In a largely symbolic move, the Reno City Council unanimously moved forward on a resolution last week to prohibit the use of subminimum wage in city contracts, a practice that allows employers to pay disabled workers a lower training wage — in some cases pennies per hour.
Only one Reno contractor uses a subminimum wage — and the resolution would not apply retroactively — but council members said their action would send a message of where the city stands on a practice allowed by state and federal law. On Wednesday, the council directed city staff to draft a resolution that will be voted on for final approval in the coming weeks.
Passed in 1938, the Fair Labor Standards Act allowed companies to pay subminimum wages based on productivity. The legislation was originally designed to provide incentive to companies to hire disabled workers. Proponents argue that the minimum wage carve-out still creates a training opportunity that otherwise wouldn’t exist. But opponents say the system creates opportunities for exploitation and makes career advancement impossible as workers perform rote tasks like creating cardboard boxes or assembling widgets.
Erik Jimenez, the chair of the Reno Access Advisory Committee, casted the resolution as a way to blunt a little-discussed practice that he said discriminated against disabled residents.
“In the state of Nevada, pursuant to federal law and Nevada state law, people with disabilities are allowed to be paid below the minimum wage,” said Jimenez, who lives with cerebral palsy. “When I say below the minimum wage, I don’t mean five dollars an hour. I mean 10 cents an hour.”
About 1,100 people in Nevada are paid a subminimum wage, Jimenez noted. Like many states, Nevada has various statutes that, in addition to federal law, allow employers to pay wages under the minimum wage of $7.25 an hour. According to the Department of Labor, there are nine Nevada organizations, from Elko to Las Vegas, that pay subminimum wage.
Because there is no floor for the subminimum wage, employees can end up earning as little as 10 cents an hour. Under subminimum wage law, employees are paid based on the tasks they perform in an hour’s time. As a hypothetical, workers might be paid 50 cents for every task they perform. If they completed one task per hour, they would earn only make 50 cents in that hour.
Alaska, Maryland, New Hampshire and the city of Seattle have banned the practice. Reno’s resolution would not go that far. Instead of an ordinance, supporters opted for a resolution. When passed, it would state the city’s opposition to entering into future contracts that allow for the use of subminimum wage. Jimenez said the resolution would be the first of its kind in the country.
“Once we give people with disabilities the ability to have dignity and the ability to make an equal wage to everyone else, we can become an inclusive and thriving community,” Jimenez said.
According to a memo circulated before the meeting, High Sierra Industries is the only city of Reno contractor that sometimes pays subminimum wages. As a city subcontractor, it provides cleaning services in downtown Reno, working with the business improvement district. But High Sierra Industries, a nonprofit that aims to serve residents with disabilities, does not use a subminimum wage under that contract, said the memo from Assistant City Manager Bill Thomas. Workers are paid $8.68 an hour with their health-care premiums covered.
Melany Denny, the chief operating officer for High Sierra Industries, defended the use of a subminimum wage in certain cases. She said the company pays about 30 of its workers a subminimum wage, but that many receive compensation in line with the minimum wage.
“It is a tool for folks who need job training so that they can learn basic skills: how to show up on time, how to dress properly for a job, how to get along with your co-workers,” she said.
She added that the practice is regulated, making exploitation less likely.
“It is highly regulated by the state and the Department of Labor so exploitation is looked at by both the federal government and the state government,” Denny told the council during public comment. “It is a tool for training for folks. Keep that in mind. I kept hearing exploitation and wanted you to know that these things are actually looked at by various governmental entities.”
Jimenez disagreed, saying that the “training wages” provided little real-world training.
“This model of training wages is not being used to transition them to [the job market],” he said.
In addition to the resolution, Jimenez noted a statewide effort underfoot to re-evaluate the practice. Las Vegas Assemblyman Richard Carrillo submitted a bill draft request for the Legislature to look at further regulating the practice and phasing out its use across the state.
The details of the bill are still being worked out. In its draft form, Jimenez said the bill would ban organizations from using subminimum wage in the future and create a six-year sunset period for companies currently using the practice. It would also establish a wage floor of $4.25, create reporting requirements and protect collective bargaining rights to subminimum wage workers.
Of the roughly 1,100 subminimum wage employees in Nevada, most of the workers — about 904 — reside in Southern Nevada, according to the Department of Labor. Yet Reno city council members stressed that their resolution would send a symbolic message to the rest of the state.
Reno Councilwoman Jenny Brekhus, who worked with the Access Advisory Committee, said she supported the action as a “good start” for the city to lead on the issue.
“I’ve heard both sides,” Brekhus said. “I think that this is a big step, and it is a positive one.”
The approach of paying disabled employees by task is outdated, Brekhus argued.
“What I understood from some of the experts on the Access Advisory Committee is that it’s a model that has very much expired in time,” she added. “And some of the Access Advisory Committee members who do a lot of hiring in the workplace said that, ‘Look, the piecemeal [approach] — the subminimum wage — is not helpful to building inclusive work environments.’”