[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR273.7]

[Page 696-722]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 273_CERTIFICATION OF ELIGIBLE HOUSEHOLDS--Table of Contents
 
Sec.  273.7  Work provisions.

    (a) Work requirements. (1) As a condition of eligibility for food 
stamps, each household member not exempt under paragraph (b)(1) of this 
section must comply with the following Food Stamp Program work 
requirements:
    (i) Register for work or be registered by the State agency at the 
time of application and every 12 months after initial registration. The 
member required to register need not complete the registration form.
    (ii) Participate in a Food Stamp Employment and Training (E&T) 
program if assigned by the State agency, to the extent required by the 
State agency;
    (iii) Participate in a workfare program if assigned by the State 
agency;
    (iv) Provide the State agency or its designee with sufficient 
information regarding employment status or availability for work;
    (v) Report to an employer to whom referred by the State agency or 
its designee if the potential employment meets the suitability 
requirements described in paragraph (h) of this section;
    (vi) Accept a bona fide offer of suitable employment, as defined in 
paragraph (h) of this section, at a site or plant not subject to a 
strike or lockout, at a wage equal to the higher of the Federal or State 
minimum wage or 80 percent of the wage that would have governed had the 
minimum hourly rate under section 6(a)(1) of the Fair Labor Standards 
Act been applicable to the offer of employment.
    (vii) Do not voluntarily and without good cause quit a job of 30 or 
more hours a week or reduce work effort to less than 30 hours a week, in 
accordance with paragraph (j) of this section.

[[Page 697]]

    (2) The Food and Nutrition Service (FNS) has defined the meaning of 
``good cause,'' and ``voluntary quit,'' and ``reduction of work effort'' 
as used in paragraph (a)(1)(vii) of this section. See paragraph (i) of 
this section for a discussion of good cause; see paragraph (j) of this 
section for a discussion of voluntary quit and reduction of work effort.
    (3) Each State agency will determine the meaning of any other terms 
used in paragraph (a)(1) of this section; the procedures for 
establishing compliance with Food Stamp Program work requirements; and 
whether an individual is complying with Food Stamp Program work 
requirements. A State agency must not use a meaning, procedure, or 
determination that is less restrictive on food stamp recipients than is 
a comparable meaning, procedure, or determination under the State 
agency's program funded under title IV-A of the Social Security Act.
    (4) Strikers whose households are eligible under the criteria in 
Sec.  273.1(e) are subject to Food Stamp Program work requirements 
unless they are exempt under paragraph (b)(1) of this section at the 
time of application.
    (5) State agencies may request approval from FNS to substitute State 
or local procedures for work registration for PA households not subject 
to the work requirements under title IV of the Social Security Act or 
for GA households. However, the failure of a household member to comply 
with State or local work requirements that exceed the requirements 
listed in this section must not be considered grounds for 
disqualification. Work requirements imposed on refugees participating in 
refugee resettlement programs may also be substituted, with FNS 
approval.
    (6) Household members who are applying for SSI and for food stamps 
under Sec.  273.2(k)(1)(i) will have Food Stamp Program work 
requirements waived until they are determined eligible for SSI and 
become exempt from Food Stamp Program work requirements, or until they 
are determined ineligible for SSI, at which time their exemptions from 
Food Stamp Program work requirements will be reevaluated.
    (b) Exemptions from work requirements. (1) The following persons are 
exempt from Food Stamp Program work requirements:
    (i) A person younger than 16 years of age or a person 60 years of 
age or older. A person age 16 or 17 who is not the head of a household 
or who is attending school, or is enrolled in an employment training 
program, on at least a half-time basis, is also exempt. If the person 
turns 16 (or 18 under the preceding sentence) during a certification 
period, the State agency must register the person as part of the next 
scheduled recertification process, unless the person qualifies for 
another exemption.
    (ii) A person physically or mentally unfit for employment. For the 
purposes of this paragraph (b), a State agency will define physical and 
mental fitness; establish procedures for verifying; and will verify 
claimed physical or mental unfitness when necessary. However, the State 
agency must not use a definition, procedure for verification, or 
verification that is less restrictive on food stamp recipients than a 
comparable meaning, procedure, or determination under the State agency's 
program funded under title IV-A of the Social Security Act.
    (iii) A person subject to and complying with any work requirement 
under title IV of the Social Security Act. If the exemption claimed is 
questionable, the State agency is responsible for verifying the 
exemption.
    (iv) A parent or other household member responsible for the care of 
a dependent child under 6 or an incapacitated person. If the child has 
his or her 6th birthday during a certification period, the State agency 
must work register the individual responsible for the care of the child 
as part of the next scheduled recertification process, unless the 
individual qualifies for another exemption.
    (v) A person receiving unemployment compensation. A person who has 
applied for, but is not yet receiving, unemployment compensation is also 
exempt if that person is complying with work requirements that are part 
of the Federal-State unemployment compensation application process. If 
the exemption claimed is questionable, the State agency is responsible 
for

[[Page 698]]

verifying the exemption with the appropriate office of the State 
employment services agency.
    (vi) A regular participant in a drug addiction or alcoholic 
treatment and rehabilitation program.
    (vii) An employed or self-employed person working a minimum of 30 
hours weekly or earning weekly wages at least equal to the Federal 
minimum wage multiplied by 30 hours. This includes migrant and seasonal 
farm workers under contract or similar agreement with an employer or 
crew chief to begin employment within 30 days (although this will not 
prevent individuals from seeking additional services from the State 
employment services agency). For work registration purposes, a person 
residing in areas of Alaska designated in Sec.  274.10(a)(4)(iv) of this 
chapter, who subsistence hunts and/or fishes a minimum of 30 hours 
weekly (averaged over the certification period) is considered exempt as 
self-employed. An employed or self-employed person who voluntarily and 
without good cause reduces his or her work effort and, after the 
reduction, is working less than 30 hours per week, is ineligible to 
participate in the Food Stamp Program under paragraph (j) of this 
section.
    (viii) A student enrolled at least half-time in any recognized 
school, training program, or institution of higher education. Students 
enrolled at least half-time in an institution of higher education must 
meet the student eligibility requirements listed in Sec.  273.5. A 
student will remain exempt during normal periods of class attendance, 
vacation, and recess. If the student graduates, enrolls less than half-
time, is suspended or expelled, drops out, or does not intend to 
register for the next normal school term (excluding summer), the State 
agency must work register the individual, unless the individual 
qualifies for another exemption.
    (2)(i) Persons losing exemption status due to any changes in 
circumstances that are subject to the reporting requirements of Sec.  
273.12 must register for employment when the change is reported. If the 
State agency does not use a work registration form, it must annotate the 
change to the member's exemption status. If a work registration form is 
used, the State agency is responsible for providing the participant with 
a work registration form when the change is reported. Participants are 
responsible for returning the completed form to the State agency within 
10 calendar days from the date the form was handed to the household 
member reporting the change in person, or the date the State agency 
mailed the form. If the participant fails to return the completed form, 
the State agency must issue a notice of adverse action stating that the 
participant is being terminated and why, but that the termination can be 
avoided by returning the form.
    (ii) Those persons who lose their exemption due to a change in 
circumstances that is not subject to the reporting requirements of Sec.  
273.12 must register for employment at their household's next 
recertification.
    (c) State agency responsibilities. (1) The State agency must 
register for work each household member not exempted by the provisions 
of paragraph (b)(1) of this section. As part of the work registration 
process, the State agency must explain to the individual the pertinent 
work requirements, the rights and responsibilities of work-registered 
household members, and the consequences of failure to comply. The State 
agency must provide a written statement of the above to each individual 
in the household who is registered for work. A notice must also be 
provided when a previously exempt individual or new household member 
becomes subject to a work requirement, and at recertification. The State 
agency must permit the applicant to complete a record or form for each 
household member required to register for employment in accordance with 
paragraph (a)(1)(i) of this section. Household members are considered to 
have registered when an identifiable work registration form is submitted 
to the State agency or when the registration is otherwise annotated or 
recorded by the State agency.
    (2) The State agency is responsible for screening each work 
registrant to determine whether or not it is appropriate, based on the 
State agency's criteria, to refer the individual to an E&T program, and 
if appropriate, referring

[[Page 699]]

the individual to an E&T program component. Upon entry into each 
component, the State agency must inform the participant, either orally 
or in writing, of the requirements of the component, what will 
constitute noncompliance and the sanctions for noncompliance. The State 
agency may, with FNS approval, use intake and sanction systems that are 
compatible with its title IV-A work program. Such systems must be 
proposed and explained in the State agency's E&T State Plan.
    (3) The State agency must issue a notice of adverse action to an 
individual, or to a household if appropriate, within 10 days after 
learning of the individual's noncompliance with Food Stamp Program work 
requirements. The notice of adverse action must meet the timeliness and 
adequacy requirements of Sec.  273.13. If the individual complies before 
the end of the advance notice period, the State agency will cancel the 
adverse action. If the State agency offers a conciliation process as 
part of its E&T program, it must issue the notice of adverse action no 
later than the end of the conciliation period.
    (4) The State agency must design and operate an E&T program that may 
consist of one or more or a combination of employment and/or training 
components as described in paragraph (e)(1) of this section. The State 
agency must ensure that it is notified by the agency or agencies 
operating its E&T components within 10 days if an E&T mandatory 
participant fails to comply with E&T requirements.
    (5) Each component of the State agency's E&T program must be 
delivered through its statewide workforce development system, unless the 
component is not available locally through such a system.
    (6) In accordance with Sec.  272.2(d) and Sec.  272.2(e) of this 
chapter, the State agency must prepare and submit an E&T Plan to its 
appropriate FNS Regional Office. The E&T Plan must be available for 
public inspection at the State agency headquarters. In its E&T Plan, the 
State agency will detail the following:
    (i) The nature of the E&T components the State agency plans to offer 
and the reasons for such components, including cost information. The 
methodology for State agency reimbursement for education components must 
be specifically addressed;
    (ii) An operating budget for the Federal fiscal year with an 
estimate of the cost of operation for one full year. Any State agency 
that requests 50 percent Federal reimbursement for State agency E&T 
administrative costs, other than for participant reimbursements, must 
include in its plan, or amendments to its plan, an itemized list of all 
activities and costs for which those Federal funds will be claimed, 
including the costs for case management and casework to facilitate the 
transition from economic dependency to self-sufficiency through work. 
Costs in excess of the Federal grant will be allowed only with the prior 
approval of FNS and must be adequately documented to assure that they 
are necessary, reasonable and properly allocated;
    (iii) The categories and types of individuals the State agency 
intends to exempt from E&T participation, the estimated percentage of 
work registrants the State agency plans to exempt, and the frequency 
with which the State agency plans to reevaluate the validity of its 
exemptions;
    (iv) The characteristics of the population the State agency intends 
to place in E&T;
    (v) The estimated number of volunteers the State agency expects to 
place in E&T;
    (vi) The geographic areas covered and not covered by the E&T Plan 
and why, and the type and location of services to be offered;
    (vii) The method the State agency uses to count all work registrants 
as of the first day of the new fiscal year;
    (viii) The method the State agency uses to report work registrant 
information on the quarterly Form FNS-583;
    (ix) The method the State agency uses to prevent work registrants 
from being counted twice within a Federal fiscal year. If the State 
agency universally work registers all food stamp applicants, this method 
must specify how the State agency excludes those exempt from work 
registration under paragraph (b)(1) of this section. If the State agency 
work registers nonexempt participants whenever a new

