I. Introduction
Bill Villemaire began his workday by following the sound of the cowbell. 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.” “’I wanted to destroy that cowbell’” he lamented, “’They treated us like animals. . . . It was soul-draining.’” He worked in that sheltered workshop for thirty-six years. It served as a segregated facility day program attended by adults with disabilities as an alternative to working in open labor markets. Bill earned “as little as $2 a day.” Finally, at the age of fifty-four, Bill began working in a local grocery store, making above the federal minimum wage stocking shelves. 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 . . .’”
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, when Vermont became the first state to close its sheltered workshops. According to a 2018 report by the National Council on Disability (NCD), there remain approximately 321,131 people with disabilities working in sheltered workshops across the United States.
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.” One reason that sheltered workshops and other segregated employment have remained so prominent is due to the Javits-Wagner-O’Day Act (JWOD), a statute first enacted in 1938 during the New Deal Era. 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. 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.”
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, 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. 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, as well as the USB flash drive. Even the toilet paper in the bathroom was created by AbilityOne. Likewise, if you were an active service member in combat, the magazine cartridge for your M16 rifle, your explosion-suppressant foam, and the supplies in your first aid kit were created by AbilityOne. 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, $2.1 billion of which were from prime contracts with the Department of Defense. 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.” 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. The U.S. AbilityOne Commission, 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. The Commission designated three Central Nonprofit Agencies (CNAs), to distribute the orders from federal agencies among different qualified nonprofits that participate in the program.
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. 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.” 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.—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.
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. Under Roosevelt, the federal government implemented a series of programs and projects aimed to restore prosperity to the country, known as the New Deal. Congress enacted multiple bills aimed at employing U.S. citizens and protecting workers. 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 . . .”
The purpose of the bill was to provide the blind with gainful employment and to prevent the blind workmen from becoming “public charges.” 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.” At the time, there were few sheltered workshops that provided employment for the blind, and Congress believed that more blind individuals would be employed by creating a market for these sheltered workshops.
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.” The Wagner-O’Day Act was seen as quite successful for the blind, and it was thought that expanding the program would benefit many other disabled individuals, such as Vietnam War veterans. 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.
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. 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.” 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.
Since the amendment was signed into law in 1971, JWOD has been amended eight more times. 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.
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. 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). 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. 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. 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. However, Title II and Section 504 of the Rehab Act do not apply to JWOD-qualified NPAs.
A. Sections 503 and 504 of the Rehabilitation Act of 1973
In 1973, two years after JWOD, Congress enacted the Rehab Act which prohibits discrimination on the basis of disability in programs conducted by federal agencies—programs receiving federal financial assistance. The Rehab Act also prohibits disability discrimination in the employment practices of federal agencies and federal contractors. Section 504 of the Rehab Act prohibits discrimination against people with disabilities in all programs or activities receiving federal funding. 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.
Typically, government contractors are not considered programs or activities receiving federal financial assistance under section 504 of the Rehab Act. 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. 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. 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.
Section 503, which does apply to federal contractors, does not prohibit employers from segregating employees with disabilities. 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. 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.”
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, established “a utilization goal of [seven] percent for employment of qualified individuals with disabilities for each job group in the contractor’s workforce.” The utilization goal is not a quota, and a failure to meet the goal is not a per se violation of the law. 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. However, OFCCP recognizes federal contractors’ use of sheltered workshops and segregated employment and simply says that they do not constitute affirmative action.
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. 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.
B. Titles I and II of the Americans with Disabilities Act of 1990
In 1990, Congress passed the ADA, arguably the most seminal disability civil rights law in the U.S. The ADA was intended “to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.” 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. 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.” Title I of the ADA covers disability discrimination by private employers and Title II of the ADA covers disability discrimination by state and local government entities.
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.” 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. However, Congress explicitly stated in its legislative history that Title I of the ADA was not intended to apply to JWOD NPAs.
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. Title II states that “no qualified individual with a disability shall, by reason of such disability . . . be subject to discrimination” by any public entity. 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. 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. 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.
