SB2123ham002 103RD GENERAL ASSEMBLY

Rep. Theresa Mah

Filed: 5/17/2023

10300SB2123ham002 LRB103 26875 KTG 61666 a

AMENDMENT TO SENATE BILL 2123

AMENDMENT NO. ______. Amend Senate Bill 2123 by replacing everything after the enacting clause with the following:

"Section 1. Declaration of policy and intent. Section 14(c) of the Fair Labor Standards Act includes provisions for the payment of subminimum wages to individuals with disabilities. Among those who have worked for subminimum wages in Illinois are people with intellectual, developmental, physical, and sensory disabilities, including those who are blind or deaf or are diagnosed with cerebral palsy, spina bifida, Down syndrome, or any other disability. This program has resulted in a national average wage of approximately $3 per hour for disabled workers who have engaged in work activities under a 14(c) wage certificate.

Data released in October 2022 from the United States Department of Labor shows that Illinois ranks second in the nation in the number of 14(c) certificates issued or pending, with several thousand Illinois residents with disabilities engaged in activities compensated below minimum wage. These activities most often occur in congregate work centers (also known as sheltered workshops) which isolate and segregate people with disabilities from the greater community.

The Illinois Employment First Act stipulates that "competitive and integrated employment shall be considered the first option when serving persons with disabilities of working age." Across the United States, significant action has curtailed or eliminated 14(c) certificates and segregated work centers. Simultaneously, society has progressed far beyond the severely limited Great Depression vision of employment of people with disabilities under the Fair Labor Standards Act. Today, people with disabilities hold a wide variety of jobs, with and without disability supports.

Collaborative partnerships between State agencies shall result in development and implementation of a plan to phase out all subminimum wage activity in the State of Illinois.

Section 5. The Department of Human Services Act is amended by adding Sections 1-85 and 1-90 as follows:

(20 ILCS 1305/1-85 new)

Sec. 1-85. 14(c) certificate phase-out plan; Transition Grant Fund.

(a) The Department, in partnership with other State agencies, including the Department of Labor, the Department of Healthcare and Family Services, the Department of Central Management Services, the Department of Commerce and Economic Opportunity, the Department of Employment Security, and the State Board of Education, shall phase out, on or before June 30, 2026, the use of active or pending 14(c) certificates authorized under the Fair Labor Standards Act, as well as authorizations permitted under Sections 5 and 10 of the Minimum Wage Law to pay an employee with a disability less than the minimum wage otherwise required for employees under Section 4 of the Minimum Wage Law.

(b) The phase-out plan shall include all of the following:

(1) The use of Medicaid funding to support subminimum wage work payments shall be prohibited.

(A) Subminimum wage activities that remain after the effective date of this amendatory Act of the 103rd General Assembly shall sustain solely on the revenue of the contracts entered into between the respective businesses' subletting labor, goods, and services from 14(c) certificate holders - not billing for community day services.

(B) Billing to the Department shall be prohibited under the following services:

(i) Community Day Services (Waiver).

(ii) Developmental or Day Training (State developmental center).

(iii) Developmental or Day Training (intermediate care facility for persons with developmental disabilities licensed under the ID/DD Community Care Act).

(iv) Any other service related to the supervision and support of individuals with developmental disabilities who are engaged in activities which result in subminimum wage payments.

(2) New referrals to, and admissions into, programs which offer subminimum wage shall be prohibited. Referrals to non-subminimum wage activity programs within agencies that hold a 14(c) certificate shall continue.

(3) Applications by agencies for new, or renewal of existing, 14(c) certificates from the Department of Labor shall be prohibited beginning July 1, 2024. The Department and the Department of Labor shall not accept 14(c) certificates from the U.S. Department of Labor effective July 1, 2024. An escalating wage floor for individuals engaged in subminimum wage activity may be established by rule. Authority to pay a worker with disabilities less than the minimum wage shall end by July 1, 2026.

