employment.”).

131. Cari DeSantis, President & CEO of Melwood, Comment at the 2019 Javits-Wagner-O’Day Legal and Policy Symposium (Oct. 17, 2019).

132. See id.

133. See id.

134. See 2005 S. HELP Comm. Hearing, supra note 125, at 64 (Statement of Bob Lawhead, Exec. Dir. Employment Link).

135. See All Products, AbilityOne Program., https://www.abilityone.com/all-products/category/all-products (last visited Nov. 1, 2020) [https://perma.cc/WNL5-PFK2].

136. See Section 898 Panel, supra note 28, at 23 (recommending to allow competition within the program); Melwood, Top 11 Proposals for Change to the AbilityOne Program 2–3 (2019) (explaining that competition on price would require reducing costs in general and administrative expenses for vocational supports for people with disabilities).

137. See 2005 S. HELP Comm. Hearing, supra note 125, at 64 (statement of Bob Lawhead, Exec. Dir. Employment Link).

138. See H.R. Rep. No. 92-228, at 6 (1971) (explaining how there are an estimated 800,000 individuals with disabilities who need vocational rehabilitation each year, but only 250,000 of them are “rehabilitated to useful employment.”).

139. See Ernie Tedeschi, Will Employment Keep Growing? Disabled Workers Offer a Clue, N.Y. Times (Mar. 15, 2018), https://www.nytimes.com/2018/03/15/upshot/will-employment-keep-growing-disabled-workers-offer-a-clue.html?smid=tw-upshotnyt&smtyp=cur [https://perma.cc/AN7F-TYLT] (describing the Current Population Survey data).

140. See Mikhail Zinshetyn, The Plight of the Disabled Graduate, Atl.: Educ. (June 4, 2015), https://www.theatlantic.com/education/archive/2015/06/the-plight-of-the-disabled-graduate/394916 [https://perma.cc/897E-2HHM] (“As recently as the early 1970s, just one-fifth of students with disabilities were enrolled in public schools. Today, some [eighty-two] percent of students considered disabled are ‘mainstreamed.’”); see also American Speech-Language-Hearing Ass’n, Graduation Rate for Students with Disabilities Rises, ASHA (Jan. 1, 2017), https://leader.pubs.asha.org/doi/10.1044/leader.NIB3.22012017.11 [https://perma.cc/G7X8-5S4T] (referencing U.S. Department of Education data).

141. Cari DeSantis, President & CEO of Melwood, Comment at the 2019 Javits-Wagner-O’Day Legal and Policy Symposium (Oct. 17, 2019).

142. 41 U.S.C. § 8501(5), (8).

143. U.S. Civil Rights Comm’n, Subminimum Wages: Impacts on the Civil Rights of People with Disabilities 150 (2020) [hereinafter U.S. Civil Rights Comm’n].

144. See id. at 226 (statement of Comm’r David Kladney) (comparing his own “personal real-life experience” as a commercial dishwasher with the dishwashers employed at MVLE).

145. See Policies from the Past, supra note 110, at 44 (describing that in discussions with an advisory group that was of former AbilityOne employees and a former manager of an NPA, the group discussed how NPAs only hire employees who marginally fall under the definition of significantly disabled); see also Teresa Grossi, Dir. of Strategic Devs. & Assoc. Research Scientist, Ind. Inst. on Disability & Cmty at Ind. Univ., Panel at the U.S. Commission on Civil Rights Hearing on Subminimum Wages (Nov. 15, 2019) (noting that fifty-eight percent of individuals in sheltered workshops are individuals with mild intellectual disabilities, followed by moderate intellectual disability (twenty-eight percent) and a mental illness (seven percent)).

146. See Robert E. Cimera, Does Being in Sheltered Workshops Improve the Employment Outcomes of Supported Employees with Intellectual Disabilities? 35 J. Vocational Rehab. 21, 21 (2011).

147. See id.

148. See id. at 24–25 (noting that while both groups were almost equally likely to be employed (60.4% versus 59.6%), those in non-sheltered workshops earned more, worked more hours and cost less to serve).

149. See Michael Levere et al., Policy Changes for SourceAmerica Nonprofit Agencies: Impacts of Eliminating Section 14(c) and Reducing AbilityOne’s Required Direct Labor Ratio 38 (2017) (contracting for SourceAmerica under Mathematica) [hereinafter SourceAmerica Policy Report].

