Federal and State Subminimum Wage Legal and Policy Framework

State Exchange on Employment & Disability

Federal Legal and Policy Framework

Under Section 14(c) of the Fair Labor Standards Act, employers are authorized, after receiving a certificate from the Wage and Hour Division, to pay subminimum wages (SMWs)—wages less than the federal minimum wage—to workers who have disabilities “for the job  being performed.” The certificate also allows the payment of wages that are less than the prevailing wage to workers who have disabilities for the work being performed on contracts subject to the McNamara-O’Hara Service Contract Act (SCA) and the Walsh-Healey Public Contracts Act (PCA).

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Question of the Month: What policies are in place in the Midwest to increase the number of state contracts going to minority- and female-owned businesses?

By Tim Anderson

No state in the Midwest requires that a certain percentage of contracts be given to minority- or women-owned businesses. (Outside the region, Connecticut requires that 6.25 percent of the value of state and local government contracts go to companies owned by women, minorities or disabled individuals.) However, at least three states have specific goals set in statute: Illinois, Ohio and Wisconsin.

Continue reading “Question of the Month: What policies are in place in the Midwest to increase the number of state contracts going to minority- and female-owned businesses?”

Disabled, and able to work: With legislation and executive actions, states are doing more to improve job prospects of people with disabilities

By Laura Tomaka

For nearly 40 years, South Dakota Rep. Fred Romkema has run a jobs training center for a segment of his state’s population that he says is too often forgotten. About 140 people with disabilities are currently served at the Northern Hills Training Center, and 108 of them are earning a regular paycheck.

“With the right supervision and training and supports, they can succeed in employment in the community,” Romkema says about his experience working with people with developmental disabilities.

And that job success, he adds, is good not only for the individual, but the community — and the state — where he or she lives.

“There is potential there that we are not tapping,” Romkema says of the state’s population with disabilities. “There is a cadre of potential employees who can certainly contribute in some of the jobs that are difficult to fill.”

Through a mix of legislation and actions taken by governors, new initiatives are being launched in states across the Midwest to remove workforce barriers and to help get more disabled individuals into the workforce.

If successful, these initiatives could help close the large disparity in employment between the disabled and non-disabled. According to the U.S. Bureau of Labor Statistics, the unemployment rate for those with disabilities was 13.2 percent in 2013, almost double the rate for those without a disability (7.1 percent). People with disabilities are also disproportionately affected by poverty — nearly 30 percent live in poverty, compared to less than 14 percent of people without disabilities.

“The employment challenge comes from the long-standing belief that people with disabilities have very limited abilities to work,” says Ryley Newport, a public policy associate with the Association of People Supporting Employment First, an advocacy group working for the full inclusion of people with disabilities in the community and workplace.

“People with disabilities [traditionally] have not been expected to work.” 

His association and other groups want to shift presumptions away from segregation, dependency and care and toward inclusion, employability and self-determination. And central to that strategy is changing policies at the state level, through an approach known as Employment First.

Employment First is based on a presumption that people with disabilities can be employed, and that the jobs for them should be in integrated, community-based workplaces for competitive pay. This approach also makes employment the first and preferred service option for working-age people with disabilities who rely on publicly funded programs and supports.

The goal of Employment First is to increase the quality of life for people with disabilities while also reducing reliance on traditional government supports. (Public support for unemployed workers with disabilities has been estimated to be $300 billion a year.)

“What we are trying to do is change it so everyone has opportunities to work and to be part of the mainstream,” Newport says.

According to Newport, Ohio is ahead of many other states in making this goal a reality. Gov. John Kasich launched his state’s Employment First policy, via executive order, in 2012. Legislation (HB 59) was then passed that same year. That original policy stated that “employment services for people with developmental disabilities shall be directed at community employment.”

Additional legislation in 2013 clarified that community employment means competitive employment in an integrated setting, and that all people with developmental disabilities are to be presumed capable of community employment.