(4) The Department shall develop and implement annual data collection requirements for community agencies with active or pending 14(c) certificates for all individuals participating in subminimum wage activity through their agency.

(5) Community agencies with active or pending 14(c) certificates shall be required to complete a provider transition plan that shall be developed by the Department.

(6) The Department shall establish a tracking process and transition benchmarks to monitor the progress of community agencies with an active or pending 14(c) certificate from subminimum wage to alternative activities.

(7) The Department shall review and make updates to any intake, screening, and service planning processes to ensure individuals with disabilities entering, or currently being served within, the service delivery system are diverted from subminimum wage activity. This shall include individuals in waiver-funded services, intermediate care facilities for persons with developmental disabilities, State developmental centers, and youth exiting school programs.

(8) The Department's Division of Rehabilitation Services and its Vocational Rehabilitation program shall establish processes and associated funding, as needed, to accommodate increased referrals of individuals with disabilities from subminimum wage activities.

(9) The Department shall develop and implement provider training and make other provider resources available related to the transition from subminimum wage to competitive integrated employment, including, but not limited to, employment best practices, communication strategies, benefits planning, transportation, business engagement and state agency policy. The provider training and resources shall be done in partnership with other State agencies and entities directly involved in working with individuals with disabilities who may be utilizing subminimum wage activities.

(10) As needed, the Department shall create new supported employment service codes and request funding to be used for the service codes, specific to competitive integrated employment supports for individual and group employment, applicable to individuals who reside in State developmental centers and intermediate care facilities for persons with developmental disabilities.

(11) The Director of Labor and the Secretary of Human Services shall jointly submit reports to the Governor and the General Assembly on the benchmarks and status of achieving the outcomes included in the phase-out plan and recommendations for funding levels or other resources necessary to implement the phase-out plan. The first report shall be due January 1, 2025, and subsequent reports shall be submitted annually thereafter for 5 years. After the January 1, 2029, report, the annual reporting requirement shall sunset.

(c) 14(c) Transition Grant Fund.

(1) The 14(c) Transition Grant Fund is created as a special fund in the State treasury. Moneys in the Fund shall be used, subject to appropriation, by the Department for community agencies with active or pending 14(c) certificates to aid in the transition away from subminimum wages for employees with disabilities. The goal of the 14(c) Transition Grant Fund is to develop new opportunities and programs and grow capacity to respond to the needs of individuals with disabilities in their geographic area, such as supported employment programs and diverse day programs that support meaningful days, choice, and community integration. The Fund may be used to provide wage subsidies to employers who offer integrated work options to workers with disabilities who previously labored for subminimum wages.

(2) The Department shall adopt rules establishing a process for the equitable and transparent administration of the Fund.

(20 ILCS 1305/1-90 new)

Sec. 1-90. Subminimum Wage Transition Task Force. The Subminimum Wage Transition Task Force is created within the Department to (i) provide guidance, leadership, and recommendations, (ii) review progress made throughout the process, (iii) address systemwide barriers to transition, and (iv) support the community agencies to maintain and increase capacity in non-subminimum wage programming. The Task Force shall be comprised of members appointed by the Secretary of the Department and shall include representatives from all of the following:

(1) Community agencies that are 14(c) certificate holders.

(2) Individuals with disabilities who have been or are engaged in subminimum wage activities.

(3) The Illinois Council on Developmental Disabilities and the State Rehabilitation Council.

(4) Advocacy organizations.

(5) The Department's Divisions of Developmental Disabilities and Rehabilitation Services.

(6) The Department of Healthcare and Family Services.

(7) The Illinois Task Force on Employment and Economic Opportunity for People with Disabilities.

Section 10. The State Finance Act is amended by adding Section 5.990 as follows:

(30 ILCS 105/5.990 new)

Sec. 5.990. The 14(c) Transition Grant Fund.

Section 15. The Illinois Procurement Code is amended by changing Section 45-35 as follows:

(30 ILCS 500/45-35)

Sec. 45-35. Not-for-profit agencies for persons with significant disabilities.