[[Page 700]]

application is submitted, this method must also specify how the State 
agency excludes those participants who may have already been registered 
within the past 12 months as specified under paragraph (a)(1)(i) of this 
section;
    (x) The organizational relationship between the units responsible 
for certification and the units operating the E&T components, including 
units of the statewide workforce development system, if available. FNS 
is specifically concerned that the lines of communication be efficient 
and that noncompliance be reported to the certification unit within 10 
working days after the noncompliance occurs;
    (xi) The relationship between the State agency and other 
organizations it plans to coordinate with for the provision of services, 
including organizations in the statewide workforce development system, 
if available. Copies of contracts must be available for inspection;
    (xii) The availability, if appropriate, of E&T programs for Indians 
living on reservations;
    (xiii) If a conciliation process is planned, the procedures that 
will be used when an individual fails to comply with an E&T program 
requirement. Include the length of the conciliation period; and
    (xiv) The payment rates for child care established in accordance 
with the Child Care and Development Block Grant provisions of 45 CFR 
98.43, and based on local market rate surveys.
    (xv) The combined (Federal/State) State agency reimbursement rate 
for transportation costs and other expenses reasonably necessary and 
directly related to participation incurred by E&T participants. If the 
State agency proposes to provide different reimbursement amounts to 
account for varying levels of expenses, for instance for greater or 
lesser costs of transportation in different areas of the State, it must 
include them here.
    (xvi) Information about expenses the State agency proposes to 
reimburse. FNS must be afforded the opportunity to review and comment on 
the proposed reimbursements before they are implemented.
    (7) A State agency interested in receiving additional funding for 
serving able-bodied adults without dependents (ABAWDs) subject to the 3-
month time limit, in accordance with paragraph (d)(3) of this section, 
must include in its annual E&T plan:
    (i) Its pledge to offer a qualifying activity to all at-risk ABAWD 
applicants and recipients;
    (ii) Estimated costs of fulfilling its pledge;
    (iii) A description of management controls in place to meet pledge 
requirements;
    (iv) A discussion of its capacity and ability to serve at-risk 
ABAWDs;
    (v) Information about the size and special needs of its ABAWD 
population; and
    (vi) Information about the education, training, and workfare 
components it will offer to meet the ABAWD work requirement.
    (8) The State agency will submit its E&T Plan annually, at least 45 
days before the start of the Federal fiscal year. The State agency must 
submit plan revisions to the appropriate FNS regional office for 
approval if it plans to alter the nature or location of its components 
or the number or characteristics of persons served. The proposed changes 
must be submitted for approval at least 30 days prior to planned 
implementation.
    (9) The State agency will submit an E&T Program Activity Report to 
FNS no later than 45 days after the end of each Federal fiscal quarter. 
The report will contain monthly figures for:
    (i) Participants newly work registered;
    (ii) Number of ABAWD applicants and recipients participating in 
qualifying components;
    (iii) Number of all other applicants and recipients (including 
ABAWDs involved in non-qualifying activities) participating in 
components; and
    (iv) ABAWDs subject to the 3-month time limit imposed in accordance 
with Sec.  273.24(b) who are exempt under the State agency's 15 percent 
exemption allowance under Sec.  273.24(g).
    (10) The State agency will submit annually, on its first quarterly 
report, the number of work registrants in the State on October 1 of the 
new fiscal year.

[[Page 701]]

    (11) The State agency will submit annually, on its final quarterly 
report:
    (i) A list of E&T components it offered during the fiscal year and 
the number of ABAWDs and non-ABAWDs who participated in each; and
    (ii) The number of ABAWDs and non-ABAWDs who participated in the E&T 
Program during the fiscal year. Each individual must be counted only 
once.
    (12) Additional information may be required of the State agency, on 
an as needed basis, regarding the type of components offered and the 
characteristics of persons served, depending on the contents of its E&T 
Plan.
    (13) The State agency must ensure, to the maximum extent 
practicable, that E&T programs are provided for Indians living on 
reservations.
    (14) If a benefit overissuance is discovered for a month or months 
in which a mandatory E&T participant has already fulfilled a work 
component requirement, the State agency must follow the procedure 
specified in paragraph (m)(6)(v) of this section for a workfare 
overissuance.
    (15) If a State agency fails to efficiently and effectively 
administer its E&T program, the provisions of Sec.  276.1(a)(4) of this 
chapter will apply.
    (d) Federal financial participation--(1) Employment and training 
grants--(i) Allocation of grants. Each State agency will receive a 100 
percent Federal grant each fiscal year to operate an E&T program in 
accordance with paragraph (e) of this section. The grant requires no 
State matching.
    (A) In determining each State agency's 100 percent Federal E&T 
grant, FNS will apply the percentage determined in accordance with 
paragraph (d)(1)(i)(B) of this section to the total amount of 100 
percent Federal funds authorized under section 16(h)(1)(A) of the Act 
for each fiscal year.
    (B) FNS will allocate the funding available each fiscal year for E&T 
grants using a formula designed to ensure that each State agency 
receives its appropriate share.
    (1) Ninety percent of the annual 100 percent Federal E&T grant will 
be allocated based on the number of work registrants in each State as a 
percentage of work registrants nationwide. FNS will use work registrant 
data reported by each State agency on the FNS-583, Employment and 
Training Program Activity Report, from the most recent Federal fiscal 
year.
    (2) Ten percent of the annual 100 percent Federal E&T grant will be 
allocated based on the number of ABAWDs in each State, as determined by 
food stamp QC data for the most recently available completed fiscal 
year, which provide a breakdown of each State's population of adults age 
18 through 49 who are not disabled and who do not live with children.
    (C) No State agency will receive less than $50,000 in Federal E&T 
funds. To ensure this, FNS will, if necessary, reduce the grant of each 
State agency allocated more than $50,000. In order to guarantee an 
equitable reduction, FNS will calculate grants as follows. First, 
disregarding those State agencies scheduled to receive less than 
$50,000, FNS will calculate each remaining State agency's percentage 
share of the fiscal year's E&T grant. Next, FNS will multiply the 
grant--less $50,000 for every State agency under the minimum--by each 
remaining State agency's same percentage share to arrive at the revised 
amount. The difference between the original and the revised amounts will 
represent each State agency's contribution. FNS will distribute the 
funds from the reduction to State agencies initially allocated less than 
$50,000.
    (D) If a State agency will not obligate or expend all of the funds 
allocated to it for a fiscal year under paragraph (d)(1)(i)(B) of this 
section, FNS will reallocate the unobligated, unexpended funds to other 
State agencies during the fiscal year or the subsequent fiscal year on a 
first come-first served basis. Each year FNS will notify all State 
agencies of the availability of carryover funding. Interested State 
agencies must submit their requests for carryover funding to FNS. If the 
requests are determined reasonable and necessary, FNS will allocate 
carryover funding to meet some or all of the State agencies' requests, 
as it considers appropriate and equitable. The factors that FNS will 
consider when reviewing a State agency's request will include the size 
of the request relative to the level of the State agency's E&T

[[Page 702]]

spending in prior years, the specificity of the State agency's plan for 
spending carryover funds, and the quality of program and scope of impact 
for the State's E&T program and proposed use of carryover funds.
    (ii) Use of Funds. (A) A State agency must use E&T program grants to 
fund the administrative costs of planning, implementing and operating 
its food stamp E&T program in accordance with its approved State E&T 
plan. E&T grants must not be used for the process of determining whether 
an individual must be work registered, the work registration process, or 
any further screening performed during the certification process, nor 
for sanction activity that takes place after the operator of an E&T 
component reports noncompliance without good cause. For purposes of this 
paragraph (d), the certification process is considered ended when an 
individual is referred to an E&T component for assessment or 
participation. E&T grants may also not be used to subsidize the wages of 
participants, or to reimburse participants under paragraph (d)(3) of 
this section.
    (B) A State agency's receipt of its 100 percent Federal E&T grant is 
contingent on FNS's approval of the State agency's E&T plan. If an 
adequate plan is not submitted, FNS may reallocate a State agency's 
grant among other State agencies with approved plans. Non-receipt of an 
E&T grant does not release a State agency from its responsibility under 
paragraph (c)(4) of this section to operate an E&T program.
    (C) Federal funds made available to a State agency to operate an 
educational component under paragraph (e)(1)(vi) of this section must 
not be used to supplant nonfederal funds for existing educational 
services and activities that promote the purposes of this component. 
Education expenses are approvable to the extent that E&T component costs 
exceed the normal cost of services provided to persons not participating 
in an E&T program.
    (D) In accordance with section 6(d)(4)(K) of the Food Stamp Act, and 
notwithstanding any other provision of this paragraph (d), the amount of 
Federal E&T funds, including participant and dependent care 
reimbursements, a State agency uses to serve participants who are 
receiving cash assistance under a State program funded under title IV-A 
of the Social Security Act must not exceed the amount of Federal E&T 
funds the State agency used in FY 1995 to serve participants who were 
receiving cash assistance under a State program funded under title IV-A 
of the Social Security Act.
    (1) Based on information provided by each State agency, FNS 
established claimed Federal E&T expenditures on this category of 
recipients in fiscal year 1995 for the State agencies of Colorado 
($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin 
($10,999,773). These State agencies may spend up to a like amount each 
fiscal year to serve food stamp recipients who also receive title IV 
assistance.
    (2) All other State agencies are prohibited from expending any 
Federal E&T funds on title IV cash assistance recipients.
    (2) Additional administrative costs. Fifty percent of all other 
administrative costs incurred by State agencies in operating E&T 
programs, above the costs referenced in paragraph (d)(1) of this 
section, will be funded by the Federal government.
    (3) Additional allocations. In addition to the E&T program grants 
discussed in paragraph (d)(1) of this section, FNS will allocate $20 
million in Federal funds each fiscal year to State agencies that ensure 
availability of education, training, or workfare opportunities that 
permit ABAWDs to remain eligible beyond the 3-month time limit.
    (i) To be eligible, a State agency must make and comply with a 
commitment, or ``pledge,'' to use these additional funds to defray the 
cost of offering a position in an education, training, or workfare 
component that fulfills the ABAWD work requirement, as defined in Sec.  
273.24(a), to each applicant and recipient who is:
    (A) In the last month of the 3-month time limit described in Sec.  
273.24(b);
    (B) Not eligible for an exception to the 3-month time limit under 
Sec.  273.24(c);
    (C) Not a resident of an area of the State granted a waiver of the 
3-month time limit under Sec.  273.24(f); and

[[Page 703]]

