On June 16, 2021, Hawaii enacted Senate Bill 793 (the “Act”), which repeals an exemption to the minimum wage for disabled employees, often referred to as “the disability subminimum wage.” The Act took effect immediately and requires all Hawaii employers pay disabled individuals no less than the state minimum wage.

Previously, Section 14(c) of federal Fair Labor Standards Act permitted Hawaii employers to pay individuals with disabilities less than the state minimum wage, which is currently set at $10.10.  However, the Act explains that the exemption, which was intended to “train and prepare individuals with disabilities to gain open-market competitive jobs,” has shown over time to “simply [provide] a subsidy for sheltered workshops that do not support movement of [workers] to competitive employment.” In repealing the exemption, the Act states that the exemption no longer fulfills its original purpose and instead has led to discrimination against individuals with disabilities.

Hawaii employers should take steps to ensure that they no longer rely on the disability subminimum wage exemption.

Alexandria Adkins, a 2021 Summer Associate (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.