(a) Qualification. Supplies and services may be procured without advertising or calling for bids from any qualified not-for-profit agency for persons with significant disabilities that:

(1) complies with Illinois laws governing private not-for-profit organizations;

(2) is certified as a community rehabilitation provider by the Department of Human Services is certified as a work center by the Wage and Hour Division of the United States Department of Labor or is an accredited vocational program that provides transition services to youth between the ages of 14 1/2 and 22 in accordance with individualized education plans under Section 14-8.03 of the School Code and that provides residential services at a child care institution, as defined under Section 2.06 of the Child Care Act of 1969, or at a group home, as defined under Section 2.16 of the Child Care Act of 1969; and

(3) is accredited by a nationally-recognized accrediting organization or certified as a day services developmental training provider by the Department of Human Services.

(b) Participation. To participate, the not-for-profit agency must have indicated an interest in providing the supplies and services, must meet the specifications and needs of the using agency, and must set a fair and reasonable price.

(c) Committee. There is created within the Department of Central Management Services a committee to facilitate the purchase of products and services from not-for-profit agencies that provide employment opportunities to persons with physical disabilities, intellectual or developmental disabilities, mental illnesses, or any combination thereof. This committee is called the State Use Committee. The State Use Committee shall consist of the Director of the Department of Central Management Services or his or her designee, the Secretary of the Department of Human Services or his or her designee, the Director of Commerce and Economic Opportunity or his or her designee, one public member representing private business who is knowledgeable of the employment needs and concerns of persons with developmental disabilities, one public member representing private business who is knowledgeable of the needs and concerns of rehabilitation facilities, one public member who is knowledgeable of the employment needs and concerns of persons with developmental disabilities, one public member who is knowledgeable of the needs and concerns of rehabilitation facilities, 2 members who have a disability, 2 public members from a statewide association that represents community-based rehabilitation facilities serving or supporting individuals with intellectual or developmental disabilities, and one public member from a disability-focused statewide advocacy group, all appointed by the Governor. The public members shall serve 2 year terms, commencing upon appointment and every 2 years thereafter. A public member may be reappointed, and vacancies shall be filled by appointment for the completion of the term. In the event there is a vacancy on the State Use Committee, the Governor must make an appointment to fill that vacancy within 30 calendar days after the notice of vacancy. The members shall serve without compensation but shall be reimbursed for expenses at a rate equal to that of State employees on a per diem basis by the Department of Central Management Services. All members shall be entitled to vote on issues before the State Use Committee.

The State Use Committee shall have the following powers and duties:

(1) To request from any State agency information as to product specification and service requirements in order to carry out its purpose.

(2) To meet quarterly or more often as necessary to carry out its purposes.

(3) To request a quarterly report from each participating qualified not-for-profit agency for persons with significant disabilities describing the volume of sales for each product or service sold under this Section.

(4) To prepare a report for the Governor and General Assembly no later than December 31 of each year. The requirement for reporting to the General Assembly shall be satisfied by following the procedures set forth in Section 3.1 of the General Assembly Organization Act.

(5) To prepare a publication that lists all supplies and services currently available from any qualified not-for-profit agency for persons with significant disabilities. This list and any revisions shall be distributed to all purchasing agencies.

(6) To encourage diversity in supplies and services provided by qualified not-for-profit agencies for persons with significant disabilities and discourage unnecessary duplication or competition among not-for-profit agencies.

(7) To develop guidelines to be followed by qualifying agencies for participation under the provisions of this Section. Guidelines shall include a list of national accrediting organizations which satisfy the requirements of item (3) of subsection (a) of this Section. The guidelines shall be developed within 6 months after the effective date of this Code and made available on a nondiscriminatory basis to all qualifying agencies. The new guidelines required under this item (7) by Public Act 100-203 shall be developed within 6 months after August 18, 2017 (the effective date of Public Act 100-203) and made available on a non-discriminatory basis to all qualifying not-for-profit agencies.