    (D) Not included in each State agency's 15 percent ABAWD exemption 
allotment under Sec.  273.24(g).
    (ii) While a participating pledge State may use a portion of the 
additional funding to provide E&T services to ABAWDs who do not meet the 
criteria discussed in paragraph (d)(3)(i) of this section, it must 
guarantee that the ABAWDs who do meet the criteria are provided the 
opportunity to remain eligible.
    (iii) State agencies will have one opportunity each fiscal year to 
take the pledge described in paragraph (d)(3)(i) of this section. An 
interested State agency, in its E&T Plan for the upcoming fiscal year, 
must include the following:
    (A) A request to be considered as a pledge State, along with its 
commitment to comply with the requirements of paragraph (d)(3)(i) of 
this section;
    (B) The estimated costs of complying with its pledge;
    (C) A description of management controls it has established to meet 
the requirements of the pledge;
    (D) A discussion of its capacity and ability to serve vulnerable 
ABAWDs;
    (E) Information about the size and special needs of the State's 
ABAWD population; and
    (F) Information about the education, training, and workfare 
components that it will offer to allow ABAWDs to remain eligible.
    (iv) If the information provided in accordance with paragraph 
(d)(3)(iii) of this section clearly indicates that the State agency will 
be unable to fulfill its commitment, FNS may require the State agency to 
address its deficiencies before it is allowed to participate as a pledge 
State.
    (v) If the State agency does not address its deficiencies by the 
beginning of the new fiscal year on October 1, it will not be allowed to 
participate as a pledge State.
    (vi) No pledges will be accepted after the beginning of the fiscal 
year.
    (vii)(A) Once FNS determines how many State agencies will 
participate as pledge States in the upcoming fiscal year, it will, as 
early in the fiscal year as possible, allocate among them the $20 
million based on the number of ABAWDs in each participating State, as a 
percentage of ABAWDs in all the participating States. FNS will determine 
the number of ABAWDs in each participating State using food stamp QC 
data for the most recently available completed fiscal year, which 
provide a breakdown of each State's population of adults age 18 through 
49 who are not disabled and who do not live with children.
    (B) Each participating State agency's share of the $20 million will 
be disbursed in accordance with paragraph (d)(6) of this section.
    (C) Each participating State agency must meet the fiscal 
recordkeeping and reporting requirements of paragraph (d)(7) of this 
section.
    (viii) If a participating State agency notifies FNS that it will not 
obligate or expend its entire share of the additional funding allocated 
to it for a fiscal year, FNS will reallocate the unobligated, unexpended 
funds to other participating State agencies during the fiscal year, as 
it considers appropriate and equitable, on a first come-first served 
basis. FNS will notify other pledge States of the availability of 
additional funding. To qualify, a pledge State must have already 
obligated its entire annual 100 percent Federal E&T grant, excluding an 
amount that is proportionate to the number of months remaining in the 
fiscal year, and it must guarantee in writing that it intends to 
obligate its entire grant by the end of the fiscal year. A State's 
annual 100 percent Federal E&T grant is its share of the regular 100 
percent Federal E&T allocation plus its share of the additional $20 
million (if applicable). Interested pledge States must submit their 
requests for additional funding to FNS. FNS will review the requests 
and, if they are determined reasonable and necessary, will reallocate 
some or all of the unobligated, unspent ABAWD funds.
    (ix) Unlike the funds allocated in accordance with paragraph (d)(1) 
of this section, the additional pledge funding will not remain available 
until obligated or expended. Unobligated funds from this grant must be 
returned to the U.S. Treasury at the end of each fiscal year.
    (x) The cost of serving at-risk ABAWDs is not an acceptable reason 
to

[[Page 704]]

fail to live up to the pledge. A slot must be made available and the 
ABAWD must be served even if the State agency exhausts all of its 100 
percent Federal E&T funds and must use State funds to guarantee an 
opportunity for all at-risk ABAWDs to remain eligible beyond the 3-month 
time limit. State funds expended in accordance with the approved State 
E&T Plan are eligible for 50 percent Federal match. If a participating 
State agency fails, without good cause, to meet its commitment, it may 
be disqualified from participating in the subsequent fiscal year or 
years.
    (4) Participant reimbursements. The State agency must provide 
payments to participants in its E&T program, including applicants and 
volunteers, for expenses that are reasonably necessary and directly 
related to participation in the E&T program. The Federal government will 
fund 50 percent of State agency payments for allowable expenses, except 
that Federal matching for dependent care expenses is limited to the 
maximum amount specified in paragraph (d)(4)(i) of this section. These 
payments may be provided as a reimbursement for expenses incurred or in 
advance as payment for anticipated expenses in the coming month. The 
State agency must inform each E&T participant that allowable expenses up 
to the amounts specified in paragraphs (d)(4)(i) and (d)(4)(ii) of this 
section will be reimbursed by the State agency upon presentation of 
appropriate documentation. Reimbursable costs may include, but are not 
limited to, dependent care costs, transportation, and other work, 
training or education related expenses such as uniforms, personal safety 
items or other necessary equipment, and books or training manuals. These 
costs must not include the cost of meals away from home. If applicable, 
any allowable costs incurred by a noncompliant E&T participant after the 
expiration of the noncompliant participant's minimum mandatory 
disqualification period, as established by the State agency, that are 
reasonably necessary and directly related to reestablishing eligibility, 
as defined by the State agency, are reimbursable under paragraphs 
(d)(4)(i) and (d)(4)(ii) of this section. The State agency may reimburse 
participants for expenses beyond the amounts specified in paragraphs 
(d)(4)(i) of this section; however, only costs that are up to but not in 
excess of those amounts are subject to Federal cost sharing. 
Reimbursement must not be provided from E&T grants allocated under 
paragraph (d)(1)(i) of this section. Any expense covered by a 
reimbursement under this section is not deductible under Sec.  
273.10(d)(1)(i).
    (i) The State agency will reimburse the cost of dependent care it 
determines to be necessary for the participation of a household member 
in the E&T program up to the actual cost of dependent care, or the 
applicable payment rate for child care, whichever is lowest. The payment 
rates for child care are established in accordance with the Child Care 
and Development Block Grant provisions of 45 CFR 98.43, and are based on 
local market rate surveys. The State agency will provide a dependent 
care reimbursement to an E&T participant for all dependents requiring 
care unless otherwise prohibited by this section. The State agency will 
not provide a reimbursement for a dependent age 13 or older unless the 
dependent is physically and/or mentally incapable of caring for himself 
or herself or is under court supervision. The State agency must provide 
a reimbursement for all dependents who are physically and/or mentally 
incapable of caring for themselves or who are under court supervision, 
regardless of age, if dependent care is necessary for the participation 
of a household member in the E&T program. The State agency will obtain 
verification of the physical and/or mental incapacity for dependents age 
13 or older if the physical and/or mental incapacity is questionable. 
Also, the State agency will verify a court-imposed requirement for the 
supervision of a dependent age 13 or older if the need for dependent 
care is questionable. If more than one household member is required to 
participate in an E&T program, the State agency will reimburse the 
actual cost of dependent care or the applicable payment rate for child 
care, whichever is lowest, for each dependent in the household, 
regardless of the number of household

[[Page 705]]

members participating in the E&T program. An individual who is the 
caretaker relative of a dependent in a family receiving cash assistance 
under title IV-A of the Social Security Act in a local area where an 
employment, training, or education program under title IV-A is in 
operation is not eligible for such reimbursement. An E&T participant is 
not entitled to the dependent care reimbursement if a member of the E&T 
participant's food stamp household provides the dependent care services. 
The State agency must verify the participant's need for dependent care 
and the cost of the dependent care prior to the issuance of the 
reimbursement. The verification must include the name and address of the 
dependent care provider, the cost and the hours of service (e.g., five 
hours per day, five days per week for two weeks). A participant may not 
be reimbursed for dependent care services beyond that which is required 
for participation in the E&T program. In lieu of providing 
reimbursements for dependent care expenses, a State agency may arrange 
for dependent care through providers by the use of purchase of service 
contracts, by providing vouchers to the household or by other means. A 
State agency may require that dependent care provided or arranged by the 
State agency meet all applicable standards of State and local law, 
including requirements designed to ensure basic health and safety 
protections (e.g., fire safety). An E&T participant may refuse available 
appropriate dependent care as provided or arranged by the State agency, 
if the participant can arrange other dependent care or can show that 
such refusal will not prevent or interfere with participation in the E&T 
program as required by the State agency.
    (ii) The State agency will reimburse the actual costs of 
transportation and other costs (excluding dependent care costs) it 
determines to be necessary and directly related to participation in the 
E&T program up the maximum level of reimbursement established by the 
State agency. Such costs are the actual costs of participation unless 
the State agency has a method approved in its E&T Plan for providing 
allowances to participants to reflect approximate costs of 
participation. If a State agency has an approved method to provide 
allowances rather than reimbursements, it must provide participants an 
opportunity to claim actual expenses up to the maximum level of 
reimbursements established by the State agency.
    (iii) No participant cost that has been reimbursed under a workfare 
program under paragraph (m)(7)(i) of this section, title IV of the 
Social Security Act or other work program will be reimbursed under this 
section.
    (iv) Any portion of dependent care costs that are reimbursed under 
this section may not be claimed as an expense and used in calculating 
the dependent care deduction under Sec.  273.9(d)(4) for determining 
benefits.
    (v) The State agency must inform all mandatory E&T participants that 
they may be exempted from E&T participation if their monthly expenses 
that are reasonably necessary and directly related to participation in 
the E&T program exceed the allowable reimbursement amount. Persons for 
whom allowable monthly expenses in an E&T component exceed the amounts 
specified under paragraphs (d)(4)(i) and (d)(4)(ii) of this section are 
not required to participate in that component. These individuals will be 
placed, if possible, in another suitable component in which the 
individual's monthly E&T expenses would not exceed the allowable 
reimbursable amount paid by the State agency. If a suitable component is 
not available, these individuals will be exempt from E&T participation 
until a suitable component is available or the individual's 
circumstances change and his/her monthly expenses do not exceed the 
allowable reimbursable amount paid by the State agency. Dependent care 
expenses incurred that are otherwise allowable but not reimbursed 
because they exceed the reimbursable amount specified under paragraph 
(d)(4)(i) of this section will be considered in determining a dependent 
care deduction under Sec.  273.9(d)(4).
    (5) Workfare cost sharing. Enhanced cost-sharing due to placement of 
workfare participants in paid employment is available only for workfare 
programs funded under paragraph (m)(7)(iv) of this section at the 50 
percent reimbursement level and reported as such.

