On-the-job training wage caps and reimbursement waivers

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                WIOA
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OWI - OJT
             Washington, D.C. 20210                      DATE
                                                         February 23, 2016

ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER WIOA NO. 13-15
                OPERATING GUIDANCE for the WORKFORCE INNOVATION AND
                OPPORTUNITY ACT (referred to as WIOA or the Opportunity Act)

TO:             STATE AND LOCAL STAKEHOLDERS IN THE WORKFORCE
                INNOVATION AND OPPORTUNITY ACT
                STATE WORKFORCE AGENCIES
                STATE WORKFORCE ADMINISTRATORS
                STATE AND LOCAL WORKFORCE BOARD CHAIRS AND DIRECTORS
                LABOR COMMISSIONERS
                AMERICAN JOB CENTERS

FROM:           PORTIA WU /s/
                Assistant Secretary

SUBJECT:        On-the-Job Training (OJT) Wage Caps and Reimbursement Rate Waivers for
                Job Driven, Dislocated Worker Training, and Sector Partnership National
                Emergency Grants (NEGs)

1. Purpose. Through this guidance, the Department of Labor is providing updated hourly State
   Wage Cap data for OJT under the Workforce Innovation and Opportunity Act (WIOA). The
   Department is also providing guidance on the transition of funds from the Workforce
   Investment Act (WIA) to WIOA as it relates to the OJT wage cap reimbursement rate.

   WIOA was signed into law on July 22, 2014. WIOA is designed to help job seekers access
   employment, education, training, and support services to succeed in the labor market and to
   match employers with the skilled workers they need to compete in the global economy.
   WIOA supersedes titles I and II of the Workforce Investment Act of 1998, and amends the
   Wagner-Peyser Act and the Rehabilitation Act of 1973.

   The Departments of Labor and Education published a set of regulations for implementing
   WIOA through the posting of five Notice of Proposed Rulemaking (NPRMs) documents.
   These NPRMs were open for public comment until June 15, 2015, and many comments were
   received by both Departments. The Federal agencies will review, analyze and consider the
   comments received. The Final WIOA rules will be issued in 2016.

   In order to continue implementation prior to the final rule, a series of WIOA Operating
   Guidance documents are being issued in the form of Training and Employment Guidance
   Letters (TEGLs). These Operating Guidance documents on WIOA will inform the workforce

 RESCISSIONS     None                                    EXPIRATION DATE
                                                         Continuing

   system on how to begin the important planning and organizational work necessary to comply
   with the WIOA statutory requirements. The Operating Guidance TEGLs will provide a
   framework for program activities until the regulations are finalized. This TEGL is one in a
   series of WIOA Operating Guidance.

2. References. See Attachment I.

3. Background. The Department of Labor, Employment and Training Administration (ETA)
   previously established a wage cap policy for OJT reimbursement in TEGL 4-10, which was
   originally applied to the OJT NEGs as a part of the American Recovery and Reinvestment
   Act (ARRA), announced in Training and Employment Notice (TEN) 38-09. This wage cap
   policy was continued under the 2013 Dislocated Worker Training (DWT) NEGs, the 2014
   Job Driven (JD) NEGs, and the 2015 Sector Partnership (SP) NEGs, and will remain in place
   through the end of these grants.

4. State Wage Cap. A wage cap is an upper limit on the hourly wage rate that is eligible for
   reimbursement. A reimbursement rate, or reimbursement level, refers to the percentage of
   the OJT participant’s hourly wage or wage cap that can be reimbursed to an employer. The
   wage cap is set at the average hourly wage rate for each state. The training reimbursement
   percentage is applied against the participant’s wage rate unless the wage rate exceeds the
   state’s average hourly rate. When the latter occurs, the training reimbursement percentage
   must be applied against the state’s average hourly rate. ETA has established a wage cap
   policy for these grants not to exceed 50 percent of the participant’s wage rate or the ETA
   established wage cap. This is consistent with section 3(44) of WIOA. However, section
   134(c)(3)(H) of WIOA allows State and Local areas the flexibility to increase the
   reimbursement level to up to 75 percent taking into account the following factors:
   •        The characteristics of the participants;
   •        The size of the employer;
   •        The quality of employer-provided training and advancement opportunities; and
   •        Other factors the State or local boards may determine appropriate (for example, the
   number of employees participating in the training, wage and benefit levels of the employees
   (both pre and post participation earnings), and the relation of the training to the
   competitiveness of the participant).

