Transformation to Competitive Integrated Employment Act
- Sponsor
- Rep. Scott, Robert C. "Bobby" [D-VA-3]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jul 25, 2025
Bottom line
The bill aims to eliminate subminimum wages for individuals with disabilities by providing financial and technical support for employers to transition to competitive integrated employment, with a clear timeline for full implementation.
What it actually does
This bill establishes federal grant programs to assist employers currently paying subminimum wages to individuals with disabilities under Fair Labor Standards Act Section 14(c) special certificates in transitioning to competitive integrated employment models. It mandates a phased increase of these subminimum wages over four years, ultimately requiring all such employees to be paid at least the federal minimum wage. The bill also prohibits the issuance of new 14(c) certificates and sets a definitive sunset date for all existing certificates four years after the wage increase effective date.
Proponents argue
Proponents argue that this legislation is a critical step towards ensuring economic self-sufficiency, dignity, and full inclusion for individuals with disabilities, aligning federal policy with disability rights principles and the Olmstead decision. They contend that the grant programs and phased approach provide necessary support for a smooth transition, preventing job loss while upholding the right to fair wages.
Opponents contend
Opponents, or those with concerns, might argue that while the goal of competitive integrated employment is laudable, phasing out 14(c) certificates too quickly, even with transition support, could inadvertently eliminate employment opportunities for individuals with severe disabilities who may struggle in competitive integrated settings. They express concern that some individuals might be left without work or adequate, person-centered support if the new systems are not fully robust.
The bill is moderately complex due to its grant structures and amendments to existing law, but its clear organization and purpose make it accessible for an informed reader to evaluate within a reasonable timeframe.
Title I, Sec. 101
Competitive Integrated Employment Transformation Grant Authorization
This section authorizes the Secretary of Labor to award competitive grants to States and eligible entities. These grants are specifically designed to help employers who currently hold special certificates (allowing them to pay subminimum wages to individuals with disabilities) transition their business and program models. The goal is to move towards models that support individuals with disabilities in competitive integrated employment, ensuring fair wages, assisting in job placement, and providing integrated community participation and wraparound services that comply with federal home and community-based services (HCBS) rules.
Supporters argue
Supporters argue this provision is crucial for providing the necessary resources and incentives for employers to make a difficult but essential transition, ensuring individuals with disabilities are not left behind as subminimum wage employment is phased out.
Critics contend
Critics might argue that the grant amounts, while helpful, may be insufficient to cover the full costs of transformation for all employers, potentially leading to some employers closing or reducing services if the financial burden is too high.
Tradeoffs
This provision balances the desire to end subminimum wage with the practical need to support existing employers and ensure continued, improved employment opportunities for individuals with disabilities during the transition.
Title I, Sec. 102
State-Level Transformation Grants and Rehabilitation Act Amendments
This section details the application requirements for States seeking grants, which include comprehensive descriptions of their current 14(c) employment landscape, existing competitive integrated employment initiatives (like Olmstead plans), and proposed activities for transformation. States must establish an advisory council with significant representation from individuals with disabilities and their families. Crucially, it also amends the Rehabilitation Act of 1973 to provide additional, ongoing funding for supported employment services to States that successfully complete the transformation grant and cease using 14(c) certificates, offering a long-term incentive for full compliance.
Title I, Sec. 103
Direct Grants for Individual Certificate Holders
This section establishes a grant program specifically for individual eligible entities (employers with 14(c) certificates) located in States that did not receive a State-level grant under Section 102. Applications must detail the entity's current 14(c) usage, proposed competitive integrated employment models, and a clear timeline for discontinuing 14(c) certificates. Grantees are required to partner with at least two entities experienced in supporting individuals with disabilities in competitive integrated employment. Grants range from $100,000 to $500,000 over a 3-year period and are awarded in two cycles.
Title II, Sec. 201
Gradual Increase of Subminimum Wages
This section amends Section 14(c)(1)(A) of the Fair Labor Standards Act of 1938 to implement a phased increase in the minimum wage for individuals with disabilities employed under special certificates. Beginning three months after the Act's enactment, the wage must be at least 60% of the federal minimum wage, incrementally increasing to 70% after one year, 80% after two years, 90% after three years, and reaching 100% of the federal minimum wage (or applicable State/local minimum wage, if higher) after four years. This establishes a clear, predictable path to fair wages.
Title II, Sec. 202
Prohibition on New Certificates and Sunset of 14(c) Authority
This section prohibits the Secretary of Labor from issuing any new special certificates under FLSA Section 14(c) to employers who did not already hold one before the bill's enactment, effectively halting the expansion of subminimum wage employment. Furthermore, it establishes a definitive sunset clause: four years after the effective date of the wage increases (as outlined in Sec. 201), the authority to issue 14(c) certificates will expire, and all existing certificates will lose their legal effect. This sets a firm deadline for the complete elimination of subminimum wage employment.