[[Page 706]]

    (6) Funding mechanism. E&T program funding will be disbursed through 
States' Letters of Credit in accordance with Sec.  277.5 of this 
chapter. The State agency must ensure that records are maintained that 
support the financial claims being made to FNS.
    (7) Fiscal recordkeeping and reporting requirements. Total E&T 
expenditures are reported on the Financial Status Report (SF-269) in the 
column containing ``other'' expenses. E&T expenditures are also 
separately identified in an attachment to the SF-269 to show, as 
provided in instructions, total State and Federal E&T expenditures; 
expenditures funded with the unmatched Federal grants; State and Federal 
expenditures for participant reimbursements; State and Federal 
expenditures for E&T costs at the 50 percent reimbursement level; and 
State and Federal expenditures for optional workfare program costs, 
operated under section 20 of the Food Stamp Act and paragraph (m)(7) of 
this section. Claims for enhanced funding for placements of participants 
in employment after their initial participation in the optional workfare 
program will be submitted in accordance with paragraph (m)(7)(iv) of 
this section.
    (e) Employment and training programs. Work registrants not otherwise 
exempted by the State agency are subject to the E&T program 
participation requirements imposed by the State agency. Such individuals 
are referred to in this section as E&T mandatory participants. 
Requirements may vary among participants. Failure to comply without good 
cause with the requirements imposed by the State agency will result in 
disqualification as specified in paragraph (f)(2) of this section.
    (1) Components. To be considered acceptable by FNS, any component 
offered by a State agency must entail a certain level of effort by the 
participants. The level of effort should be comparable to spending 
approximately 12 hours a month for two months making job contacts (less 
in workfare or work experience components if the household's benefit 
divided by the minimum wage is less than this amount). However, FNS may 
approve components that do not meet this guideline if it determines that 
such components will advance program goals. An initial screening by an 
eligibility worker to determine whom to place in an E&T program does not 
constitute a component. The State agency may require Food Stamp Program 
applicants to participate in any component it offers in its E&T program 
at the time of application. The State agency must not impose 
requirements that would delay the determination of an individual's 
eligibility for benefits or in issuing benefits to any household that is 
otherwise eligible. In accordance with section 6(o)(1)(A) of the Food 
Stamp Act and Sec.  273.24, job search and job search training, when 
offered as components of an E&T program, are not qualifying activities 
relating to the participation requirements necessary to maintain food 
stamp eligibility for ABAWDs. However, job search or job search training 
activities, when offered as part of other E&T program components, are 
acceptable as long as those activities comprise less than half the total 
required time spent in the components. An E&T program offered by a State 
agency must include one or more of the following components:
    (i) A job search program. The State agency may require an individual 
to participate in job search from the time an application is filed for 
an initial period established by the State agency. Following this 
initial period (which may extend beyond the date when eligibility is 
determined) the State agency may require an additional job search period 
in any period of 12 consecutive months. The first such period of 12 
consecutive months will begin at any time following the close of the 
initial period. The State agency may establish a job search period that, 
in its estimation, will provide participants a reasonable opportunity to 
find suitable employment. The State agency should not, however, 
establish a continuous, year-round job search requirement. If a 
reasonable period of job search does not result in employment, placing 
the individual in a training or education component to improve job 
skills will likely be more productive. In accordance with section 
6(o)(1)(A) of the Food Stamp Act and Sec.  273.24, a job search

[[Page 707]]

program is not a qualifying activity relating to the participation 
requirements necessary to maintain food stamp eligibility for ABAWDs. 
However, such a program, when operated under title I of the WIA, or 
under section 236 of the Trade Act, is considered a qualifying activity 
relating to the participation requirements necessary to maintain food 
stamp eligibility for ABAWDs.
    (ii) A job search training program that includes reasonable job 
search training and support activities. Such a program may consist of 
job skills assessments, job finding clubs, training in techniques for 
employability, job placement services, or other direct training or 
support activities, including educational programs determined by the 
State agency to expand the job search abilities or employability of 
those subject to the program. Job search training activities are 
approvable if they directly enhance the employability of the 
participants. A direct link between the job search training activities 
and job-readiness must be established for a component to be approved. In 
accordance with section 6(o)(1) of the Food Stamp Act and Sec.  273.24, 
a job search program is not a qualifying activity relating to the 
participation requirements necessary to maintain food stamp eligibility 
for ABAWDs. However, such a program, when operated under title I of the 
WIA or under section 236 of the Trade Act, is considered a qualifying 
activity relating to the participation requirements necessary to 
maintain food stamp eligibility for ABAWDs.
    (iii) A workfare program as described in paragraph (m) of this 
section.
    (A) The participation requirements of section 20(b) of the Food 
Stamp Act and paragraphs (m)(5)(i)(A) and (m)(5)(i)(B) of this section 
for individuals exempt from Food Stamp Program work requirements under 
paragraphs (b)(1)(iii) and (b)(1)(v) of this section, are not applicable 
to E&T workfare components.
    (B) In accordance with section 20(e) of the Food Stamp Act and 
paragraph (m)(6)(ii) of this section, the State agency may establish a 
job search period of up to 30 days following certification prior to 
making a workfare assignment. This job search activity is part of the 
workfare assignment, and not a job search ``program.'' Participants are 
considered to be participating in and complying with the requirements of 
workfare, thereby meeting the participation requirement for ABAWDs.
    (C) The sharing of workfare savings authorized under section 20(g) 
of the Food Stamp Act and paragraph (m)(7)(iv) of this section are not 
available for E&T workfare components.
    (iv) A program designed to improve the employability of household 
members through actual work experience or training, or both, and to 
enable individuals employed or trained under such programs to move 
promptly into regular public or private employment. Such an employment 
or training experience must:
    (A) Not provide any work that has the effect of replacing the 
employment of an individual not participating in the employment or 
training experience program; and
    (B) Provide the same benefits and working conditions that are 
provided at the job site to employees performing comparable work for 
comparable hours.
    (v) A project, program or experiment such as a supported work 
program, or a WIA or State or local program aimed at accomplishing the 
purpose of the E&T program.
    (vi) Educational programs or activities to improve basic skills or 
otherwise improve employability including educational programs 
determined by the State agency to expand the job search abilities or 
employability of those subject to the program. Allowable educational 
activities may include, but are not limited to, high school or 
equivalent educational programs, remedial education programs to achieve 
a basic literacy level, and instructional programs in English as a 
second language. Only educational components that directly enhance the 
employability of the participants are allowable. A direct link between 
the education and job-readiness must be established for a component to 
be approved.
    (vii) A program designed to improve the self-sufficiency of 
recipients through self-employment. Included are

[[Page 708]]

programs that provide instruction for self-employment ventures.
    (2) Exemptions. Each State agency may, at its discretion, exempt 
individual work registrants and categories of work registrants from E&T 
participation. Each State agency must periodically reevaluate its 
individual and categorical exemptions to determine whether they remain 
valid. Each State agency will establish the frequency of its periodic 
evaluation.
    (3) Time spent in an employment and training program. (i) Each State 
agency will determine the length of time a participant spends in any E&T 
component it offers. The State agency may also determine the number of 
successive components in which a participant may be placed.
    (ii) The time spent by the members of a household collectively each 
month in an E&T work program (including, but not limited to, those 
carried out under paragraphs (e)(1)(iii) and (e)(1)(iv) of this section) 
combined with any hours worked that month in a workfare program under 
paragraph (m) of this section must not exceed the number of hours equal 
to the household's allotment for that month divided by the higher of the 
applicable Federal or State minimum wage. The total hours of 
participation in an E&T component for any household member individually 
in any month, together with any hours worked in a workfare program under 
paragraph (m) of this section and any hours worked for compensation (in 
cash or in kind), must not exceed 120.
    (4) Voluntary participation. (i) A State agency may operate program 
components in which individuals elect to participate.
    (ii) A State agency must not disqualify voluntary participants in an 
E&T component for failure to comply with E&T requirements.
    (iii) The hours of participation or work of a volunteer may not 
exceed the hours required of E&T mandatory participants, as specified in 
paragraph (e)(3) of this section.
    (f) Failure to comply--(1) Ineligibility for failure to comply. A 
nonexempt individual who refuses or fails without good cause, as defined 
in paragraphs (i)(2) and (i)(3) of this section, to comply with the Food 
Stamp Program work requirements listed under paragraph (a)(1) of this 
section is ineligible to participate in the Food Stamp Program, and will 
be considered an ineligible household member, pursuant to Sec.  
273.1(b)(7).
    (i) As soon as the State agency learns of the individual's 
noncompliance it must determine whether good cause for the noncompliance 
exists, as discussed in paragraph (i) of this section. Within 10 days of 
establishing that the noncompliance was without good cause, the State 
agency must provide the individual with a notice of adverse action, as 
specified in Sec.  273.13. If the State agency offers a conciliation 
process as part of its E&T program, it must issue the notice of adverse 
action no later than the end of the conciliation period.
    (ii) The notice of adverse action must contain the particular act of 
noncompliance committed and the proposed period of disqualification. The 
notice must also specify that the individual may, if appropriate, 
reapply at the end of the disqualification period. Information must be 
included on or with the notice describing the action that can be taken 
to avoid the disqualification before the disqualification period begins. 
The disqualification period must begin with the first month following 
the expiration of the 10-day adverse notice period, unless a fair 
hearing is requested.
    (iii) An E&T disqualification may be imposed after the end of a 
certification period. Thus, a notice of adverse action must be sent 
whenever the State agency becomes aware of an individual's noncompliance 
with Food Stamp Program work requirements, even if the disqualification 
begins after the certification period expires and the household has not 
been recertified.
    (2) Disqualification periods. The following disqualification periods 
will be imposed:
    (i) For the first occurrence of noncompliance, the individual will 
be disqualified until the later of:
    (A) The date the individual complies, as determined by the State 
agency;
    (B) One month; or
    (C) Up to three months, at State agency option.
    (ii) For the second occurrence, until the later of:

[[Page 709]]

    (A) The date the individual complies, as determined by the State 
agency;
    (B) Three months; or
    (C) Up to six months, at State agency option.
    (iii) For the third or subsequent occurrence, until the later of:
    (A) The date the individual complies, as determined by the State 
agency;
    (B) Six months;
    (C) A date determined by the State agency; or
    (D) At the option of the State agency, permanently.
    (3) Record retention. In accordance with Sec.  272.1(f) of this 
chapter, State agencies are required to retain records concerning the 
frequency of noncompliance with FSP work requirements and the resulting 
disqualification actions imposed. These records must be available for 
inspection and audit at any reasonable time to ensure conformance with 
the minimum mandatory disqualification periods instituted.
    (4) Disqualification plan. In accordance with Sec.  
272.2(d)(1)(xiii) of this chapter, each State agency must prepare and 
submit a plan detailing its disqualification policies. The plan must 
include the length of disqualification to be enforced for each 
occurrence of noncompliance, how compliance is determined by the State 
agency, and the State agency's household disqualification policy.
    (5) Household ineligibility. (i) If the individual who becomes 
ineligible to participate under paragraph (f)(1) of this section is the 
head of a household, the State agency, at its option, may disqualify the 
entire household from Food Stamp Program participation.
    (ii) The State agency may disqualify the household for a period that 
does not exceed the lesser of:
    (A) The duration of the ineligibility of the noncompliant individual 
under paragraph (f)(2) of this section; or
    (B) 180 days.
    (iii) A household disqualified under this provision may reestablish 
eligibility if:
    (A) The head of the household leaves the household;
    (B) A new and eligible person joins the household as the head of the 
household, as defined in Sec.  273.1(d)(2); or
    (C) The head of the household becomes exempt from work requirements 
during the disqualification period.
    (iv) If the head of the household joins another household as its 
head, that household will be disqualified from participating in the Food 
Stamp Program for the remaining period of ineligibility.
    (6) Fair hearings. Each individual or household has the right to 
request a fair hearing, in accordance with Sec.  273.15, to appeal a 
denial, reduction, or termination of benefits due to a determination of 
nonexempt status, or a State agency determination of failure to comply 
with Food Stamp Program work requirements. Individuals or households may 
appeal State agency actions such as exemption status, the type of 
requirement imposed, or State agency refusal to make a finding of good 
cause if the individual or household believes that a finding of failure 
to comply has resulted from improper decisions on these matters. The 
State agency or its designee operating the relevant component must 
receive sufficient advance notice to either permit the attendance of a 
representative or ensure that a representative will be available for 
questioning over the phone during the hearing. A representative of the 
appropriate agency must be available through one of these means. A 
household must be allowed to examine its E&T component casefile at a 
reasonable time before the date of the fair hearing, except for 
confidential information (that may include test results) that the agency 
determines should be protected from release. Confidential information 
not released to a household may not be used by either party at the 
hearing. The results of the fair hearing are binding on the State 
agency.
    (7) Failure to comply with a work requirement under title IV of the 
Social Security Act, or an unemployment compensation work requirement. 
An individual exempt from Food Stamp Program work requirements by 
paragraphs (b)(1)(iii) or (b)(1)(v) of this section because he or she is 
subject to work requirements under title IV-A or unemployment 
compensation who fails to comply with a title IV-A or unemployment 
compensation work requirement

