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New Legislation: The Transformation to Competitive Integrated Employment Act of 2023

The Transformation to Competitive Integrated Employment Act (TCIEA) was introduced in February 2023 in the U.S. House of Representatives by Rep. Robert C. Scott (D-VA) and Rep. Cathy McMorris Rodgers (R-WA), and in the U.S. Senate by Sen. Bob Casey (D-PA), and Sen. Steve Daines (R-MA). The bill is designed to end the exception to the minimum wage enacted in the 1930s which allows certain employers of people with disabilities to pay wages significantly under the minimum wage, as little as pennies an hour, colloquially known as subminimum wage. We recognize that this would realize one of our main strategic policy goals.

Section 14(c) of the Fair Labor Standards Act of 1938 instructed the Department of Labor (DOL) to provide certificates to employers specifically involved in the training of people with disabilities, allowing them an exemption to minimum wage standards. The original purpose of this exemption was to allow workshops for people with disabilities to continue operating through the end of the Great Depression, despite the fact that the federal government had enacted a minimum wage. It has long outlived this purpose, and has in fact created inequitable outcomes, and diverted people with disabilities from the more effective training programs available this century.

The TCIEA would sunset this historical anomaly and assist states in the process of transitioning all 14(c) certificate holders to models which would support Competitive Integrated Employment (CIE), as defined under the Workforce Innovation and Opportunity Act of 2014 (WIOA). CIE work is any work performed on a full or part-time basis for which an individual with disabilities is compensated with rates and benefits comparable to the customary rates provided by the employer to people without disabilities at similar levels of experience and training.

According to a press release from Sen. Casey, the bill was produced in response to a recent GAO report exploring the DOL oversight of the 14(c) certificate program. Although the report found that the number of employers authorized to pay subminimum wages under the 14(c) provision had decreased 50 percent from 2012 to 2019, DOL’s Wage and Hour Division (WHD) identified more than $15 million in unpaid back wages owed to more than 73,000 14(c) employees.

If passed, the bill will implement the goals laid out in WIOA by incentivizing states to help transition employers to CIE models. It would provide a competitive grant program supported by $300 million in funding from DOL to support requirements that states establish advisory committees comprised of key stakeholders in the disability space, including employers, organizations specializing in employment for individuals with their disabilities, Medicaid agencies, and vocational rehabilitation agencies. States that successfully complete a grant would receive a 25 percent increase in their allotted budget for supporting employment for individuals with disabilities. 14(c) certificate holders located in states which do not apply for these grants would receive their own competitive grant program to support transitioning their business models to CIE systems.

TCIEA would also prevent the issuance of any new 14(c) certificates by DOL and would phase out the use of existing certificates over a five-year period. It would require that DOL provide for the establishment of a technical assistance (TA) center, which would support entities receiving these grants with the transition to CIE. The TA center would be tasked with providing information about best practices and models to all entities transitioning to CIE. Finally, it would also require regular reporting and evaluation from states and 14(c) certificate holders on their grant activities and compliance with the program.

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John Arsenault
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