TANF, the Minimum Wage, and Other Labor Laws

Publication Date: July 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Labor

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Abstract:

TANF workfare programs (in which welfare recipients work for their benefits) have raised minimum wage and payroll taxation issues. In the absence of special language in the 1996 law, the Clinton Administration held the most workfare participants are “employees” under the Fair Labor Standards Act (FLSA), and hence, must be “compensated” at the minimum wage rate. Because TANF sets minimum weekly hours of work (now 30 hours for single-parent families), the DOL ruling might require some states to raise benefits for workfare participants. Under H.R. 4, as passed by the House in February, even greater benefit increases would be required, as that bill imposes a 40 hour work week for all TANF families. In discussing the Bush Administration plan to continue welfare reform, Secretary of Health and Human Services Tommy Thompson said on March 6, 2002, that the Bush Administration would insist that TANF recipients receive “at least the minimum wage for the hours they work, including community service jobs.” Another issue is whether workfare “wages” are subject to payroll taxes. If Congress should increase the federal minimum wage rate, it would increase the number of states whose workfare programs might have to be changed to meet FLSA and Internal Revenue Service (IRS) requirements.