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Q & A: Subsidized Employment

Published: September 23, 2014
Tribal TANF, Native Employment Works (NEW)
Regulations, Tribal TANF and Native Employment Works Final Rule




Q1: Can a Tribal TANF client receive a cash grant in addition to subsidized employment?

A1: Yes, a TANF client may participate in a subsidized employment activity and receive a monthly cash grant (assistance) if this circumstance is permitted in the Tribe’s approved TANF plan.

Q2: Can TANF serve needy foster care youth who do not live with a caretaker relative in a subsidized employment program?

A2: Yes, a jurisdiction may use federal TANF funds to serve foster youth in a subsidized employment program under TANF Purpose One.

Q3: Can a Tribe provide youth subsidized employment services under TANF statutory purpose 3 or 4 and thus not require an income eligibility standard?

A3: The allowability of these expenditures will ultimately be determined through the audit process. A Tribe’s spending decisions and resultant expenditures for TANF benefits and services must be supported with a rationale explaining how such benefits and services are reasonably calculated to accomplish one or more of the statutory purposes of the TANF program. Any pertinent evidence of this linkage needs to be carefully developed as this could be examined during the single audit and the Tribe’s determination may need to be defended against an assertion that it was a misuse of funds. Reasonably calculated to accomplish one of the TANF purposes requires more than just a tenuous connection between the service and the statutory purpose the Tribe identifies.

Q4: Are the definitions of subsidized employment, work experience, and on-the-job training the same between the TANF Program, the Department of Labor, and the Native Employment Works Programs?

A4: The NEW regulations (and statute) do not define subsidized employment, work experience, or on-the-job training for grantees’ NEW programs.

The Tribal TANF regulations do not explicitly define subsidized employment, work experience, or on-the-job training; therefore, Tribes may reasonably interpret the meaning of these terms and request further guidance from ACF as needed on a case-by-case basis. Tribes are not required to adhere to the definitions in the State TANF regulations but Tribes may refer to the definitions in the State TANF regulations for examples of what ACF considers reasonable. The following definitions are found at 45 CFR 261.2:

“(c) Subsidized private sector employment means employment in the private sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing an individual.”

“(d) Subsidized public sector employment means employment in the public sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing an individual.”

“(e) Work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available means a work activity, performed in return for welfare, that provides an individual with an opportunity to acquire the general skills, training, knowledge, and work habits necessary to obtain employment. The purpose of work experience is to improve the employability of those who cannot find unsubsidized full-time employment. This activity must be supervised by an employer, work site sponsor, or other responsible party on an ongoing basis no less frequently than once in each day in which the individual is scheduled to participate.”

“(f) On-the-job training means training in the public or private sector that is given to a paid employee while he or she is engaged in productive work and that provides knowledge and skills essential to the full and adequate performance of the job.”

Broadly, ACF considers work experience to be separate from subsidized employment. Work experience participants generally do not receive wages, but the TANF agency may choose to provide grants, incentives, or stipends to encourage participation. On-the-job training, however, is generally considered a type of subsidized employment as participants must be paid employees (i.e., receiving wages).

All three are countable work activities that can be used to fulfill a TANF participant’s work requirements (hours).

ACF consulted with the Department of Labor (DOL) to obtain definitions related to DOL programs. According to the Workforce Investment Act and Regulations, on-the-job training and work experience are two distinct job trainings. For the definition of OJT, please refer to the Workforce Investment Act, Public Law 105-220, Section 101 (31).

“(31) On-the-job training.--The term ``on-the-job training'' means training by an employer that is provided to a paid participant while engaged in productive work in a job that—

(A) provides knowledge or skills essential to the full and adequate performance of the job;

(B) provides reimbursement to the employer of up to 50 percent of the wage rate of the participant, for the extraordinary costs of providing the training and additional supervision related to the training; and

(C) is limited in duration as appropriate to the occupation for which the participant is being trained, taking into account the content of the training, the prior work experience of the participant, and the service strategy of the participant, as appropriate.”

For the purposes of DOL programs, work experience is not specifically defined in the law, but is addressed in the regulations (20 CFR 652, et al.) at 663.200 (b):

“(b) For the purposes of paragraph (a) of this section, work experience is a planned, structured, learning experience that takes place in a workplace for a limited period of time. Work experience may be paid or unpaid, as appropriate. A work experience work place may be in the private for profit sector, or the public sector. Labor standards apply in any work experience where an employee/employer relationship, as defined by the Fair Labor Standards Act, exists.”

Q5: Does participation in subsidized employment count toward the 60 month TANF time limit?