[[Page 710]]

will be treated as though he or she failed to comply with the Food Stamp 
Program work requirement.
    (i) When a food stamp household reports the loss or denial of title 
IV-A or unemployment compensation benefits, or if the State agency 
otherwise learns of a loss or denial, the State agency must determine 
whether the loss or denial resulted when a household member refused or 
failed without good cause to comply with a title IV-A or unemployment 
compensation work requirement.
    (ii) If the State agency determines that the loss or denial of 
benefits resulted from an individual's refusal or failure without good 
cause to comply with a title IV or unemployment compensation 
requirement, the individual (or household if applicable under paragraph 
(f)(5) of this section) must be disqualified in accordance with the 
applicable provisions of this paragraph (f). However, if the 
noncomplying individual meets one of the work registration exemptions 
provided in paragraph (b)(1) of this section (other than the exemptions 
provided in paragraphs (b)(1)(iii) or (b)(1)(v) of this section) the 
individual (or household if applicable under paragraph (f)(5) of this 
section) will not be disqualified.
    (iii) If the State agency determination of noncompliance with a 
title IV-A or unemployment compensation work requirement leads to a 
denial or termination of the individual's or household's food stamp 
benefits, the individual or household has a right to appeal the decision 
in accordance with the provisions of paragraph (f)(6) of this section.
    (iv) In cases where the individual is disqualified from the title 
IV-A program for refusal or failure to comply with a title IV-A work 
requirement, but the individual meets one of the work registration 
exemptions provided in paragraph (b)(1) of this section, other than the 
exemption in paragraphs (b)(1)(iii) of this section, the State agency 
may, at its option, apply the identical title IV-A disqualification on 
the individual under the Food Stamp Program. The State agency must 
impose such optional disqualifications in accordance with section 6(i) 
of the Food Stamp Act and with the provisions of Sec.  273.11(1).
    (g) Ending disqualification. Except in cases of permanent 
disqualification, at the end of the applicable mandatory 
disqualification period for noncompliance with Food Stamp Program work 
requirements, participation may resume if the disqualified individual 
applies again and is determined by the State agency to be in compliance 
with work requirements. A disqualified individual may be permitted to 
resume participation during the disqualification period (if otherwise 
eligible) by becoming exempt from work requirements.
    (h) Suitable employment. (1) Employment will be considered suitable 
unless:
    (i) The wage offered is less than the highest of the applicable 
Federal minimum wage, the applicable State minimum wage, or eighty 
percent (80%) of the Federal minimum wage if neither the Federal nor 
State minimum wage is applicable.
    (ii) The employment offered is on a piece-rate basis and the average 
hourly yield the employee can reasonably be expected to earn is less 
than the applicable hourly wages specified under paragraph (h)(1)(i) of 
this section.
    (iii) The household member, as a condition of employment or 
continuing employment, is required to join, resign from, or refrain from 
joining any legitimate labor organization.
    (iv) The work offered is at a site subject to a strike or lockout at 
the time of the offer unless the strike has been enjoined under section 
208 of the Labor-Management Relations Act (29 U.S.C. 78) (commonly known 
as the Taft-Hartley Act), or unless an injunction has been issued under 
section 10 of the Railway Labor Act (45 U.S.C. 160).
    (v) It fails to meet additional suitability criteria established by 
State agencies.
    (2) In addition, employment will be considered suitable unless the 
household member involved can demonstrate or the State agency otherwise 
becomes aware that:
    (i) The degree of risk to health and safety is unreasonable.
    (ii) The member is physically or mentally unfit to perform the 
employment, as documented by medical evidence or

[[Page 711]]

by reliable information from other sources.
    (iii) The employment offered within the first 30 days of 
registration is not in the member's major field of experience.
    (iv) The distance from the member's home to the place of employment 
is unreasonable considering the expected wage and the time and cost of 
commuting. Employment will not be considered suitable if daily commuting 
time exceeds 2 hours per day, not including the transporting of a child 
to and from a child care facility. Nor will employment be considered 
suitable if the distance to the place of employment prohibits walking 
and neither public nor private transportation is available to transport 
the member to the jobsite.
    (v) The working hours or nature of the employment interferes with 
the member's religious observances, convictions, or beliefs.
    (i) Good Cause. (1) The State agency is responsible for determining 
good cause when a food stamp recipient fails or refuses to comply with 
Food Stamp Program work requirements. Since it is not possible for the 
Department to enumerate each individual situation that should or should 
not be considered good cause, the State agency must take into account 
the facts and circumstances, including information submitted by the 
employer and by the household member involved, in determining whether or 
not good cause exists.
    (2) Good cause includes circumstances beyond the member's control, 
such as, but not limited to, illness, illness of another household 
member requiring the presence of the member, a household emergency, the 
unavailability of transportation, or the lack of adequate child care for 
children who have reached age six but are under age 12.
    (3) Good cause for leaving employment includes the good cause 
provisions found in paragraph (i)(2) of this section, and resigning from 
a job that is unsuitable, as specified in paragraphs (h)(1) and (h)(2) 
of this section. Good cause for leaving employment also includes:
    (i) Discrimination by an employer based on age, race, sex, color, 
handicap, religious beliefs, national origin or political beliefs;
    (ii) Work demands or conditions that render continued employment 
unreasonable, such as working without being paid on schedule;
    (iii) Acceptance of employment by the individual, or enrollment by 
the individual in any recognized school, training program or institution 
of higher education on at least a half time basis, that requires the 
individual to leave employment;
    (iv) Acceptance by any other household member of employment or 
enrollment at least half-time in any recognized school, training program 
or institution of higher education in another county or similar 
political subdivision that requires the household to move and thereby 
requires the individual to leave employment;
    (v) Resignations by persons under the age of 60 which are recognized 
by the employer as retirement;
    (vi) Employment that becomes unsuitable, as specified in paragraphs 
(h)(1) and (h)(2) of this section, after the acceptance of such 
employment;
    (vii) Acceptance of a bona fide offer of employment of more than 30 
hours a week or in which the weekly earnings are equivalent to the 
Federal minimum wage multiplied by 30 hours that, because of 
circumstances beyond the individual's control, subsequently either does 
not materialize or results in employment of less than 30 hours a week or 
weekly earnings of less than the Federal minimum wage multiplied by 30 
hours; and
    (viii) Leaving a job in connection with patterns of employment in 
which workers frequently move from one employer to another such as 
migrant farm labor or construction work. There may be some circumstances 
where households will apply for food stamp benefits between jobs 
particularly in cases where work may not yet be available at the new job 
site. Even though employment at the new site has not actually begun, the 
quitting of the previous employment must be considered as with good 
cause if it is part of the pattern of that type of employment.

[[Page 712]]

    (4) Verification. To the extent that the information given by the 
household is questionable, as defined in Sec.  273.2(f)(2), State 
agencies must request verification of the household's statements. The 
primary responsibility for providing verification, as provided in Sec.  
273.2(f)(5), rests with the household.
    (j) Voluntary quit and reduction of work effort--(1) Period for 
establishing voluntary quit and reduction of work effort. For the 
purpose of establishing that a voluntary quit without good cause or 
reduction in work effort without good cause occurred prior to applying 
for food stamps, a State agency may, at its option, choose a period 
between 30 and 60 days before application in which to determine 
voluntary quit or reduction in work effort.
    (2) Individual ineligibility. An individual is ineligible to 
participate in the Food Stamp Program if, in a period established by the 
State agency between 30 and 60 day before applying for food stamp 
benefits or at any time thereafter, the individual:
    (i) Voluntarily and without good cause quits a job of 30 hours a 
week or more; or
    (ii) Reduces his or her work effort voluntarily and without good 
cause and, after the reduction, is working less than 30 hours per week.
    (3) Determining whether a voluntary quit or reduction of work effort 
occurred and application processing. (i) When a household files an 
application for participation, or when a participating household reports 
the loss of a source of income or a reduction in household earnings, the 
State agency must determine whether any household member voluntarily 
quit his or her job or reduced his or her work effort. Benefits must not 
be delayed beyond the normal processing times specified in Sec.  273.2 
pending the outcome of this determination.
    (ii) The voluntary quit provision applies if the employment involved 
30 hours or more per week or provided weekly earnings at least 
equivalent to the Federal minimum wage multiplied by 30 hours; the quit 
occurred within a period established by the State agency between 30 to 
60 days prior to the date of application or anytime thereafter; and the 
quit was without good cause. Changes in employment status that result 
from terminating a self-employment enterprise or resigning from a job at 
the demand of the employer will not be considered a voluntary quit for 
purposes of this paragraph (j). An employee of the Federal Government, 
or of a State or local government who participates in a strike against 
such government, and is dismissed from his or her job because of 
participation in the strike, will be considered to have voluntarily quit 
his or her job without good cause. If an individual quits a job, secures 
new employment at comparable wages or hours and is then laid off or, 
through no fault of his own, loses the new job, the individual must not 
be disqualified for the earlier quit.
    (iii) The reduction of work effort provision applies if, before the 
reduction, the individual was employed 30 hours or more per week; the 
reduction occurred within a period established by the State agency 
between 30 and 60 days prior to the date of application or anytime 
thereafter; and the reduction was voluntary and without good cause. If 
the individual reduces his or her work hours to less than 30 a week, but 
continues to earn weekly wages that exceed the Federal minimum wage 
multiplied by 30 hours, the individual remains exempt from Program work 
requirements, in accordance with paragraph (b)(1)(vii) of this section, 
and the reduction in work effort provision does not apply. Minor 
variations in the number of hours worked or in the weekly minimum wage 
equivalent wages are inevitable and must be taken into consideration 
when assessing a recipient's compliance with Program work rules.
    (iv) In the case of an applicant household, the State agency must 
determine if any household member subject to Food Stamp Program work 
requirements voluntarily quit his or her job or reduced his or her work 
effort within a period established by the State agency between 30 and 60 
days prior to date of application. If the State agency learns that a 
household has lost a source of income or experienced a reduction in 
income after the date of application but before the household is 
certified, the State agency must determine

