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Review of Situation of Goodwill Industries in connection with Fair Labor Standards Act

1. On October 24, 1938 a Federal Law went into effect which was known as the Fair Labor Standards Act. It provided certain minimum wages and maximum hours for all persons engaged in industry which was in interstate commerce.

2. It did provide certain exemptions, but sheltered workshops and charitable organizations such as Goodwill Industries were not exempted under the Act.

3. The Fair Labor Standards Act is administered by a special division in the Department of Labor, known as the Wage and Hour Division of the United States Department of Labor.

4. It has been the general informal ruling of the counsel of the Wage and Hour Division that Sheltered Workshops as such were not exempted in any way under the Act and that any of their activities that might be construed to be in interstate commerce were subject to the conditions of the Act.

5. A group of executives of Sheltered Workshops, among whom was your executive secretary, directed the attention of the Administrator of the Act to the fact that the application of the requirements of the Fair Labor Standards Act to the Sheltered Workshops would work great hardship upon them and thus upon handicapped persons being served by them, unless there were some special provisions made whereby Sheltered Workshops could observe the requirements of the Act through adjustments being made in the regulations to cover the particular problems and service of Sheltered Workshops which were non-profit organizations and which were interested only in helping people to help themselves.

6. The Administrator of the Wage and Hour Division did later issue a special temporary order which exempted Sheltered Workshops from the wage provisions of the Act, providing they paid handicapped workers in accordance with their ability and in proportion to the minimum wage requirements of the Act. The temporary exemption did not affect the matter of hours. Thus Sheltered Workshops are required to meet the regular provisions of the Act so far as maximum hours are concerned which at the present time are 42 per week and next year will be reduced to 40 per week.

7. The Administrator also appointed a committee to be known as the Sheltered Workshop Advisory Committee to the Wage and Hour Division of the United States Department of Labor. This committee includes six executives of Sheltered Workshops, two union labor representatives-,- two commercial industry representatives, one representing the general public and one representing the Wage and Hour Division.

8. The Sheltered Workshop Advisory Committee did after several months of work, present to the Administrator proposed regulations to govern Sheltered Workshops under the Act. The Administrator, except for necessary minor mechanical changes, issued those regulations as recommended by the Sheltered Workshop Advisory Committee.

9. A copy of those regulations has been sent to all Sheltered Workshops and if any Goodwill Industries has not received then, your executive secretary should be advised at once and he will see that the Wage and Hour Division send them a copy direct from Washington.

10. The Fair Labor Standards Act itself does provide a way through special individual certification, whereby handicapped persons may be employed in commercial industry at a sub-minimum rate of not loss than seventy-five percent of the minimum wage. The request for such certificates to be applied for by both the employer and the employee. Sheltered Workshop members of the Advisory Committee have insisted that while such an arrangement may be advisable in handling the situation in commercial industry, Sheltered Workshops are social service organizations and individual certification should not be required. Throughout all discussion Sheltered Workshop Advisory Committee members have tried to keep before the Wage and Hour Division staff the fact that Sheltered Workshops are interested primarily in helping handicapped people to help themselves.

11. The final regulation issued by the Administrator to cover the situation of the Sheltered Workshops under the Fair Labor Standards Act does appear to accomplish the things requested by the Sheltered Workshop members of the Advisory Committee. It does recognize the fact that Sheltered Workshops are different than commercial industry; it provides for a group Sheltered Workshop certificate rather than an individual certificate for each handicapped person employed in a shop; it does provide for the establishment of a sub-minimum wage rate for types of Sheltered Workshops; for individual Sheltered Workshops and even for types of activities within individual Sheltered Workshops. It also provides that all of the factors in connection with the operation and service of Sheltered Workshops may be taken into consideration when establishing the sub-minimum rate to apply to a particular Sheltered Workshop. It further provides that if there be some seriously handicapped individual to be served by the Sheltered Workshop and who must be paid a wage rate less than even the sub-minimum rate established for that Sheltered Workshop, then a special individual certificate may be secured for that most seriously handicapped person at a rate lower than the shop sub-minimum.