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. 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. However, Title II, and by extension the Olmstead decision, may not apply to federal contractors. 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.” WIOA reflects that new policy goal. WIOA redefined the standard for competitive integrated employment 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.
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. 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. As a result of this regulation, many VR agencies have stopped referring their clients to NPAs operating under the AbilityOne program. While the U.S. AbilityOne Commission believes that certain AbilityOne positions, such as service jobs, can offer integrated settings, there is an understanding among VR agencies that most AbilityOne NPAs do not meet that requirement. 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. AbilityOne is one of the largest employers of people with disabilities in the country with around 45,000 employees with disabilities. 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. 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. However, the seventy-five percent requirement has slowed efforts to modernize employment opportunities for people with disabilities. 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. 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. 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.
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. 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. 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.
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. As a result, those contracts did not correspond with the integrated service model and could not be considered competitive integrated employment.
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. “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. 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.” In reality, AbilityOne nonprofits have had little-to-no success transitioning their employees to integrated employment. In fact, JWOD program data consistently shows that only five percent of JWOD workers move into supported or competitive employment each year—this number did not change from 2001 to 2016. 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.
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. At the 2019 Javits-Wagner-O’Day Legal and Policy Symposium, one head of an NPA recognized this disincentive. She explained that when JWOD was made into law, it did not contemplate that people with significant disabilities could move into higher, supervisory roles. 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.
Second, the federal contracts that NPAs participate in are demanding and require high quality products. NPAs offer over 15,000 products that must all meet federal requirements, and they are facing pressures to make the products the most cost-effective. 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.
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. 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.” Likewise, people with disabilities are better educated than they were in the 1930s and 1970s. 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.
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.” 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, 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. The majority of people with disabilities in sheltered workshops such as AbilityOne NPAs are individuals with mildintellectual disabilities. 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. These individuals were matched based on diagnosis, presence of secondary conditions, and gender. The study found that both groups were equally as likely to be competitively employed in the community.
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. 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.” In 2015, the DoJ and several Inspectors General 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.”
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. 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.” 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.” The “reasonable observer” standard is quite vague, and as NCD notes, contrasts with the original congressional findings in the ADA. 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.
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. 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. However, many AbilityOne NPAs hold special certificates issued by the Department of Labor (DoL) that allow the NPAs to pay subminimum wage. 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. FLSA Section 14(c) allows employers of people with disabilities to pay those employees below minimum wage. 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.
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.” 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.
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, nearly half of all AbilityOne employers have Section 14(c) certificates. In a 2018 report, NCD explained that the “workshop business model is largely unsustainable unless people are paid subminimum wages.” 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.
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. But there are 233 NPAs affiliated with AbilityOne that still possess a § 14(c) certificate, and in 2015, “AbilityOne contractors employed 4,426 individuals who were paid less than minimum wage.” Since AbilityOne is one of the largest employers of people with disabilities in the country, this could mean that a large portion of employed people with disabilities are in fact being paid far below the federal minimum wage.
In September 2020, the U.S. Commission on Civil Rights published a report recommending that Congress repeal Section 14(c). 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).
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.
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. To meet that definition, Congress would have to reduce the DLH ratio requirement, amend the definition of direct labor hours to include indirect labor, and require that AbilityOne contractors phase out the use of Section 14(c) waivers.
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. 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. In the report, NCD lists sixteen recommendations as part of its overall conclusion that Congress should pass legislation to phase out the AbilityOne program. 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).
Additionally, “NCD recommends that existing CNAs and NPAs be used as a tool during the transition.” 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.” 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. 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. As a result, their employees with disabilities would be protected from discrimination based on disability.
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, but also remove the conflict of interest created by NPAs serving as both employers and support providers.
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. 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.” 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.
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. This may be due to the seemingly outdated cultural views of private employers on hiring people with disabilities, a lack of support from competent and well-educated employment services personnel, or a lack of opportunities for people with disabilities to enter training programs that better meet the needs of businesses. 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. 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. 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). By 2002, Vermont closed all of its sheltered workshops and reallocated all the funding from sheltered workshops to individualized supports for employment. 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.
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. 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. 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. 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.
