TO:	Commissioners, Employment Coordinators, TA Directors, FS Directors, WMS Coordinators, BICS Coordinators

FROM:	Russell Sykes, Deputy Commissioner, Division of Employment and Transitional Supports

SUBJECT:	Minimum Wage Increase and Work Experience Hours

EFFECTIVE DATE:  January 1, 2007

CONTACT PERSON(s): Employment Questions: Welfare-To-Work Technical Advisor
TA Program Questions: Bureau of Temporary Assistance 
at (518) 474-9344 	

The purpose of this notice is to remind social services districts of the upcoming increase in the State’s minimum wage and to identify the effects that the increased minimum wage may have on Welfare-To-Work (WTW) programs and temporary assistance (TA) and food stamp budgeting. 

The Empire State Wage Act of 2004 (Chapter 747 of the Laws of 2004) increased the State hourly minimum wage to $6.00 per hour effective January 1, 2005, and to $6.75 effective January 1, 2006.  The Act also provides for a final minimum wage increase to $7.15 effective January 1, 2007.  The federal minimum wage remains $5.15 per hour.  The increase in the minimum wage will result in additional income for some households currently receiving assistance and offer a modest added incentive for individuals to choose work over welfare.  The increase will also affect the number of hours a client may be required to participate in a work experience program.

Temporary Assistance Employment Requirements

Section 336-c of Social Services Law specifies that the maximum number of hours an individual may be required to participate in a temporary assistance work experience assignment is equal to the sum of the household’s temporary assistance deficit (from the temporary assistance budget) and food stamp allotment divided by the higher of the State or federal minimum wage.  The resulting hours for the month are then divided by 4.333 and rounded down to the nearest whole number to determine the maximum number of hours that an individual can be assigned to work experience per week.  

As a result of the increased State minimum wage, districts must review the number of hours each individual is assigned to work experience to ensure that the hours assigned do not exceed the maximum allowable under State law.  Districts may adjust participation in other hours as needed, not to exceed 40 hours per week, to ensure the recipient participates as needed to secure employment. 

Food Stamp Employment and Training Requirements

An increase in the State’s minimum wage does not affect the number of individuals exempt from food stamp work requirements based on the exemption for individuals receiving weekly earnings equal to the federal minimum wage multiplied by 30 hours.  This provision relies on the federal minimum wage and is not affected by the State minimum wage.

Federal regulations do however establish that the maximum number of hours a non-exempt food stamp recipient may be required to participate in a food stamp work experience program as being equal to the value of the food stamp benefit divided by the higher of the State or federal minimum wage.  The resulting hours for the month are then divided by 4.333 and rounded down to the nearest whole number to determine the maximum number of hours that an individual can be assigned to work experience per week.  Districts must review the number of hours that food stamp recipients are assigned to work experience to ensure the hours do not exceed the maximum allowable under State and federal law.  A food stamp recipient participating in work experience for the number of hours supported by the food stamp benefit would be compliant with eligibility-based work requirements for able-bodied adults without children (ABAWDs).

Welfare-To-Work Caseload Management System (WTWCMS) and Participation Rate Reporting Logic

WTWCMS will be updated to reflect the increased minimum wage so that the system generated calculation of the allowable hours for work experience included in the referral function is accurate.  Necessary changes are scheduled to be effective January 1, 2007.  To help identify the need for any reductions in hourly work experience assignments, districts (other than NYC) may generate a list of clients currently enrolled in work experience by using the WTWCMS online listing “Current Activity Enrollments” and selecting the activity name “work experience” or other needed activity.  Districts may also obtain this listing by using the Cognos “Active Adults Enrolled in Work Experience” report which may be accessed through the Cognos Upfront website.

The State participation rate reporting logic will also be modified to use the higher State minimum wage effective January 1, 2007, when determining whether or not a case is deemed as meeting the 20 hour “core” work requirement for work participation rate calculation purposes.  The calculation determines the maximum number of weekly hours that an individual can be assigned to work experience by dividing the household’s temporary assistance deficit amount plus the food stamp allotment for the report month by the State minimum wage and then dividing the resulting hours for the month by 4.333 and rounding down to the nearest whole number.  The State participation rate reporting logic will deem a case as meeting the 20 hour “core” work requirement in those instances in which the average weekly actual hours of participation (including holiday time and excused absence which are consistent with the requirements outlined in 06 LCM-10) in work experience reported for the month are equal to the maximum number of hours in work experience supported by the calculation described above, even if the hours are less than 20.  

TA Budgetary Implications 

The increase in the minimum wage may have budgetary implications for those TA cases whose earnings increase as a result.  TA recipients are obligated to report timely any changes in household circumstances which occur.  The TA grant must be adjusted prospectively for any significant changes.  A significant change is not a monetary amount but rather is any wage increase or decrease that is expected to last at least thirty days.  If a TA recipient   experiences a significant change in the amount of earnings the social services district must obtain verification of the change and adjust the benefit after any appropriate administrative processing period (see 18 NYCRR 352.17 (e)) and timely notice allows.  If A TA recipient has a significant change in earned income because of the minimum wage increase and does not report it timely, an overpayment must be calculated beginning with the actual month in which the significant change occurred.  

Districts should also ensure that the hours of employment entered in to the temporary assistance budget or reported via the WTWCMS (NYC workers should review and adjust the hours of employment reported on the form FIA3A, as appropriate) are consistent with the documentation that is maintained as part of the case record. 

FS Budgetary Implications 

The increase in the minimum wage also may have budgetary implications for food stamp cases that receive the higher wage rate.  Almost all food stamp households with earnings are six-month reporting households and, as such, between required case contacts, are required to report only if household income exceeds 130% of the poverty level.  Such households with employed members whose income will be affected by the wage increase should have case budgets adjusted accordingly at application acceptance and recertification or if the next required contact following the wage increase is a periodic (six-month) report, should report the wage rate change to be budgeted when returning their next periodic report.

For FS household’s with earnings subject to 10-day reporting rules are required to report the wage increase timely.  The only FS households with earnings still subject to 10-day reporting rules are households subject to Able Bodied Adult Without Dependents (ABAWD) work rules requirements and the very few households with earnings where all adult household members are elderly and disabled.

Please contact your Welfare-To-Work Technical Advisor if you have any questions related to employment programs and the Bureau of Temporary Assistance for questions related to temporary assistance budgeting.