(8) To review all pricing submitted under the provisions of this Section and may approve a proposed agreement for supplies or services where the price submitted is fair and reasonable. Review of pricing under this paragraph may include, but is not limited to:

(A) Amounts private businesses would pay for similar products or services.

(B) Amounts the federal government would pay contractors for similar products or services.

(C) The amount paid by the State for similar products or services.

(D) The actual cost of manufacturing the product or performing a service at a community rehabilitation program offering employment services on or off premises to persons with disabilities or mental illnesses, with adequate consideration given to legal and moral imperatives to pay workers with disabilities equitable wages.

(E) The usual, customary, and reasonable costs of manufacturing, marketing, and distribution.

(9) To, not less than every 3 years, adopt a strategic plan for increasing the number of products and services purchased from qualified not-for-profit agencies for persons with disabilities or mental illnesses, including the feasibility of developing mandatory set-aside contracts.

(c-5) Conditions for Use. Each chief procurement officer shall, in consultation with the State Use Committee, determine which articles, materials, services, food stuffs, and supplies that are produced, manufactured, or provided by persons with significant disabilities in qualified not-for-profit agencies shall be given preference by purchasing agencies procuring those items.

(d) (Blank).

(e) Subcontracts. Subcontracts shall be permitted for agreements authorized under this Section. For the purposes of this subsection (e), "subcontract" means any acquisition from another source of supplies, not including raw materials, or services required by a qualified not-for-profit agency to provide the supplies or services that are the subject of the contract between the State and the qualified not-for-profit agency.

The State Use Committee shall develop guidelines to be followed by qualified not-for-profit agencies when seeking and establishing subcontracts with other persons or not-for-profit agencies in order to fulfill State contract requirements. These guidelines shall include the following:

(i) The State Use Committee must approve all subcontracts and substantive amendments to subcontracts prior to execution or amendment of the subcontract.

(ii) A qualified not-for-profit agency shall not enter into a subcontract, or any combination of subcontracts, to fulfill an entire requirement, contract, or order without written State Use Committee approval.

(iii) A qualified not-for-profit agency shall make reasonable efforts to utilize subcontracts with other not-for-profit agencies for persons with significant disabilities.

(iv) For any subcontract not currently performed by a qualified not-for-profit agency, the primary qualified not-for-profit agency must provide to the State Use Committee the following: (A) a written explanation as to why the subcontract is not performed by a qualified not-for-profit agency, and (B) a written plan to transfer the subcontract to a qualified not-for-profit agency, as reasonable.

(Source: P.A. 102-343, eff. 8-13-21; 102-558, eff. 8-20-21.)

Section 20. The Business Enterprise for Minorities, Women, and Persons with Disabilities Act is amended by changing Section 2 as follows:

(30 ILCS 575/2)

(Section scheduled to be repealed on June 30, 2024)

Sec. 2. Definitions.

(A) For the purpose of this Act, the following terms shall have the following definitions:

(1) "Minority person" shall mean a person who is a citizen or lawful permanent resident of the United States and who is any of the following:

(a) American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment).

(b) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam).

(c) Black or African American (a person having origins in any of the black racial groups of Africa).

(d) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(e) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).

(2) "Woman" shall mean a person who is a citizen or lawful permanent resident of the United States and who is of the female gender.

(2.05) "Person with a disability" means a person who is a citizen or lawful resident of the United States and is a person qualifying as a person with a disability under subdivision (2.1) of this subsection (A).

(2.1) "Person with a disability" means a person with a severe physical or mental disability that:

(a) results from:

amputation,

arthritis,

autism,

blindness,

burn injury,

cancer,

cerebral palsy,

Crohn's disease,

cystic fibrosis,

deafness,

head injury,

heart disease,

hemiplegia,

hemophilia,

respiratory or pulmonary dysfunction,

an intellectual disability,

mental illness,

multiple sclerosis,

muscular dystrophy,

musculoskeletal disorders,

neurological disorders, including stroke and epilepsy,

paraplegia,

quadriplegia and other spinal cord conditions,

sickle cell anemia,

ulcerative colitis,

specific learning disabilities, or

end stage renal failure disease; and

(b) substantially limits one or more of the person's major life activities.