Title III, Sec. 301
Technical Assistance and Best Practices Dissemination
This section authorizes a grant to a nonprofit entity to provide comprehensive technical assistance to employers transitioning from 14(c) employment to competitive integrated employment. The entity will identify and disseminate successful transition models, develop replicable strategies, collect and share evidence-based practices, and leverage existing training resources from various federal agencies (Labor, HHS, Education). It also aims to raise awareness of 'Employment First' initiatives and financial asset development resources like ABLE accounts, ensuring a broad base of knowledge and support for the transition.
Title IV, Sec. 401
Multi-Year Impact Evaluation
This section requires the Secretary of Labor to contract with a nonprofit entity to conduct a multi-year evaluation of the Act's overall impact. The evaluation will specifically assess changes in wages and employment outcomes for individuals with disabilities affected by the legislation, as well as actions taken by employers and states to comply with the new requirements and grant conditions. Interim and final reports on this evaluation are mandated to be submitted to Congress, with the final report due 18 months after the 14(c) sunset date.
Title IV, Sec. 402
Annual Wage and Hour Reports and Survey of Certificate Holders
This section mandates annual reports to Congress for five years, to be submitted by the Secretary of Labor (through the Wage and Hour Division). These reports will summarize the practices of 14(c) employers, including detailed data on the number of employees, their wages, hours worked, demographic characteristics, and transitions to competitive integrated employment, disaggregated by employer and state. Additionally, within one year of enactment, the Secretary must conduct a survey of at least 10% of existing 14(c) employers to evaluate their training, support, and wage practices, with a report on the findings submitted to Congress.
Title V, Sec. 501
Key Definitions
This section defines critical terms used throughout the Act, providing clarity on its scope and intent. Key definitions include "ABLE account," "competitive integrated employment" (referencing existing law), and a comprehensive definition of "integrated community participation and wraparound services" or "integrated services." This latter definition sets strict criteria, requiring services to be provided in community locations that are not specifically for individuals with disabilities, allow interaction with individuals without disabilities, optimize individual choice and independence, and comply with the Home and Community-Based Services (HCBS) final rule. It explicitly excludes institutional settings like nursing facilities or mental disease institutions.
Title V, Sec. 502
Authorization of Appropriations
This section authorizes $50,000,000 to be appropriated for each of fiscal years 2026 through 2031 to carry out the Act. This funding supports the various grant programs for states and certificate holders, technical assistance, and impact evaluations. Notably, this authorization excludes the additional funding for supported employment services to successful states, which is authorized separately under Section 102(f) for fiscal years 2030 through 2034 as 'such sums as may be necessary.'
The detailed definition of "integrated community participation and wraparound services" and "integrated services" sets strict criteria for what qualifies as integrated support, explicitly excluding institutional settings and requiring community interaction, individual choice, and compliance with the HCBS final rule.
Sec. 501(4)
Why it matters:While it is standard legislative practice to consolidate definitions, the highly prescriptive nature of this definition is profoundly consequential for service providers and individuals with disabilities, shaping the fundamental nature of all non-employment services funded or supported by the Act.
Case for: Proponents argue that these strict definitions are essential to prevent programs from merely rebranding segregated services as "integrated" and to ensure that federal funds genuinely support community inclusion and person-centered care, aligning with the spirit of the Olmstead decision and federal policy goals.
Case against: Some service providers might argue that the definitions are overly prescriptive and could limit flexibility for providers to meet the diverse and complex needs of individuals with the most significant disabilities, potentially making it harder to provide necessary support in some specialized contexts.
Estimated impact: High impact, as it dictates the fundamental nature of all non-employment services funded or supported by the Act, affecting thousands of service providers and individuals with disabilities by setting a high bar for genuine integration.
This provision amends Title VI of the Rehabilitation Act of 1973 to create a new Section 611, authorizing additional grants to States that successfully complete the Section 102 transformation grant. These grants would be equal to 25% of their previous year's supported employment allotment under Section 603, for fiscal years 2030 through 2034, provided they maintain compliance with the cessation of 14(c) certificates.
Sec. 102(f) and new Sec. 611 of the Rehabilitation Act of 1973
Why it matters:It is standard legislative practice to amend existing laws, but the long-term, conditional nature of this funding mechanism makes it a significant, yet easily overlooked, incentive for states to fully commit to the bill's goals.
Case for: Proponents argue this provides a powerful, long-term incentive for States to fully commit to and successfully implement the transition away from 14(c) certificates, ensuring sustained support for competitive integrated employment and rewarding states for achieving the bill's ultimate goal.
Case against: Critics might argue that tying future funding to the complete elimination of 14(c) certificates could create undue pressure on states, potentially leading to rushed transitions or unintended negative consequences for some individuals if the support infrastructure isn't fully robust by the deadline.
Estimated impact: Potentially significant, as it represents an ongoing revenue stream for successful states, totaling 25% of their prior year's supported employment allotment for 5 years (FY2030-2034), providing substantial resources for continued services.