Newport singles out two important provisions of Ohio’s current plan to employ more people with disabilities: First, it emphasizes the expectation of employability, and second, it sets objectives for increasing workforce participation.

Gov. Kasich’s goal was to increase integrated employment for people with disabilities by 10 percent (about 7,770 adults) by the end of fiscal year 2014. According to the Ohio Department of Developmental Disabilities, as of December 2013, the rate had increased by 8.5 percent.

For Ohio and other states trying new ways to improve employment outcomes, Newport says, tracking success, or the lack of it, is critical.

“There have been some states that have issued exemplary policies that have best practices embedded in them,” he says, “but we’ve seen no changes in the employment of people with disabilities.”

“We need to be able look at where we are in the states and what really is effecting [positive] change.”

In support of the state’s Employment First strategy, the Ohio General Assembly has appropriated $3 million a year in the current budget. Lawmakers have also done more to ensure the state’s young people are being prepared for work after school. For example, the individualized education plan, or IEP, for special-education students age 14 and older must now include a post-secondary goal of community-based employment.

Plans in Illinois, Michigan seek to maximize job opportunities 

Though considered a model state, Ohio is far from alone in focusing more on the employment needs of individuals with disabilities. Illinois lawmakers passed the Employment First Act (HB 2591) in July 2013, and the state is now in the early stages of setting new policies and goals around it. The act, in part, requires state agencies to work together to make competitive employment for people with disabilities a priority. 

“[It] will go a long way toward aligning state policy with Illinois’ values of inclusion and fair play for people with disabilities,” says Illinois Sen. Daniel Biss, the primary Senate sponsor of the bill. 

Under the legislation, an Illinois task force will collect data from all state agencies and monitor how well state services are meeting the goal of community-based employment for people with disabilities. 

“There’s so much loose talk around the goal of [integrated employment], but we’re at a loss of how to do something about it,” Biss says. “The Employment First Act is a necessary part of making sure our laws maximize the opportunities people with disabilities have to live with dignity.”

In Iowa, no formal Employment First laws have been passed and no policy directives are in place. However, it is currently a “protégé state” under a U.S. Department of Labor initiative designed to help states learn from one another on how to prioritize integrated employment.

Iowa has been matched with the state of Washington — designated as a “mentor state” because it already has effective policies and funding mechanisms in place. The program gives Iowa officials the chance to study, and possibly adopt, Washington’s Employment First strategies.

Michigan calls its new strategic plan for improving employment outcomes for the disabled “Better Off Working.” Released this year, it is the result of a collaboration among heads of state agencies, business leaders and advocates for the disabled.

The strategy mirrors some of the goals of Employment First. For example, de-emphasize disability as a de facto public assistance program, and instead refocus state services and programs on the goal of employment.

“Whatever the goals and aspirations and the hopes of people with development differences, it is our job to help them achieve those goals and not predetermine what their outcome is going to be,” says Lt. Gov. Brian Calley, the father of a child with autism and one of many people who helped shape the plan.

He adds that this change cannot occur with changes in policy alone; it also requires a shift in attitudes. And it also entails input, cooperation and buy-in from the business community. 

To that end, the state this year began recognizing exemplary employers with Better Off Working Awards. Meijer, the Grand Rapids-based grocery and superstore chain, was one of two businesses to receive the inaugural award.

“They made the decision to employ people who have been largely locked out of employment opportunities in the past,” Calley says of the two award winners. 

In turn, Meijer executives credit the state of Michigan, led by Gov. Rick Snyder, with raising awareness about the issue.

“[Gov. Snyder] really challenged businesses to come together with government and community organizations to say, ‘How can we create an environment for businesses to really engage in this work?’” says Rick Keyes, Meijer’s executive vice president of supply chain and manufacturing.

Meijer has a long history of hiring people with disabilities in its stores. However, Keyes says, the company has redoubled its efforts in recent years, in part spurred by the governor’s focus on the issue.

At one of Meijer’s production and manufacturing facilities in Lansing, for example, more than 30 percent of the employees are individuals with disabilities. The company worked with a community partner to help hire and train these workers, and also to provide the necessary accommodations and support.