Another disability or combination of disabilities may also be considered as a severe disability for the purposes of item (a) of this subdivision (2.1) if it is determined by an evaluation of rehabilitation potential to cause a comparable degree of substantial functional limitation similar to the specific list of disabilities listed in item (a) of this subdivision (2.1).

(3) "Minority-owned business" means a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it.

(4) "Women-owned business" means a business which is at least 51% owned by one or more women, or, in the case of a corporation, at least 51% of the stock in which is owned by one or more women; and the management and daily business operations of which are controlled by one or more of the women who own it.

(4.1) "Business owned by a person with a disability" means a business that is at least 51% owned by one or more persons with a disability and the management and daily business operations of which are controlled by one or more of the persons with disabilities who own it. A not-for-profit agency for persons with disabilities that is exempt from taxation under Section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability".

(4.2) "Council" means the Business Enterprise Council for Minorities, Women, and Persons with Disabilities created under Section 5 of this Act.

(4.3) "Commission" means, unless the context clearly indicates otherwise, the Commission on Equity and Inclusion created under the Commission on Equity and Inclusion Act.

(5) "State contracts" means all contracts entered into by the State, any agency or department thereof, or any public institution of higher education, including community college districts, regardless of the source of the funds with which the contracts are paid, which are not subject to federal reimbursement. "State contracts" does not include contracts awarded by a retirement system, pension fund, or investment board subject to Section 1-109.1 of the Illinois Pension Code. This definition shall control over any existing definition under this Act or applicable administrative rule.

"State construction contracts" means all State contracts entered into by a State agency or public institution of higher education for the repair, remodeling, renovation or construction of a building or structure, or for the construction or maintenance of a highway defined in Article 2 of the Illinois Highway Code.

(6) "State agencies" shall mean all departments, officers, boards, commissions, institutions and bodies politic and corporate of the State, but does not include the Board of Trustees of the University of Illinois, the Board of Trustees of Southern Illinois University, the Board of Trustees of Chicago State University, the Board of Trustees of Eastern Illinois University, the Board of Trustees of Governors State University, the Board of Trustees of Illinois State University, the Board of Trustees of Northeastern Illinois University, the Board of Trustees of Northern Illinois University, the Board of Trustees of Western Illinois University, municipalities or other local governmental units, or other State constitutional officers.

(7) "Public institutions of higher education" means the University of Illinois, Southern Illinois University, Chicago State University, Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Northern Illinois University, Western Illinois University, the public community colleges of the State, and any other public universities, colleges, and community colleges now or hereafter established or authorized by the General Assembly.

(8) "Certification" means a determination made by the Council or by one delegated authority from the Council to make certifications, or by a State agency with statutory authority to make such a certification, that a business entity is a business owned by a minority, woman, or person with a disability for whatever purpose. A business owned and controlled by women shall be certified as a "woman-owned business". A business owned and controlled by women who are also minorities shall be certified as both a "women-owned business" and a "minority-owned business".

(9) "Control" means the exclusive or ultimate and sole control of the business including, but not limited to, capital investment and all other financial matters, property, acquisitions, contract negotiations, legal matters, officer-director-employee selection and comprehensive hiring, operating responsibilities, cost-control matters, income and dividend matters, financial transactions and rights of other shareholders or joint partners. Control shall be real, substantial and continuing, not pro forma. Control shall include the power to direct or cause the direction of the management and policies of the business and to make the day-to-day as well as major decisions in matters of policy, management and operations. Control shall be exemplified by possessing the requisite knowledge and expertise to run the particular business and control shall not include simple majority or absentee ownership.