150. Id.

151. Scott Bronstein & Drew Griffin, Sources: Nation’s Disabled Work Program Mired in Corruption, Fraud, CNN (July 31, 2015), https://www.cnn.com/2015/07/27/us/disabled-work-program-investigation/index.html [https://perma.cc/ECJ4-ETW3] (Inspectors General that investigated SourceAmerica included the General Services Administration OIG, Department of Defense OIG, the Department of Veterans Affairs OIG, and the State Department OIG).

152. See id. (noting that SourceAmerica is being investigated for “illegal operations, financial fraud, mismanagement, operating in violation of the law, steering of contracts, and possibly obstruction of justice”).

153. See NISH, AbilityOne Regulatory Assistance Guide 23–24 (2008) (noting that NPAs DLH ratio on all Federal contracts must never be below seventy-five percent).

154. See id. at 14; see also A Cursory Look at AbilityOne, supra note 55, at 13.

155. A Cursory Look at AbilityOne, supra note 55, at 13 (citing Comm. for Purchase from People Who Are Blind or Severely Disabled, “Agency Review Manual,” § 3.13.6 (2007)).

156. See id. at 14.

157. Id. at 13.

158. See Workforce Innovation and Opportunity Act of 2014, Pub. L. No. 113-128, § 404(5)(A)(i)(aa)–(bb), 128 Stat, 1425, 1633 (2014).

159. Id.

160. See New Deal to Real Deal, supra note 13, at 52 (noting that forty-eight percent of all AbilityOne employers have 14(c) certificates).

161. Fair Labor Standards Act of 1938, Pub. L. No. 75-718, § 6, 52 Stat. 1060, 1062.

162. 29 U.S.C. § 214(c).

163. Id. (“The Secretary . . . shall by regulation or order provide for the employment, under special certificates, of individuals (including individuals employed in agriculture) whose earning or productive capacity is impaired by . . . physical or mental deficiency . . . at wages which are (A) lower than the minimum wage . . . and (C) related to individual’s productivity.”); see also Theresa Golde, Comment, Pennies an Hour: Was This Really the Intent Behind § 14(c) of the Fair Labor Standards Act? A Note Calling for a System Change to an Otherwise Broken System, 48 Tex. Tech. L. Rev. 459, 472 (2016).

164. U.S. Civil Rights Comm’n, supra note 143, at i–ii, 221–22 (2020).

165. Id. at 221.

166. See Exec. Order No. 13658, 79 Fed. Reg. 9849, 9851 (2014) (establishing a minimum wage for federal service and construction contractors).

167. New Deal to Real Deal, supra note 13, at 52. But cf. SourceAmerica FY19 Snapshot, SourceAmerica (2019), https://www.sourceamerica.org/fiscal-year-2019-snapshot (last visited Nov. 1, 2020) [https://perma.cc/E2SC-AL77] (explaining that average hourly wage on AbilityOne contracts is $14.40).

168. New Deal to Real Deal, supra note 13, at 53.

169. Carol DeSantis, CEO of Melwood, Panel at the U.S. Commission on Civil Rights Hearing on Subminimum Wage (Nov. 15, 2019).

170. See id. (describing the use of 14(c) as a time where her employees were filled with anxiety, worry, and discouragement and that the transition to full pay increased morale and the quality of their work).

171. Policies from the Past, supra note 110, at 11.

172. U.S. Civil Rights Comm’n, supra note 143, at 138.

173. Fact Sheet, supra note 29.

174. The federal minimum wage is $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). The U.S. Civil Rights Commission estimates that in 2015, 9.5% of all employees of AbilityOne contractors were paid less than the minimum wage. U.S. Civil Rights Comm’n, supra note 143, at 138. However, it is important to note that, while the U.S. AbilityOne Commission estimates that the average wages in FY 2017 for production contracts were $9.12 an hour, this estimate is based on aggregate wage data, meaning it “does not collect data on wages paid by the NPAs to individual AbilityOne employees.” A Cursory Look at AbilityOne, supra note 55, at 17–18. Therefore, it is difficult to calculate the range of hourly wage rates that employees receive and how many are impacted by section 14(c) subminimum wage. See A Cursory Look at AbilityOne, supra note 55, at 18.

175. U.S. Civil Rights Comm’n, supra note 143, at 223.

176. Id. at 219; see also Golde, supra note 163, at 492–96 (explaining how § 14(c) is a self-fulfilling prophecy, that it fulfills the stereotype that different means facilitates lower expectations towards the disabled population, with very little consideration of the individual’s capabilities).