“We used that success as a springboard for our other operations,” Keyes says, adding that increased hiring of individuals with disabilities “has had an amazing impact on our culture and on our team.” 

Businesses such as Meijer wanting to hire individuals with disabilities may still need assistance from the state — for example, access to expertise and resources related to vocational rehabilitation. In turn, states need input from business leaders to make Employment First strategies succeed.

“The more you can speak with employers who have had a successful experience,” Newport says, “that is what will change the public’s perspectives on what people with disabilities can do.”

And Newport also says policymakers need to understand the perspective of the disabled workers themselves.

“Learn what it’s like for people with disabilities to work and know what it looks like to work in the community,” he says.

In South Dakota, Employment Works Initiative helps guide policymakers

South Dakota is led by a governor who witnessed first-hand the challenges faced by people with disabilities, including job-related struggles. Raised by deaf parents on a farm in southeast South Dakota, Dennis Daugaard has now taken on a very public role in advancing employment opportunities for people with disabilities.

In 2013, he launched the state’s Employment Works Initiative.

“This is one of the most promising new efforts … that I have seen over the years,” says Rep. Romkema, who served on a 35-member task force that was established as part of Employment Works and that has since released a series of recommendations for state action.

Those recommendations focus on ways the state can better connect businesses with the disabled population, provide more support for employers and employees, and promote awareness about the abilities and capabilities of many disabled people. South Dakota has since established a single point of contact, a business liaison, within the Department of Human Services to work with businesses on hiring people with disabilities. 

Another task force recommendation was to eliminate disincentives for people with disabilities to find employment. Romkema views that policy area as being particularly important. Are there state or federal benefits that, in one way or another, discourage people from finding work?

South Dakota lawmakers found one in their own state and recently did away with it. 

“If you earned more than $400, your benefits were reduced,” Romkema says, explaining a cost-share requirement in one of the state’s Medicaid waiver programs. “People realized there was no incentive to work.”

Leading by example: Hiring more disabled people in state government

Another way for a state to boost employment among disabled workers is to do the hiring itself. 
In Minnesota and Michigan, for example, the governors have recently issued executive orders to improve their state governments’ hiring of individuals with disabilities.

Minnesota Gov. Mark Dayton has directed state agencies to increase the employment of people with disabilities to 7 percent by 2018. Last year, 3.2 percent of the state’s government workforce was disabled. Dayton has expressed concern that the proportion of disabled people working for the state has dropped in recent years and that Minnesota has fallen behind the rest of the nation.

In Michigan, Lt. Gov. Calley now expects state agencies to set hiring goals and to establish aggressive new recruitment and retention plans that bring more people with disabilities into the state workforce.

“I’d like our state to be a magnet for this talent that is out there — this untapped potential,” Calley says. “And then I intend to show how good the performance is when you make these types of opportunities available.”
“This needs to be fully integrated, competitive employment,” he adds, “where somebody comes in with the same type of benefits and pay that anyone else would.”

Boosting employment for the disabled, Calley says, is part of an even greater objective that all states can play a part in achieving.

“So far I haven’t seen any government anywhere in our nation that has made enough progress yet in this constant fight against stigma,” Calley says. “This is an area where we all have a lot of learning to do.”

Because of his own family’s experience with autism, Calley has seen a growing awareness, understanding and inclusiveness of people with autism, as well as a greater willingness for individuals and families living with this diagnosis to be more open and public.

“I want that for everyone else,” he says. “I want people with schizophrenia or bipolar disorder or depression or other types of developmental disabilities to have that same type of freedom.”

Employment First: Many states adopting new strategy for disabled

In seeking to promote greater job opportunities for their population of disabled residents, many states have adopted a model known as “Employment First.” It is based on the expectation that people with disabilities can work in an integrated work environment (given the proper training, supports and accommodations) and should receive compensation on par with non-disabled co-workers.