(10) "Business" means a business that has annual gross sales of less than $150,000,000 as evidenced by the federal income tax return of the business. A firm with gross sales in excess of this cap may apply to the Council for certification for a particular contract if the firm can demonstrate that the contract would have significant impact on businesses owned by minorities, women, or persons with disabilities as suppliers or subcontractors or in employment of minorities, women, or persons with disabilities. Firms with gross sales in excess of this cap that are granted certification by the Council shall be granted certification for the life of the contract, including available renewals.

(11) "Utilization plan" means a form and additional documentations included in all bids or proposals that demonstrates a vendor's proposed utilization of vendors certified by the Business Enterprise Program to meet the targeted goal. The utilization plan shall demonstrate that the Vendor has either: (1) met the entire contract goal or (2) requested a full or partial waiver and made good faith efforts towards meeting the goal.

(12) "Business Enterprise Program" means the Business Enterprise Program of the Commission on Equity and Inclusion.

(B) When a business is owned at least 51% by any combination of minority persons, women, or persons with disabilities, even though none of the 3 classes alone holds at least a 51% interest, the ownership requirement for purposes of this Act is considered to be met. The certification category for the business is that of the class holding the largest ownership interest in the business. If 2 or more classes have equal ownership interests, the certification category shall be determined by the business.

(Source: P.A. 101-601, eff. 1-1-20; 101-657, eff. 1-1-22; 102-29, eff. 6-25-21; 102-1119, eff. 1-23-23.)

Section 25. The Minimum Wage Law is amended by changing Section 10 as follows:

(820 ILCS 105/10) (from Ch. 48, par. 1010)

Sec. 10. (a) The Director shall make and revise administrative regulations, including definitions of terms, as the Director he deems appropriate to carry out the purposes of this Act, to prevent the circumvention or evasion thereof, and to safeguard the minimum wage established by the Act. Regulations governing employment of learners may be issued only after notice and opportunity for public hearing, as provided in subsection (c) of this Section.

(b) (Blank). In order to prevent curtailment of opportunities for employment, avoid undue hardship, and safeguard the minimum wage rate under this Act, the Director may also issue regulations providing for the employment of workers with disabilities at wages lower than the wage rate applicable under this Act, under permits and for such periods of time as specified therein; and providing for the employment of learners at wages lower than the wage rate applicable under this Act. However, such regulation shall not permit lower wages for persons with disabilities on any basis that is unrelated to such person's ability resulting from his disability, and such regulation may be issued only after notice and opportunity for public hearing as provided in subsection (c) of this Section.

(c) Prior to the adoption, amendment or repeal of any rule or regulation by the Director under this Act, except regulations which concern only the internal management of the Department of Labor and do not affect any public right provided by this Act, the Director shall give proper notice to persons in any industry or occupation that may be affected by the proposed rule or regulation, and hold a public hearing on the Director's his proposed action at which any such affected person, or the Director's his duly authorized representative, may attend and testify or present other evidence for or against such proposed rule or regulation. Rules and regulations adopted under this Section shall be filed with the Secretary of State in compliance with "An Act concerning administrative rules", as now or hereafter amended. Such adopted and filed rules and regulations shall become effective 10 days after copies thereof have been mailed by the Department to persons in industries affected thereby at their last known address.

(d) The commencement of proceedings by any person aggrieved by an administrative regulation issued under this Act does not, unless specifically ordered by the Court, operate as a stay of that administrative regulation against other persons. The Court shall not grant any stay of an administrative regulation unless the person complaining of such regulation files in the Court an undertaking with a surety or sureties satisfactory to the Court for the payment to the employees affected by the regulation, in the event such regulation is affirmed, of the amount by which the compensation such employees are entitled to receive under the regulation exceeds the compensation they actually receive while such stay is in effect.

(e) The Department may adopt emergency rules in accordance with Section 5-45 of the Illinois Administrative Procedure Act to implement the changes made by this amendatory Act of the 101st General Assembly.

(Source: P.A. 101-1, eff. 2-19-19.)

(820 ILCS 105/5 rep.)

Section 30. The Minimum Wage Law is amended by repealing Section 5.

Section 99. Effective date. This Act takes effect upon becoming law.".