[[Page 713]]

whether a voluntary quit or reduction in work effort occurred.
    (v) Upon determining that an individual voluntarily quit employment 
or reduced work effort, the State agency must determine if the voluntary 
quit or reduction of work effort was with good cause as defined in 
paragraph (i) of this section.
    (vi) In the case of an individual who is a member of an applicant 
household, if the voluntary quit or reduction in work effort was without 
good cause, the individual will be determined ineligible to participate 
and will be disqualified according to the State agency's established 
minimum mandatory sanction schedule. The ineligible individual must be 
considered an ineligible household member, pursuant to Sec.  
273.1(b)(7). The disqualification is effective upon the determination of 
eligibility for the remaining household members. If the individual who 
becomes ineligible is the head of the household, as defined in Sec.  
273.1(d)(2), the State agency may choose to disqualify the entire 
household, in accordance with paragraph (f)(5) of this section. If the 
State agency chooses to disqualify the household, the State agency must 
provide the applicant household with a notice of denial in accordance 
with Sec.  273.2(g)(3). The notice must inform the household of the 
proposed period of disqualification; its right to reapply at the end of 
the disqualification period; and of its right to a fair hearing. The 
household's disqualification is effective upon the issuance of the 
notice of denial.
    (vii) In the case of an individual who is a member of a 
participating household, if the State agency determines that the 
individual voluntarily quit his or her job or reduced his or her work 
effort without good cause while participating in the program or 
discovers that the individual voluntarily quit his or her job or reduced 
his or her work effort without good cause during a period established by 
the State agency between 30 and 60 days prior to the date of application 
for benefits or between application and certification, the State agency 
must provide the individual with a notice of adverse action as specified 
in Sec.  273.13 within 10 days after the determination of a quit or 
reduction in work effort. The notification must contain the particular 
act of noncompliance committed, the proposed period of ineligibility, 
the actions that may be taken to avoid the disqualification, and it must 
specify that the individual, if otherwise eligible, may resume 
participation at the end of the disqualification period if the State 
agency determines the individual to be in compliance with Program work 
requirements. The individual will be disqualified according to the State 
agency's established minimum mandatory sanction schedule. The ineligible 
individual must be considered an ineligible household member, pursuant 
to Sec.  273.1(b)(7). The disqualification period will begin the first 
month following the expiration of the 10-day adverse notice period, 
unless the individual requests a fair hearing. If a voluntary quit or 
reduction in work effort occurs in the last month of a certification 
period, or is determined in the last 30 days of the certification 
period, the individual must be denied recertification for a period equal 
to the appropriate mandatory disqualification period, beginning with the 
day after the last certification period ends and continuing for the 
length of the disqualification, regardless of whether the individual 
reapplies for food stamps. Each individual has a right to a fair hearing 
to appeal a denial or termination of benefits due to a determination 
that the individual voluntarily quit his or her job or reduced his or 
her work effort without good cause. If the participating individual's 
benefits are continued pending a fair hearing and the State agency 
determination is upheld, the disqualification period must begin the 
first of the month after the hearing decision is rendered.
    (viii) If the individual who voluntarily quit his or her job, or who 
reduced his or her work effort without good cause is the head of a 
household, as defined in Sec.  273.1(d), the State agency, at its 
option, may disqualify the entire household from Food Stamp Program 
participation in accordance with paragraph (f)(5) of this section.
    (4) Ending a voluntary quit or a reduction in work disqualification. 
Except in cases of permanent disqualification,

[[Page 714]]

following the end of the mandatory disqualification period for 
voluntarily quitting a job or reducing work effort without good cause, 
an individual may begin participation in the program if he or she 
reapplies and is determined eligible by the State agency. Eligibility 
may be reestablished during a disqualification and the individual, if 
otherwise eligible, may be permitted to resume participation if the 
individual becomes exempt from Program work requirements under paragraph 
(b)(1) of this section.
    (5) Application in the final month of disqualification. Except in 
cases of permanent disqualification, if an application for participation 
in the Program is filed in the final month of the mandatory 
disqualification period, the State agency must, in accordance with Sec.  
273.10(a)(3), use the same application for the denial of benefits in the 
remaining month of disqualification and certification for any subsequent 
month(s) if all other eligibility criteria are met.
    (k) Employment initiatives program--(1) General. In accordance with 
section 17(d)(1)(B) of the Food Stamp Act, qualified State agencies may 
elect to operate an employment initiatives program, in which an eligible 
household can receive the cash equivalent of its food stamp coupon 
allotment.
    (2) State agency qualification. A State agency qualifies to operate 
an employment initiatives program if, during the summer of 1993, at 
least half of its food stamp households also received cash benefits from 
a State program funded under title IV-A of the Social Security Act.
    (3) Qualified State agencies. The State agencies of Alaska, 
California, Connecticut, the District of Columbia, Massachusetts, 
Michigan, Minnesota, New Jersey, West Virginia, and Wisconsin meet the 
qualification. These 10 State agencies may operate an employment 
initiatives program.
    (4) Eligible households. A food stamp household in one of the 10 
qualified State agencies may receive cash benefits in lieu of a food 
stamp coupon allotment if it meets the following requirements:
    (i) The food stamp household elects to participate in an employment 
initiatives program;
    (ii) An adult member of the household:
    (A) Has worked in unsubsidized employment for the last 90 days, 
earning a minimum of $350 per month;
    (B) Is receiving cash benefits under a State program funded under 
title IV-A of the Social Security Act; or
    (C) Was receiving cash benefits under the State program but, while 
participating in the employment initiatives program, became ineligible 
because of earnings and continues to earn at least $350 a month from 
unsubsidized employment.
    (5) Program Provisions. (i) Cash benefits provided in an employment 
initiatives program will be considered an allotment, as defined at Sec.  
271.2 of this chapter.
    (ii) An eligible household receiving cash benefits in an employment 
initiatives program will not receive any other food stamp benefit during 
the period for which cash assistance is provided.
    (iii) A qualified State agency operating an employment initiatives 
program must increase the cash benefit to participating households to 
compensate for any State or local sales tax on food purchases, unless 
FNS determines that an increase is unnecessary because of the limited 
nature of items subject to the State or local sales tax.
    (iv) Any increase in cash assistance to account for a State or local 
sales tax on food purchases must be paid by the State agency.
    (6) Evaluation. After two years of operating an employment 
initiatives program, a State agency must evaluate the impact of 
providing cash assistance in lieu of a food stamp coupon allotment to 
participating households. The State agency must provide FNS with a 
written report of its evaluation findings. The State agency, with the 
concurrence of FNS, will determine the content of the evaluation.
    (l) Work supplementation program. In accordance with section 16(b) 
of the Food Stamp Act, States may operate work supplementation (or 
support) programs that allow the cash value of food stamp benefits and 
public assistance, such as cash assistance authorized under title IV-A 
of the Social Security Act or cash assistance under a program

[[Page 715]]

established by a State, to be provided to employers as a wage subsidy to 
be used for hiring and employing public assistance recipients. The goal 
of these programs is to promote self-sufficiency by providing public 
assistance recipients with work experience to help them move into 
unsubsidized jobs. In accordance with Sec.  272.2(d)(1)(xiv) of this 
chapter, State agencies that wish to exercise their option to implement 
work supplementation programs must submit to FNS for approval a plan 
that complies with the provisions of this paragraph (l). Work 
supplementation programs may not be implemented without prior approval 
from FNS.
    (1) Plan. (i) Assurances. The plan must contain the following 
assurances:
    (A) The individual participating in a work supplementation program 
must not be employed by the employer at the time the individual enters 
the program;
    (B) The wage subsidy received under the work supplementation program 
must be excluded from household income and resources during the term the 
individual is participating in work supplementation;
    (C) The household must not receive a separate food stamp allotment 
while participating in the work supplementation program;
    (D) An individual participating in a work supplementation program is 
excused from meeting any other work requirements;
    (E) The work supplementation program must not displace any persons 
currently employed who are not supplemented or supported;
    (F) The wage subsidy must not be considered income or resources 
under any Federal, State or local laws, including but not limited to, 
laws relating to taxation, welfare, or public assistance programs, and 
the household's food stamp allotment must not be decreased due to 
taxation or any other reason because of its use as a wage subsidy;
    (G) The earned income deduction does not apply to the subsidized 
portion of wages received in a work supplementation program; and
    (H) All work supplemented or supported employees must receive the 
same benefits (sick and personal leave, health coverage, workmen's 
compensation, etc.) as similarly situated coworkers who are not 
participating in work supplementation and wages paid under a wage 
supplementation or support program must meet the requirements of the 
Fair Labor Standards Act and other applicable employment laws.
    (ii) Description. The plan must also describe:
    (A) The procedures the State agency will use to ensure that the cash 
value of food stamp benefits for participating households are not 
subject to State or local sales taxes on food purchases. The costs of 
increasing household food stamp allotments to compensate for such sales 
taxes must be paid from State funds;
    (B) State agency, employer and recipient obligations and 
responsibilities;
    (C) The procedures the State agency will use to provide wage 
subsidies to employers and to ensure accountability;
    (D) How public assistance recipients in the proposed work 
supplementation program will, within a specified period of time, be 
moved from supplemented or supported employment to employment that is 
not supplemented or supported;
    (E) Whether the food stamp allotment and public assistance grant 
will be frozen at the time a recipient begins a subsidized job; and
    (F) The procedures the State agency will use to ensure that work 
supplementation program participants do not incur any Federal, State, or 
local tax liabilities on the cash value of their food stamp benefits.
    (2) Budget. In addition to the plan described in paragraph (l)(1) of 
this section, an operating budget for the proposed work supplementation 
program must be submitted to FNS.
    (3) Approval. FNS will review the initial plan and any subsequent 
amendments. Upon approval by FNS, the State agency must incorporate the 
approved work supplementation program plan or subsequent amendment into 
its State Plan of Operation and its operating budget must be included in 
the State agency budget. No plan or amendment may be implemented without 
approval from FNS.