For states, this means building policies around the idea that competitive, integrated, community-based employment is the first and preferred option for youths and adults with disabilities. An Employment First strategy includes:

• giving young people with a disability access to early work experiences and transition-planning services as part of their education;
• setting measurable goals to increase employment among the disabled population in jobs that pay a minimum wage or higher, with benefits, and then tracking progress toward these goals; 
• making employment the first and preferred outcome in the provision of publicly funded services for working-age people with disabilities; and
• funding quality services and supports that focus on long-term employment success.

“In the last decade, we’ve seen a boost in Employment First activity in the states,” says Ryley Newport, a public policy associate with the Association of People Supporting Employment First. According to this association and the State Employment Leadership Network, 30 states have something akin to an official Employment First policy. Of those, 12 have passed legislation stating that integrated employment is the first and preferred outcome in the provision of public funding and services for working-age people with disabilities. The other 18 states have policy directives or executive orders in place.

An additional 17 other states have some Employment First activities underway. For example, North Dakota passed legislation creating the Committee on Employment of People with Disabilities. However, the state has not yet formalized Employment First or its guiding principles.

Newport offers the following advice to policymakers when exploring and developing Employment First or related policies: “Learn what it’s like for people with disabilities to work. This connection and awareness not only helps when making funding decisions, but also helps focus on outcomes when creating employment policy.”

Six states awarded grants to improve employment opportunities for people with disabilities

By Jennifer Burnett

The Department of Labor has awarded $14,837,785 in grants to six states – California, Illinois, Kansas, Massachusetts, Minnesota and South Dakota – to improve employment opportunities for adults and youth with disabilities as part of the Disability Employment Initiative. The initiative awards grants to help increase the participation of adults and youth with disabilities in existing career pathway systems and other programs that bring together educational institutions, the private sector and disability advocates. 

“Breaking down barriers to employment for people with disabilities is important in order for our country to field a full team and ensure that no worker is left behind,” said U.S. Secretary of Labor Thomas E. Perez in a press release. “The federal grants we’re awarding today will help open many more doors to opportunities, providing people with disabilities with skills they need to achieve economic self-sufficiency.”

In particular, those awarded grants will use the funding to: 

  • hire or designate a Disability Resource Coordinator, an expert in workforce and disability issues, to achieve program goals;
  • foster partnerships and collaboration at the state and local levels;
  • integrate resources and services; and
  • ensure that local American Job Centers comply with physical, programmatic and communications accessibility requirements.  

This is the fifth round of grants through the initiative, which has funded 37 projects across 26 states.

To learn more about this initiative, visit the U.S. Department of Labor.

Question of the Month: Do states in the Midwest provide property tax exemptions or credits to disabled veterans?

By Tim Anderson

Stateline Midwest ~ June 2013

Every Midwestern state offers property tax breaks to certain disabled veterans, though the scope and amount of these credits and exemptions vary.

In two Midwestern states, the exemption is not specific to veterans with a disability. Iowa reduces the assessed value of a home (for property tax purposes) by $1,852 for all veterans. In Ohio, an exemption is available for all permanently and totally disabled homeowners; it applies to the first $25,000 of a home’s market value.

Legislation introduced this year in Ohio (SB 27) would provide a total tax exemption for properties owned by veterans who are 100 percent disabled due to an injury or illness that was incurred or aggravated during active military service. This disability rating is determined by the U.S. Department of Veterans Affairs.

Disabled veterans in Michigan qualify for the state’s Homestead Property Tax Credit. Also, homes that have been adapted to meet the needs of a veteran with a 100 percent service-connected disability are totally exempt from property taxes.

Illinois, Indiana and Minnesota offer broader exemptions, giving veterans tax breaks on a sliding scale based on their level of service-connected disability.

An Illinois veteran with a disability of between 50 percent and 69 percent qualifies for a $2,500 reduction in equalized assessed valuation. The reduction is $5,000 for someone with a disability of 70 percent or higher.

