House File 538 - Introduced HOUSE FILE 538 BY TUREK A BILL FOR An Act relating to employment of persons with disabilities. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 2077YH (7) 91 je/js

H.F. 538 Section 1. NEW SECTION . 91D.2 Minimum wage —— persons with 1 disabilities. 2 1. On or after July 1, 2026, an employer shall not, pursuant 3 to 29 U.S.C. §214(c), pay an employee less than the minimum 4 wage provided in this chapter. 5 2. The department of inspections, appeals, and licensing 6 shall engage in outreach to make employers of persons with 7 disabilities in this state aware of the requirements of this 8 section. 9 3. Subsection 1 does not apply to a nonprofit organization 10 operating a sheltered workshop as otherwise provided by law. 11 For purposes of this subsection, “nonprofit organization” means 12 a nonprofit entity that is exempt from federal income taxation 13 pursuant to section 501(c)(3) of the Internal Revenue Code. 14 This subsection is repealed July 1, 2027. 15 Sec. 2. Section 216C.1, Code 2025, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 3. To ensure full participation in 18 the social and economic life of this state by persons with 19 disabilities, it is declared to be the policy of the state 20 of Iowa that competitive and integrated employment shall be 21 considered the first and preferred option when serving persons 22 with disabilities who are of working age to obtain employment. 23 This policy applies to programs and services that provide 24 services and support to help obtain employment for persons with 25 disabilities. All state agencies shall follow this policy and 26 ensure that it is effectively implemented in their programs 27 and services. This subsection shall not be construed to 28 require any employer to give preference to hiring persons with 29 disabilities. 30 Sec. 3. Section 216C.1A, Code 2025, is amended by adding the 31 following new subsections: 32 NEW SUBSECTION . 01. “Competitive employment” means work in 33 the competitive labor market that is performed on a full-time 34 or part-time basis in an integrated setting and for which an 35 -1- LSB 2077YH (7) 91 je/js 1/ 3

H.F. 538 individual is compensated at or above the minimum wage provided 1 in chapter 91D, but not less than the customary wage and level 2 of benefits paid by the employer for the same or similar work 3 performed by individuals who are not disabled. 4 NEW SUBSECTION . 1A. “Integrated setting” means, with 5 respect to an employment outcome, a setting typically found 6 in the community in which applicants or eligible individuals 7 interact with nondisabled individuals, other than nondisabled 8 individuals who are providing services to those applicants 9 or eligible individuals, to the same extent that nondisabled 10 individuals in comparable positions interact with other 11 persons. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill provides that in order to ensure full 16 participation in the social and economic life of Iowa by 17 persons with disabilities, it is declared to be the policy of 18 the state that competitive and integrated employment shall be 19 considered the first and preferred option when serving persons 20 with disabilities who are of working age to obtain employment. 21 The bill specifies this policy applies to programs and services 22 that provide services and support to help obtain employment for 23 persons with disabilities. The bill directs all state agencies 24 to follow this policy and ensure that it is effectively 25 implemented in their programs and services. The bill shall 26 not be construed to require any employer to give preference to 27 hiring persons with disabilities. 28 The bill prohibits an employer from paying an employee less 29 than the minimum wage provided in Code chapter 91D pursuant 30 to 29 U.S.C. §214(c) on or after July 1, 2026. 29 U.S.C. 31 §214(c) is a provision of the federal Fair Labor Standards Act 32 that authorizes persons with disabilities to be employed for 33 less than the federal minimum wage in certain circumstances. 34 The bill directs the department of inspections, appeals, and 35 -2- LSB 2077YH (7) 91 je/js 2/ 3

H.F. 538 licensing to engage in outreach to make employers of persons 1 with disabilities in Iowa aware of the prohibition. 2 The prohibition does not apply to a nonprofit organization 3 operating a sheltered workshop as otherwise provided by law. 4 This exception to the prohibition is repealed July 1, 2027. 5 -3- LSB 2077YH (7) 91 je/js 3/ 3