[[Page 716]]

    (4) Reporting. State agencies operating work supplementation and 
support programs are required to comply with all FNS reporting 
requirements, including reporting the amount of benefits contributed to 
employers as a wage subsidy on the FNS-388, State Issuance and 
Participation Estimates; FNS-388A, Participation and Issuance by Project 
Area; FNS-46, Issuance Reconciliation Report; and SF-269, Addendum 
Financial Status Report. State agencies are also required to report 
administrative costs associated with work supplementation programs on 
the FNS-366A, Budget Projection and SF-269, Financial Status Report. 
Special codes for work supplementation programs will be assigned for 
reporting purposes.
    (5) Funding. FNS will pay the cash value of a participating 
household's food stamp benefits to a State agency with an approved work 
supplementation program to pay to an employer as a wage subsidy, and 
will also reimburse the State agency for related administrative costs, 
in accordance with Section 16 of the Food Stamp Act.
    (6) Quality control. Cases in which a household member is 
participating in a work supplementation program will be coded as not 
subject to review.
    (m) Optional workfare program--(1) General. This paragraph (m) 
contains the rules to be followed in operating a food stamp workfare 
program. In workfare, nonexempt food stamp recipients may be required to 
perform work in a public service capacity as a condition of eligibility 
to receive the coupon allotment to which their household is normally 
entitled. The primary goal of workfare is to improve employability and 
enable individuals to move into regular employment.
    (2) Program administration. (i) A food stamp workfare program may be 
operated as a component of a State agency's E&T program, or it may be 
operated independently. If the workfare program is part of an E&T 
program it must be included as a component in the State agency's E&T 
plan in accordance with the requirements of paragraph (c)(4) of this 
section. If it is operated independent of the E&T program, the State 
agency must submit a workfare plan to FNS for its approval. For the 
purpose of this paragraph (m), a political subdivision is any local 
government, including, but not limited to, any county, city, town or 
parish. A State agency may implement a workfare program statewide or in 
only some areas of the State. The areas of operation must be identified 
in the State agency's workfare or E&T plan.
    (ii) Political subdivisions are encouraged, but not required, to 
submit their plans to FNS through their respective State agencies. At a 
minimum, however, plans must be submitted to the State agencies 
concurrent with their submission to FNS. Workfare plans and subsequent 
amendments must not be implemented prior to their approval by FNS.
    (iii) When a State agency chooses to sponsor a workfare program by 
submitting a plan to FNS, it must incorporate the approved plan into its 
State Plan of Operations. When a political subdivision chooses to 
sponsor a workfare program by submitting a plan to FNS, the State agency 
is responsible as a facilitator in the administration of the program by 
disbursing Federal funding and meeting the requirements identified in 
paragraph (m)(4) of this section. When it is notified that FNS has 
approved a workfare plan submitted by a political subdivision in its 
State, the State agency must append that political subdivision's 
workfare plan to its own State Plan of Operations.
    (iv) The operating agency is the administrative organization 
identified in the workfare plan as being responsible for establishing 
job sites, assigning eligible recipients to the job sites, and meeting 
the requirements of this paragraph (m). The operating agency may be any 
public or private, nonprofit organization. The State agency or political 
subdivision that submitted the workfare plan is responsible for 
monitoring the operating agency's compliance with the requirements of 
this paragraph (m) or of the workfare plan. The Department may suspend 
or terminate some or all workfare program funding, or withdraw approval 
of the workfare program from the State agency or political subdivision 
that submitted the workfare plan upon finding that that State agency or 
political subdivision, or their respective operating

[[Page 717]]

agencies, have failed to comply with the requirements of this paragraph 
(m) or of the workfare plan.
    (v) State agencies or other political subdivisions must describe in 
detail in the plan how the political subdivision, working with the State 
agency and any other cooperating agencies that may be involved in the 
program, will fulfill the provisions of this paragraph (m). The plan 
will be a one-time submittal, with amendments submitted as needed to 
cover any changes in the workfare program as they occur.
    (vi) State agencies or political subdivisions submitting a workfare 
plan must submit with the plan an operating budget covering the period 
from the initiation of the workfare program's implementation schedule to 
the close of the Federal fiscal year. In addition, an estimate of the 
cost for one full year of operation must be submitted together with the 
workfare plan. For subsequent fiscal years, the workfare program budget 
must be included in the State agency's budget.
    (vii) If workfare plans are submitted by more than one political 
subdivision, each representing the same population (such as a city 
within a county), the Department will determine which political 
subdivision will have its plan approved. Under no circumstances will a 
food stamp recipient be subject to more than one food stamp workfare 
program. If a political subdivision chooses to operate a workfare 
program and represents a population which is already, at least in part, 
subject to a food stamp workfare program administered by another 
political subdivision, it must establish in its workfare plan how food 
stamp recipients will not be subject to more than one food stamp 
workfare program.
    (3) Operating agency responsibilities. (i) General. The operating 
agency, as designated by the State agency or other political subdivision 
that submits a plan, is responsible for establishing and monitoring job 
sites, interviewing and assessing eligible recipients, assigning 
eligible recipients to appropriate job sites, monitoring participant 
compliance, making initial determinations of good cause for household 
noncompliance, and otherwise meeting the requirements of this paragraph 
(m).
    (ii) Establishment of job sites. Workfare job slots may only be 
located in public or private nonprofit agencies. Contractual agreements 
must be established between the operating agency and organizations 
providing jobs that include, but are not limited to, designation of the 
slots available and designation of responsibility for provision of 
benefits, if any are required, to the workfare participant.
    (iii) Notifying State agency of noncompliance. The operating agency 
must notify the State agency of noncompliance by an individual with a 
workfare obligation when it determines that the individual did not have 
good cause for the noncompliance. This notification must occur within 
five days of such a determination so that the State agency can make a 
final determination as provided in paragraph (m)(4)(iv) of this section.
    (iv) Notifications. (A) State agencies must establish and use 
notices to notify the operating agency of workfare-eligible households. 
The notice must include the case name, case number, names of workfare-
eligible household members, address of the household, certification 
period, and indication of any part-time work. If the State agency is 
calculating the hours of obligation, it must also include this in the 
notice. If the operating agency is computing the hours to be worked, 
include the monthly allotment amount.
    (B) Operating agencies must establish and use notices to notify the 
workfare participant of where and when the participant is to report, to 
whom the participant is to report, a brief description of duties for the 
particular placement, and the number of hours to be worked.
    (C) Operating agencies must establish and use notices to notify the 
State agency of failure by a household to meet its workfare obligation.
    (v) Recordkeeping requirements. (A) Files that record activity by 
workfare participants must be maintained. At a minimum, these records 
must contain job sites, hours assigned, and hours completed.
    (B) Program records must be maintained, for audit and review 
purposes, for a period of 3 years from the month of origin of each 
record. Fiscal records

[[Page 718]]

and accountable documents must be retained for 3 years from the date of 
fiscal or administrative closure of the workfare program. Fiscal 
closure, as used in this paragraph (m), means that workfare program 
obligations for or against the Federal government have been liquidated. 
Administrative closure, as used in this paragraph (m), means that the 
operating agency or Federal government has determined and documented 
that no further action to liquidate the workfare program obligation is 
appropriate. Fiscal records and accountable records must be kept in a 
manner that will permit verification of direct monthly reimbursements to 
recipients, in accordance with paragraph (m)(7)(iii) of this section.
    (vi) Reporting requirements. The operating agency is responsible for 
providing information needed by the State agency to fulfill the 
reporting requirements contained in paragraph (m)(4)(v) of this section.
    (vii) Disclosure. The provisions of Sec.  272.1(c) of this chapter 
restricting the use and disclosure of information obtained from food 
stamp households is applicable to the administration of the workfare 
program.
    (4) State agency responsibilities. (i) If a political subdivision 
chooses to operate a workfare program, the State agency must cooperate 
with the political subdivision in developing a plan.
    (ii) The State agency must determine at certification or 
recertification which household members are eligible for the workfare 
program and inform the household representative of the nature of the 
program and of the penalties for noncompliance. If the State agency is 
not the operating agency, each member of a household who is subject to 
workfare under paragraph (m)(5)(i) of this section must be referred to 
the organization which is the operating agency. The information 
identified in paragraph (m)(3)(iv)(A) of this section must be forwarded 
to the operating agency within 5 days after the date of household 
certification. Computation of hours to be worked may be delegated to the 
operating agency.
    (iii) The State agency must inform the household and the operating 
agency of the effect of any changes in a household's circumstances on 
the household's workfare obligation. This includes changes in benefit 
levels or workfare eligibility.
    (iv) Upon notification by the operating agency that a participant 
has failed to comply with the workfare requirement without good cause, 
the State agency must make a final determination as to whether or not 
the failure occurred and whether there was good cause for the failure. 
If the State agency determines that the participant did not have good 
cause for noncompliance, a sanction must be processed as provided in 
paragraphs (f)(1)(i) and (f)(1)(ii) of this section. The State agency 
must immediately inform the operating agency of the months during which 
the sanction will apply.
    (v) The State agency must submit quarterly reports to FNS within 45 
days of the end of each quarter identifying for that quarter for that 
State:
    (A) The number of households with workfare-eligible recipients 
referred to the operating agency. A household will be counted each time 
it is referred to the operating agency;
    (B) The number of households assigned to jobs each month by the 
operating agency;
    (C) The number of individuals assigned to jobs each month by the 
operating agency;
    (D) The total number of hours worked by participants; and
    (E) The number of individuals against which sanctions were applied. 
An individual being sanctioned over two quarters should only be reported 
as sanctioned for the earlier quarter.
    (vi) The State agency may, at its option, assume responsibility for 
monitoring all workfare programs in its State to assure that there is 
compliance with this section and with the plan submitted and approved by 
FNS. Should the State agency assume this responsibility, it would act as 
agent for FNS, which is ultimately responsible for ensuring such 
compliance. Should the State agency determine that noncompliance exists, 
it may withhold funding until compliance is achieved or FNS directs 
otherwise.
    (5) Household responsibilities. (i) Participation requirement. 
Participation in

[[Page 719]]

workfare, if assigned by the State agency, is a Food Stamp Program work 
requirement for all nonexempt household members, as provided in 
paragraph (a) of this section. In addition:
    (A) Those recipients exempt from Food Stamp Program work 
requirements because they are subject to and complying with any work 
requirement under title IV of the Social Security Act are subject to 
workfare if they are currently involved less than 20 hours a week in 
title IV work activities. Those recipients involved 20 hours a week or 
more may be subject to workfare at the option of the political 
subdivision; and
    (B) Those recipients exempt from Food Stamp Program work 
requirements because they have applied for or are receiving unemployment 
compensation are subject to workfare.
    (ii) Household obligation. The maximum total number of hours of work 
required of a household each month is determined by dividing the 
household's coupon allotment by the Federal or State minimum wage, 
whichever is higher. Fractions of hours of obligation may be rounded 
down. The household's hours of obligation for any given month may not be 
carried over into another month.
    (6) Other program requirements. (i) Conditions of employment. (A) A 
participant may be required to work a maximum of 30 hours per week. This 
maximum must take into account hours worked in any other compensated 
capacity (including hours of participation in a title IV work program) 
by the participant on a regular or predictable part-time basis. With the 
participant's consent, the hours to be worked may be scheduled in such a 
manner that more than 30 hours are worked in one week, as long as the 
total for that month does not exceed the weekly average of 30 hours.
    (B) No participant will be required to work more than eight hours on 
any given day without his or her consent.
    (C) No participant will be required to accept an offer of workfare 
employment if it fails to meet the criteria established in paragraphs 
(h)(1)(iii), (h)(1)(iv), (h)(2)(i), (h)(2)(ii), (h)(2)(iv), and 
(h)(2)(v) of this section.
    (D) If the workfare participant is unable to report for job 
scheduling, to appear for scheduled workfare employment, or to complete 
the entire workfare obligation due to compliance with Unemployment 
Insurance requirements; other Food Stamp Program work requirements 
established in paragraph (a)(1) of this section; or the job search 
requirements established in paragraph (e)(1)(i) of this section, that 
inability must not be considered a refusal to accept workfare 
employment. If the workfare participant informs the operating agency of 
the time conflict, the operating agency must, if possible, reschedule 
the missed activity. If the rescheduling cannot be completed before the 
end of the month, that must not be considered as cause for 
disqualification.
    (E) The operating agency must assure that all persons employed in 
workfare jobs receive job-related benefits at the same levels and to the 
same extent as similar non-workfare employees. These are benefits 
related to the actual work being performed, such as workers' 
compensation, and not to the employment by a particular agency, such as 
health benefits. Of those benefits required to be offered, any elective 
benefit that requires a cash contribution by the participant will be 
optional at the discretion of the participant.
    (F) The operating agency must assure that all workfare participants 
experience the same working conditions that are provided to non-workfare 
employees similarly employed.
    (G) The provisions of section 2(a)(3) of the Service Contract Act of 
1965 (Public Law 89-286), relating to health and safety conditions, 
apply to the workfare program.
    (H) Operating agencies must not place a workfare participant in a 
work position that has the effect of replacing or preventing the 
employment of an individual not participating in the workfare program. 
Vacancies due to hiring freezes, terminations, or lay-offs must not be 
filled by workfare participants unless it can be demonstrated that the 
vacancies are a result of insufficient funds to sustain former staff 
levels.