   This limitation on the training reimbursement provides grantees with latitude in the type of
   occupations that can be targeted, while maximizing the number of OJT opportunities.
   Grantees may enter into contracts with employers who elect to pay participants more than the
   state average wage; however, the employer cannot receive a training reimbursement beyond
   the percentage (determined by the sliding scale) of the capped level.

   The average hourly wage rate for each state is provided by the Bureau of Labor Statistics in
   the Quarterly Census of Employment and Wages. The attached table (Attachment II) contains
   the average hourly wage rates for each state and uses the most up-to-date annual data. The
   average hourly wage rate table will be updated annually according to the most recent data.

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   It should be noted that employers are required to compensate OJT participants at the same
   rates as trainees or employees who are situated in similar occupations by the same employer
   and who have comparable training, experience, and skills (WIOA Sec. 181(a)(1)(A)).
   Therefore, if the job pays less than the capped level for similar work, the OJT wages and
   training reimbursement should be based on this lesser level. The OJT employee should not
   be paid more simply because the state’s average wage makes available a higher
   reimbursement threshold.

   Two examples may help to illustrate reimbursement within the wage cap:

       i.     A participant in Pennsylvania enters OJT as an insurance underwriter, earning
              $36.29, which is above Pennsylvania’s average hourly wage cap of $22.00. The
              employer can only be reimbursed at some percentage of this wage cap (this
              percentage is determined by the employer’s size and/or the skills gap of the
              trainee). The employer must compensate the OJT participant at the same earnings
              level as an actual employee (with similar levels of training, experience, and skills)
              doing the same job as the OJT participant, or at $36.26, in spite of receiving wage
              reimbursement based on the lesser wage cap and not the higher actual wage rate.

       ii.    A participant in Pennsylvania enters OJT as a certified nursing assistant earning
              $13.52, which is below Pennsylvania’s average hourly wage cap of $22.00. The
              employer can only compensate the OJT participant at the same earnings level as
              an actual employee (with similar levels of training, experience, and skills) doing
              the same job as the OJT participant, or at $13.52; therefore, the employee must be
              reimbursed at some percentage of the actual hourly wage (the percentage to be
              determined by employer’s size or skills gaps of the trainee). The employer would
              not pay the OJT participant a higher hourly wage simply because the State’s
              average hourly wage cap is higher than the employer’s wage rate for comparable
              work.

5. Transition of Funds and Waiver Applicability. The transition of OJT wage
   reimbursement requirements from WIA to WIOA is consistent with TEGL 38-14, which
   describes the transition of participants, funds, and sub-recipient contracts from WIA to
   WIOA. For PY 2013 and 2014 funds that are already obligated as of June 30, 2015, grantees
   may liquidate those obligations in compliance with WIA requirements in place before WIOA
   was enacted. PY 2013 and PY 2014 NEG funds that have not been obligated by grantees in
   PY 2013 and PY 2014 (i.e. "carry-in" funds) are subject to WIOA, effective July 1, 2015.
   This means that the funds will assume the requirements of those portions of WIOA funds that
   were effective July 1, 2015.

   Consistent with TEGL 1-15 this means that, in general, WIA funds flexibility waivers (such
   as the waiver allowing for sliding employer reimbursement scale for OJT training) will
   follow these same guidelines, and therefore they do not apply to unobligated PY 2013 and
   PY2014 funds, which are subject to WIOA requirements effective July 1, 2015. The
   transition authority in WIOA Sec. 503(b) permits the Department to allow the states that

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   received the 2013 DWT NEG and the 2014 JD NEG to use the reimbursement level
   established in the grant agreements, even if this rate is higher than the rate permitted under
   WIOA, in order to prevent a significant disruption to these grants. Therefore, recipients of
   these grants can use these higher OJT reimbursement rates for the obligated and unobligated
   PY 2013 and PY 2014 funds. It is important to note that this flexibility regarding OJT
   reimbursement rates is limited to DWT NEGs and JD NEGs and does not apply to the SP
   NEGs.

   As described above, states must continue to apply TEGL 38-14 regarding the transition of
   funds and participants from WIA to WIOA. As of July 1, 2015, the unobligated PY 2013 and
   PY 2014 WIA funds carried into PY 2015 must only support allowable WIOA activities and
   conform to WIOA requirements effective July 1, 2015, with the exception of funds used to
   pay for WIA services for WIA participants who are transitioning to WIOA, and any other
   requirements issued by DOL via Training and Employment Guidance Letters that are
   necessary to facilitate transition from WIA to WIOA.

6. Action Requested. Please distribute this information to all appropriate state and local
   officials, including local workforce investment board chairs, administrative entities, chief
   elected officials, and American Job Centers.

