Settlement reached to reform Oregon’s “sheltered workshops”

Blue and White symbol of accessibility with stack of $100 bills
Landmark Settlement to Reduce Reliance on Sheltered Workshops

Oregon will reduce its reliance on employers legally paying employees with disabilities less than minimum wages in so-called “sheltered workshops,” under a comprehensive settlement announced September 8.

The agreement, the first of its type, includes a range of specific benchmarks.

By June 30, 2017, the state must reduce the number of individuals in sheltered workshops from 1,925 to 1,530. The total number of annual hours worked by these employees must drop from 93,530 to 66,100. By June 30, 2022, 1,115 people currently in sheltered workshops must be employed by integrated employers.

In addition, the state must provide supported employment services to an estimated 4,900 people with disabilities between ages 14 and 24 through June 30, 2022, with a goal of ensuring that at least half these individuals become employees in the competitive marketplace.

Schools will no longer be barred from including sheltered workshops in their transition plans for students receiving special education services.

For many disability advocates, the settlement represents a victory against a system viewed as perpetuating discrimination against people with disabilities in the workforce.

“This case has been so important because it has moved the discussion of what people with intellectual disabilities can do with their lives into a whole other realm,” Kathy Wilde, legal director of Disability Rights Oregon, said in a news release. “The worlds of work, and of belonging to the larger community, are now open to them.”

Under the Fair Labor Standards Act, certain employers can apply for certificates with the Department of Labor that allow them to hire people deemed unlikely to be able to compete in the workforce on the basis of their disabilities. These employers, called “sheltered workshops” by their critics, are exempt from minimum wage laws.

In January 2012, attorneys from DRO, the Center for Public Representation, Miller Nash Graham & Dunn and Perkins Coie filed a class-action lawsuit against the state of Oregon, contending that its system of “sheltered workshops” violates the Americans with Disabilities Act by segregating people with disabilities from the workforce.

At the time, the state’s more than 2,000 individuals employed at subminimum wages were making on average $3.72 an hour. Despite their employers’ promises that they were providing these employees marketable skills, fewer than 5 percent of these employees ever transfer into integrated settings, the lawsuit alleged.

The Department of Justice intervened on the plaintiff’s behalf in March 2013. Two months later, then-Gov. John Kitzhaber issued an executive order, phasing out the state’s funding of “sheltered workshops” by 2015.

Although the agreement does not seek to end all “sheltered workshops” in the state, the parties believe the agreement will “ensure that those who want to work in integrated settings have a realistic opportunity to do so,” the DOJ stated in a fact sheet [PDF].

“People with disabilities deserve opportunities to work alongside their friends, peers and neighbors without disabilities and to earn fair wages,” said Vanita Gupta, head of the Justice Department’s Civil Rights Division, in a news release. “We are pleased that the state of Oregon has fully embraced integrated employment services for people with intellectual and developmental disabilities and we look forward to the new ways people with intellectual and developmental disabilities will be able to contribute to their communities as this proposed agreement is implemented.”

The settlement is still subject to approval by the U.S. District Court for the District of Oregon.

Disability Rights Oregon and Disability Rights Washington, the publisher of Rooted in Rights, are part of the federally funded protection and advocacy system and members of the National Disability Rights Network.