[[Page 720]]

    (I) Workfare jobs must not, in any way, infringe upon the 
promotional opportunities that would otherwise be available to regular 
employees.
    (J) Workfare jobs must not be related in any way to political or 
partisan activities.
    (K) The cost of workers' compensation or comparable protection 
provided to workfare participants by the State agency, political 
subdivision, or operating agency is a matchable cost under paragraph 
(m)(7) of this section. However, whether or not this coverage is 
provided, in no case is the Federal government the employer in these 
workfare programs (unless a Federal agency is the job site). The 
Department does not assume liability for any injury to or death of a 
workfare participant while on the job.
    (L) The nondiscrimination requirement provided in Sec.  272.6(a) of 
this chapter applies to all agencies involved in the workfare program.
    (ii) Job search period. The operating agency may establish a job 
search period of up to 30 days following certification prior to making a 
workfare assignment during which the potential participant is expected 
to look for a job. This period may only be established at household 
certification, not at recertification. The potential participant would 
not be subject to any job search requirements beyond those required 
under this section during this time.
    (iii) Participant reimbursement. The operating agency must reimburse 
participants for transportation and other costs that are reasonably 
necessary and directly related to participation in the program. These 
other costs may include the cost of child care, or the cost of personal 
safety items or equipment required for performance of work if these 
items are also purchased by regular employees. These other costs may not 
include the cost of meals away from home. No participant cost reimbursed 
under a workfare program operated under Title IV of the Social Security 
Act or any other workfare program may be reimbursed under the food stamp 
workfare program. Only reimbursement of participant costs up to but not 
in excess of $25 per month for any participant will be subject to 
Federal cost sharing as provided in paragraph (m)(7) of this section. 
Reimbursed child care costs may not be claimed as expenses and used in 
calculating the child care deduction for determining household benefits. 
In accordance with paragraph (m)(4)(i) of this section, a State agency 
may decide what its reimbursement policy shall be.
    (iv) Failure to comply. When a workfare participant is determined by 
the State agency to have failed or refused without good cause to comply 
with the requirements of this paragraph (m), the provisions of paragraph 
(f) of this section will apply.
    (v) Benefit overissuances. If a benefit overissuance is discovered 
for a month or months in which a participant has already performed a 
workfare or work component requirement, the State agency must apply the 
claim recovery procedures as follows:
    (A) If the person who performed the work is still subject to a work 
obligation, the State must determine how may extra hours were worked 
because of the improper benefit. The participant should be credited 
those extra hours toward future work obligations; and
    (B) If a workfare or work component requirement does not continue, 
the State agency must determine whether the overissuance was the result 
of an intentional program violation, an inadvertent household error, or 
a State agency error. For an intentional program violation a claim 
should be established for the entire amount of the overissuance. If the 
overissuance was caused by an inadvertent household error or State 
agency error, the State agency must determine whether the number of 
hours worked in workfare are more than the number which could have been 
assigned had the proper benefit level been used in calculating the 
number of hours to work. A claim must be established for the amount of 
the overissuance not ``worked off,'' if any. If the hours worked equal 
the amount of hours calculated by dividing the overissuance by the 
minimum wage, no claim will be established. No credit for future work 
requirements will be given.

[[Page 721]]

    (7) Federal financial participation--(i) Administrative costs. Fifty 
percent of all administrative costs incurred by State agencies or 
political subdivisions in operating a workfare program will be funded by 
the Federal government. Such costs include those related to recipient 
participation in workfare, up to $25 per month for any participant, as 
indicated in paragraph (m)(6)(iii) of this section. Such costs do not 
include the costs of equipment, capital expenditures, tools or materials 
used in connection with the work performed by workfare participants, the 
costs of supervising workfare participants, the costs of reimbursing 
participants for meals away from home, or reimbursed expenses in excess 
of $25 per month for any participant. State agencies must not use any 
portion of their annual 100 percent Federal E&T allocations to fund the 
administration of optional workfare programs under section 20 of the 
Food Stamp Act and this paragraph (m).
    (ii) Funding mechanism. The State agencies have responsibility for 
disbursing Federal funds used for the workfare program through the State 
agencies' Letters of Credit. The State agency must also assure that 
records are being maintained which support the financial claims being 
made to FNS. This will be for all programs, regardless of who submits 
the plan. Mechanisms for funding local political subdivisions which have 
submitted plans must be established by the State agencies.
    (iii) Fiscal recordkeeping and reporting requirements. Workfare-
related costs must be identified by the State agency on the Financial 
Status Report (Form SF-269) as a separate column. All financial records, 
supporting documents, statistical records, negotiated contracts, and all 
other records pertinent to workfare program funds must be maintained in 
accordance with Sec.  277.12 of this chapter.
    (iv) Sharing workfare savings--(A) Entitlement. A political 
subdivision is entitled to share in the benefit reductions that occur 
when a workfare participant begins employment while participating in 
workfare for the first time, or within thirty days of ending the first 
participation in workfare.
    (1) To begin employment means to appear at the place of employment 
and to begin working.
    (2) First participation in workfare means performing work for the 
first time in a particular workfare program. The only break in 
participation that does not end the first participation will be due to 
the participant's taking a job which does not affect the household's 
allotment by an entire month's wages and which is followed by a return 
to workfare.
    (B) Calculating the benefit reductions. The political subdivision 
will calculate benefit reductions from each workfare participant's 
employment as follows.
    (1) Unless the political subdivision knows otherwise, it will 
presume that the benefit reduction equals the difference between the 
last allotment issued before the participant began the new employment 
and the first allotment that reflects a full month's wages, earned 
income deduction, and dependent care deduction attributable to the new 
job.
    (2) If the political subdivision knows of other changes besides the 
new job that affect the household's allotment after the new job began, 
the political subdivision will obtain the first allotment affected by an 
entire month's wages from the new job. The political subdivision will 
then recalculate the allotment to account for the wages, earned income 
deduction, and dependent care deduction attributable to the new job. In 
recalculating the allotment the political subdivision will also replace 
any benefits from a State program funded under title IV-A of the Social 
Security Act received after the new job with benefits received in the 
last month before the new job began. The difference between the first 
allotment that accounts for the new job and the recalculated allotment 
will be the benefit reduction.
    (3) The political subdivision's share of the benefit reduction is 
three times this difference, divided by two.
    (4) If, during these procedures, an error is discovered in the last 
allotment issued before the new employment began, that allotment must be 
corrected before the savings are calculated.

[[Page 722]]

    (C) Accounting. The reimbursement from workfare will be reported and 
paid as follows:
    (1) The political subdivision will report its enhanced reimbursement 
to the State agency in accordance with paragraph (m)(7)(iii) of this 
section.
    (2) The Food and Nutrition Service will reimburse the political 
subdivision in accordance with paragraph (m)(7)(ii) of this section.
    (3) The political subdivision will, upon request, make available for 
review sufficient documentation to justify the amount of the enhanced 
reimbursement.
    (4) The Food and Nutrition Service will reimburse only the political 
subdivision's reimbursed administrative costs in the fiscal year in 
which the workfare participant began new employment and which are 
acceptable according to paragraph (m)(7)(i) of this section.
    (8) Voluntary workfare program. State agencies and political 
subdivisions may operate workfare programs whereby participation by food 
stamp recipients is voluntary. In such a program, the penalties for 
failure to comply, as provided in paragraph (f) of this section, will 
not apply for noncompliance. The amount of hours to be worked will be 
negotiated between the household and the operating agency, though not to 
exceed the limits provided under paragraph (m)(5)(ii) of this section. 
In addition, all protections provided under paragraph (m)(6)(i) of this 
section shall continue to apply. Those State agencies and political 
subdivisions choosing to operate such a program shall indicate in their 
workfare plan how their staffing will adapt to anticipated and 
unanticipated levels of participation. The Department will not approve 
plans which do not show that the benefits of the workfare program, in 
terms of hours worked by participants and reduced food stamp allotments 
due to successful job attainment, are expected to exceed the costs of 
such a program. In addition, if the Department finds that an approved 
voluntary program does not meet this criterion, the Department reserves 
the right to withdraw approval.
    (9) Comparable workfare programs. In accordance with section 
6(o)(2)(C) of the Food Stamp Act, State agencies and political 
subdivisions may establish programs comparable to workfare under this 
paragraph (m) for the purpose of providing ABAWDs subject to the time 
limits specified at Sec.  273.24 a means of fulfilling the work 
requirements in order to remain eligible for food stamps. While 
comparable to workfare in that they require the participant to work for 
his or her household's food stamp allotment, these programs may or may 
not conform to other workfare requirements. State agencies or political 
subdivisions desiring to operate a comparable workfare program must meet 
the following conditions:
    (i) The maximum number of hours worked weekly in a comparable 
workfare activity, combined with any other hours worked during the week 
by a participant for compensation (in cash or in kind) in any other 
capacity, must not exceed 30;
    (ii) Participants must not receive a fourth month of food stamp 
benefits (the first month for which they would not be eligible under the 
time limit) without having secured a workfare position or without having 
met their workfare obligation. Participation must be verified timely to 
prevent issuance of a month's benefits for which the required work 
obligation is not met;
    (iii) The State agency or political subdivision must maintain 
records to support the issuance of benefits to comparable workfare 
participants beyond the third month of eligibility; and
    (iv) The State agency or political subdivision must provide a 
description of its program, including a methodology for ensuring 
compliance with (m)(9)(ii) of this section. The description should be 
submitted to the appropriate Regional office, with copies forwarded to 
the Food Stamp Program National office.

[67 FR 41603, June 19, 2002, as amended at 71 FR 33382, June 9, 2006]