Transformation to Competitive Integrated Employment Act
The Transformation to Competitive Integrated Employment Act aims to end the use of special certificates under section 14(c) of the Fair Labor Standards Act (FLSA), which currently allow some employers to pay subminimum wages to individuals with disabilities. The bill would (a) require a transition to competitive integrated employment (CIE) with wages that meet or exceed fair wage standards, (b) create grant programs to help states and certificate-holders transform their business and program models toward CIE, (c) provide technical assistance and dissemination of best practices, and (d) establish reporting and evaluation to track progress. It also sets a phased wage progression toward full minimum/industry wages and includes a sunset for new certificates and a time limit on the continued use of existing certificates. The overarching purpose is to shift toward inclusive, integrated employment while ensuring supports for individuals with disabilities during the transition and aligning with Olmstead and Employment First principles. Key features include: (1) gradual wage increases for workers formerly paid under 14(c) certificates, (2) two grant tracks (state-level and certificate-holder) to fund transformation efforts, (3) a major emphasis on technical assistance and dissemination of evidence-based practices, and (4) comprehensive reporting, evaluation, and coordination with federal and state programs to support competitive integrated employment and wraparound supports.
Key Points
- 1Notable change to 14(c) certificates: No new 14(c) certificates may be issued to employers that did not already have one before enactment; 14(c) authority sunsets four years after the act’s effective date, and after that no certificates have legal effect.
- 2Wage transition plan: For workers previously paid under 14(c), the wage must gradually rise to fair wages over four years (60%, then 70%, 80%, 90%, and finally the full wage under the applicable law or the prior-day wage, as specified) starting from the act’s effective date plus a 3-month lead-in.
- 3Title I grant programs:
- 4- State Grant Program (Sec. 102): 5-year grants to states to transform employers using 14(c) certificates into models of CIE, with strong requirements for data collection, governance (advisory council), timelines, coordination with other programs, and annual targets. Grant sizes range from at least $2 million to $10 million; one grant per state; geographic and rural/urban diversity considerations.
- 5- Certificate Holder Grant Program (Sec. 103): 3-year grants to eligible entities currently using 14(c) certificates to transition to CIE, with required reporting on current use, transformation plans, and stakeholder engagement. Grants range from $100,000 to $500,000; entities must partner with multiple disability-support organizations and other state entities.
- 6Title III Technical Assistance and Dissemination: A nonprofit will receive a grant to provide technical assistance to transforming employers, identify and share replicable models, and disseminate evidence-based practices. It will coordinate with federal departments (Labor, Health and Human Services, Education) and promote Employment First, ABLE accounts, and related resources.
- 7Title IV Reporting/Evaluation: Requires impact evaluation and wage/hour reporting to track social/economic effects, employment outcomes, and provider capacity as states phase out 14(c) employment.
- 8Purpose and scope: The act aims to involve individuals with disabilities and their families in the transformation process, ensure continued supports during transitions, and share successful models broadly so other 14(c) employers can follow similar trajectories toward competitive integrated employment and integrated wraparound services.