Indiana has different categories of property tax exemptions that may apply to disabled veterans. For veterans who served during wartime and have a disability of 10 percent or more, the maximum deduction is $24,960. It rises to $37,440 for veterans who have a disability of 100 percent or who are 62 or older with a disability of 10 percent or more. (Deduction levels are as of 2012.)

In Minnesota, the value of a home (for property tax purposes) is reduced by as much as $300,000 for individuals with a disability of 100 percent. It is cut by $150,000 for a veteran who is not totally or permanently disabled, but who has a disability of 70 percent or higher.

Nebraska uses a sliding income scale to determine the amount of each individual homestead exemption, which is only available to veterans with a 100 percent service-connected disability. Such veterans with incomes of less than $29,801 receive a full exemption. The percentage decreases as income levels rise; no tax relief is provided when income exceeds $36,700.

Like Nebraska, the property tax exemption in South Dakota extends only to those individuals with a 100 percent service-connected disability. The first $100,000 of a home’s value is exempt. 

There is no limit to the amount that can be claimed in Wisconsin, where disabled veterans qualify for an exemption if they meet one of two federal criteria: 100 percent service-connected disabled, or a total inability to maintain gainful employment.

Kansas and North Dakota provide tax relief for veterans with a service-connected disability of 50 percent or more. Kansas offers a maximum tax refund of $300 to individuals with annual incomes of $32,400 or less. North Dakota’s property tax credit for disabled veterans applies to the first $120,000 of a home’s value; the amount varies depending on disability rating.

Veterans as Farmers

By Nancy Vickers

As Americans remember the events and veterans of December 7, 1941 today, another organization seeks to help our service members returning from Iraq and Afghanistan. A recent USA Today article highlighted the work of the Farmer-Veteran Coalition. The national coalition “seeks to help our returning veterans find employment, training and places to heal on America’s farms.”

Here is legislation reviewed by CSG’s Committee on Suggested State Legislation about agricultural operations and sustainable agriculture; a program to help disabled farmers; and a master farmer program to help farmers reduce the environmental impact of their farming operations.

The 2012 Suggested State Legislation volume will include a draft based on Kentucky HB 486, enacted into law in 2010. This legislation enables agricultural operations to incorporate sustainable agricultural practices without necessarily being deemed a nuisance by local ordinances or zoning regulations. The Act requires any administrative regulation promulgated by any agency that establishes standards for harvesting or producing agricultural crops in a sustainable manner be based on practices outlined in the Act. Those are science-based practices that are supported by research and the use of technology, demonstrated to lead to broad outcomes-based performance improvements that meet the needs of the present, and that improve the ability of future generations to meet their needs while advancing progress toward environmental, social, and economic goals and the well-being of agricultural producers and rural communities.

Illinois Public Act 094-216, enacted in 2005, directs the state department of agriculture, in cooperation with the state university extension service, to contract with a non-profit provider to establish and administer a program to help disabled farmers. The 2007 SSL draft is based on the Illinois Act.

Louisiana Act 145 of 2003 establishes a program that is designed to help agricultural producers voluntarily reduce the impact their operations have on the environment. The program would be a cooperative effort between the United States Department of Agriculture, Natural Resources and Conservation Service, the state farm bureau, state university, the state departments of agriculture and natural resources, and soil and water conservation districts. It involves classroom instruction, attendance at model farm field days and development and implementation of farm specific conservation plans. Participating farmers who complete the curriculum are certified as Master Farmers and must submit soil and water conservation plans for their farms to meet certain standards as established by the United States Department of Agriculture, Natural Resources and Conservation Service, the state department of agriculture and the affected soil and water conservation district. Any farmer who has received certification will be presumed to be in compliance with the state soil and water quality requirements as long as their certification is maintained in accordance with best management practices. The Louisiana Act is the basis for a 2005 SSL draft.  

Michigan also established a related program, Michigan Agriculture Environmental Assurance Program. MAEAP is an innovative, proactive program that “helps farms of all sizes and all commodities voluntarily prevent or minimize agricultural pollution risks.”