177. Advisory Comm. on Increasing Competitive Integrated Emp’t for Individuals with Disabilities, Final Report 57–61 (2016) [hereinafter ACICIEID Report]; see Policies from the Past, supra note 110; see 2018 HELP Com. Report, supra note 36, at 20; (recommending that JWOD be modernized to ensure that AbilityOne promotes competitive integrated employment); see generally Section 898 Panel, supra note 28, at 20 (recommending that Congress amend the JWOD Act to reduce the ratio and change the definition of direct labor hours).

178. See Workforce Innovation and Opportunity Act of 2014, Pub. L. No. 113-128, § 404(5), 128 Stat, 1425, 1633–34 (2014).

179. See, e.g., Section 898 Panel, supra note 28, at 20 (discussing reducing the ratio to a range of fifteen to fifty percent and changing the definition to include indirect labor positions to be included in the ratio); ACICIEID Report, supra note 177, at 58–59 (recommending changing the ratio to avoid the congregation of people with disabilities in the workplace without reducing the number of jobs available to people with disabilities).

180. Section 898 Panel, supra note 28, at 20 (recommending that Congress amend the definition for Direct Labor hours to include indirect labor positions such as supervisory roles, administrative roles, and others in the ratio requirement); NCD made the same recommendation in its 2019 report. See A Cursory Look at AbilityOne, supra note 55, at 28 (“Congress should amend the JWOD Act to include indirect labor in the disability labor hour ratio and to promote more integrated AbilityOne settings.”).

181. E.g., Sachs Mgmt., Similarities and Differences Between the 898 Panel Recommendations and the Social Enterprise Set Aside Concept (2018).

182. See supra Section III.

183. See generally Policies from the Past, supra note 110.

184. Id. at 71.

185. Id. at 71, 73.

186. Id. at 74.

187. Id.

188. Policies from the Past, supra note 110, at 71.

189. See 42 U.S.C. § 12111(5); see supra Section III.B.

190. See 42 U.S.C. § 12112.

191. See GAO-18-577, supra note 106, at 20.

192. See supra Section IV.IV.B–IV.D.

193. New Deal to Real Deal, supra note 13, at 72.

194. Id; Golde, supra note 163, at 483 (describing how the state worked alongside providers to stimulate a conversion from sheltered workshops to individualized support); see generally U.S. Civil Rights Comm’n, supra note 143, at 180–208 (describing a site visit to Vermont).

195. Serres, supra note 1.

196. GAO-18-577, supra note 106, at 20.

197. See ACICIEID Report, supra note 177, at 33 (explaining that the predominant business narrative for hiring individuals with disabilities has been that “it is ‘the right thing to do’” rather than appealing to the bottom line and showing that employees with disabilities are an untapped resource for talent and a cost-effective way to build an inclusive workforce).

198. New Deal to Real Deal, supra note 13, at 110 (noting that there is a staffing crisis among direct support professionals, and low wages are causing high attrition).

199. ACICIEID Report, supra note 177, at 34.

200. See generally Abigail E. Cregge, Note, Building Blocks of Change: State Initiatives and the Fair Labor Standards Act § 14(c), 15 Rutgers J.L. & Pub. Pol’y 285, at 340–42 (2018); U.S. Civil Rights Comm’n, supra note 143, at 222 (noting that “testimony and research showing successful employment outcomes in Vermont . . . suggests that a successful transition to competitive integrated employment requires significant investments in time and planning to ensure implementation of strategies like ongoing education and training of staff and involvement of stakeholders.”).

201. Golde, supra note 163, at 483.

202. See Cregge, supra note 200, at 341.

203. Golde, supra note 163, at 484. These supports include “employment assessment, employer and job development, job training, and ongoing support to maintain employment.” Id.

204. See Ass’n of People Supporting Employment First, APSE Employment First Statements, APSE, https://apse.org/wp-content/uploads/2018/09/SABE-doc_D4.pdf (last visited Nov. 1, 2020) [https://perma.cc/L4JC-VMDK].

205. See 2018 HELP Comm. Report, supra note 36, at 8 (describing employment first).

206. 41 U.S.C. §§ 8501(6)(c), 8501(7)(c) (requiring participating nonprofits to have people with disabilities perform “at least [seventy-five] percent of” their overall “direct labor” hours).

207. See Policies from the Past, supra note 110, at 10.

Entity:
Topic:

Noga Baruch

J.D. Expected May 2021, The George Washington University Law School; BA in Sociology May 2018, University of Georgia.