7. Inquiries. Questions regarding program and policy issues for OJT wage caps or
   reimbursement rates should be addressed to the appropriate ETA regional office.

8. Attachments.
   Attachment I: References
   Attachment II: 2014 Average Hourly Wage Rates

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Attachment 1

Official attachment: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2016/TEGL_13-15_Attachment1_Acc.pdf

Attachment I:

                                       References

   •   WIOA (Pub. L. 113-128) Title I;
   •   TEGL No. 19-14, Vision for the Workforce System and Initial Implementation of the
       Workforce Innovation and Opportunity Act dated February 19, 2015
       http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7353;
   •   WIA (Pub. L. 105-220), Title I;
   •   TEGL No. 1-15, Operations Guidance Regarding the Impact of Workforce Innovation
       and Opportunity Act Implementation on Waivers Approved Under the Workforce
       Investment Act dated July 1, 2015
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=4678;
   •   TEGL No. 38-14, Operational Guidance to Support the Orderly Transition of Workforce
       Investment Act Participants, Funds, and Subrecipient Contracts to the Workforce
       Innovation and Opportunity Act dated June 8, 2015
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=5093;
   •   TEGL No. 16-12, On-the-Job Training and National Emergency Grants (OJT NEGs)
       Funded with Workforce Investment Act Dislocated Worker Reserve Funds dated March 7,
       2013 https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=4248;
   •   TEGL No. 4-10, On-the-Job Training National Emergency Grants (OJT NEGs) Funded
       with American Recovery and Reinvestment Act of 2009 Resources dated August 6, 2010
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2930;
   •   TEN 38-09, American Recovery and Reinvestment Act of 2009 On the Job Training
       National Emergency Grants dated April 12, 2010
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2882;
   •   The American Recovery and Reinvestment Act of 2009 (P.L. 1115);
   •   WIA regulations at 20 CFR Part 661, 663 and 671;
   •   TEGL No. 16-03 and Changes 1 through 5, , National Emergency Grant (NEG) Policy
       Guidance dated January 26, 2004; Changes Issued on August 18, 2004; May 24, 2005;
       October 14, 2005; July 13, 2006; April 27, 2007
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=1544;
   •   TEGL No. 17-05 , Common Measures Policy for the Employment and Training
       Administration’s (ETA) Performance Accountability System and Related Performance
       Issues dated February 17, 2006
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2195;
   •   TEGL No. 19-08, National Emergency Grants Funded with American Recovery and
       Reinvestment Act of 2009 Resources dated April 30, 2009
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2748.

Attachment 2

Official attachment: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2016/TEGL_13-15_Attachment2_Acc.pdf

Attachment II:

                                        2014 Average Hourly Wage Rates

                          2014 Average Hourly Wage Rates Across All Occupations
           State                Average Hourly Rate            State          Average Hourly Rate
Alabama                                $19.66          Nebraska                     $19.75
Alaska                                 $25.98          Nevada                       $20.34
Arizona                                $21.43          New Hampshire                $22.63
Arkansas                               $18.24          New Jersey                   $25.92
California                             $25.91          New Mexico                   $20.31
Colorado                               $23.97          New York                     $26.75
Connecticut                            $26.47          North Carolina               $20.81
Delaware                               $23.81          North Dakota                 $21.20
District of Columbia                   $37.78          Ohio                         $21.11
Florida                                $20.11          Oklahoma                     $19.64
Georgia                                $21.48          Oregon                       $22.53
Hawaii                                 $22.23          Pennsylvania                 $22.00
Idaho                                  $19.12          Rhode Island                 $23.83
Illinois                               $23.45          South Carolina               $19.03
Indiana                                $19.94          South Dakota                 $17.93
Iowa                                   $19.77          Tennessee                    $19.55
Kansas                                 $20.20          Texas                        $21.79
Kentucky                               $19.25          Utah                         $20.94
Louisiana                              $19.32          Vermont                      $21.41
Maine                                  $20.26          Virginia                     $24.40
Maryland                               $25.70          Washington                   $25.26
Massachusetts                          $27.70          West Virginia                $18.21
Michigan                               $21.70          Wisconsin                    $20.62
Minnesota                              $23.23          Wyoming                      $21.60
Mississippi                            $17.67          Guam                         $16.00
Missouri                               $20.57          Puerto Rico                  $13.23
Montana                                $19.17          Virgin Islands               $16.81
Source: Bureau of Labor and Statistics 2014 Occupational Employment Statistics