Over the faint sound of a group drum circle in the next room, dozens of adults with developmental disabilities worked quietly at long, colorful tables to fulfill a production contract by a local shaving oil company. Some filled bottles with the oil, while others used a hot air gun to seal the plastic packaging. One dexterously threaded small sample packets into brochures. A few roamed the tables overseeing the work.

All the workers — verbal or nonverbal, blind or seeing — worked for a piece rate far below that of minimum wage, owing to a 1938 law that carved out exceptions for individuals with disabilities. National estimates peg the average effective wage for these workers at little more than $3.30 an hour.

But the fate of workshops like this one — San Antonio’s Mission Road Developmental Center, one of the largest in the country — are in question, as federal and state lawmakers have in recent years whittled down the exemptions under which employers can pay below minimum wage.

A recent report from the U.S. Commission on Civil Rights argues the exemption should be phased out entirely because these “sheltered workshops,” as they are called, trap workers in “exploitative and discriminatory” job programs. And disability-rights advocates say the program limits the potential of these workers with special needs.

Meanwhile nonprofit organizations like Mission Road and some families argue that eliminating these sheltered workshops would take a needed option away from the many...

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