A5: Expenditures for subsidized employment constitute a “non-assistance service”. The time limit is triggered by a needy family’s receipt of “assistance” benefits. If a client is only receiving “non-assistance” services, the period of receipt for such services does not count against the 60 month time limit. However, if the client receives both “assistance” and “non-assistance services” from the TANF agency in a month, then the receipt of such benefits and services in this month counts toward the time limit.

Q6: If subsidized employment wages exceed the monthly cash grant, can a TANF client still receive a Tribal TANF monthly cash “assistance” grant?

A6: The answer depends on the eligibility and payment provisions governing the treatment of income as described in the approved Tribal TANF plan and the Tribe’s associated policy and procedures documents. The Tribe needs to make a policy choice - - to decide whether the subsidized wages will be treated as income and counted in full or part against the Tribe’s payment standard.

Q7: Can subsidized employment programs extend past the time a person is receiving assistance?

A7: Yes, provided that the Tribe has elected to provide subsidized employment subsequent to the family’s loss of assistance.

Q8: Can subsidized employment programs extend past the time a person is receiving TANF non-assistance services?

A8: If the TANF plan provides a limitation on eligibility for receipt of non-assistance services, the limitation would apply to subsidized employment.

Q9: Can a Tribal TANF program have a subsidized employment program at both private, for-profit Tribal enterprises, as well as government/non-profit entities (like IHS)?

A9: Yes. To provide subsidized employment a TANF program must enter into a formal agreement with an employer who employs a TANF participant. The employer must treat the individual as a regular employee and provide him/her the same benefits and protections as a regular employee. The employer is also responsible for appropriate income tax withholding, Social Security withholding, etc., and reporting as they would be for any regular employee.

Q10: Can TANF funds be used to subsidize a job in the public sector?

A10: Yes, public sector subsidized employment is an allowable activity. This could be in any setting including, local or county office or in State or Tribal government.

Q11: Are there any special rules for determining program costs in public sector employment?

A11: No, the same cost principles apply to public sector subsidized employment that applies to other aspects of the TANF program; however, we remind jurisdictions of the importance of adhering to the principles of determining allowable costs expressed in 45 CFR Part 75. In particular, they stipulate that costs must be reasonable and that consideration should be given to arm’s length bargaining in setting reasonable costs.

Q12: Can TANF funds be used to create or preserve jobs in its human services agency?

A12: Yes, but an agency cannot simply re-categorize program administrative staffing costs as subsidized employment.

Q13: Can TANF funds be used to create a subsidized employment slot if the TANF agency determines that a wage subsidy is needed to prevent a TANF-eligible individual from being laid off?

A13: The TANF regulations at 45 CFR 261.70 (State TANF) and 45 CFR 286.110 (Tribal TANF) explicitly provide that a TANF agency may not create a subsidized job slot when an individual is on layoff from the same or a substantially equivalent job, and that the agency may not create a subsidized job slot when an employer has terminated an individual from employment or caused an involuntary reduction in its work force in order to fill the vacancy with a subsidized worker.

Apart from these regulatory prohibitions, the program operates under the general principle that any expenditure of TANF funds must be reasonably calculated to accomplish the purposes of TANF. For example, we think it is reasonable to assume that if a subsidized employment program provided a TANF-eligible individual with an employment opportunity that would not have been available in the absence of the subsidy, then the subsidized employment meets a TANF purpose. In some instances, a TANF agency could conclude that saving a job for a TANF-eligible individual would further the purposes of TANF, but the agency needs to be vigilant to ensure that TANF and MOE funds are actually accomplishing TANF purposes and not simply subsidizing activity that would have occurred in the absence of the subsidy.

Q14: Can a TANF agency serve youth over the age of 18 in a subsidized employment program?

A14: Yes. Federal TANF funds may be used to serve older youth in non-assistance programs, such as subsidized employment, under TANF statutory Purpose One. Since TANF Purpose One refers to “children” rather than “minor children,” a TANF agency has discretion to establish a reasonable definition of “child” for this purpose that exceeds the age level of a minor child. We have concluded that a TANF agency could reasonably set an age for a child that includes an individual under the age of 25, (or a lower age if the chosen). This definition could, but need not, coincide with an applicable age of majority under a program’s law. This does not in any way affect a program’s authority to use Federal TANF funds to provide assistance to needy families with children, because “assistance” is limited to families that include a minor child (as defined by statute) or a pregnant woman. Using Federal TANF funds, an agency may provide non-assistance benefits, including subsidized employment, to older youth when reasonably calculated to accomplish Purpose One, whether or not they are residing in the home of their parent or caretaker relative.


Last Reviewed: May 20, 2019