What it Means | 14(c)taskforceohio

As an Employment First state, Ohio emphasizes fair wages as a fundamental part of this framework. This bill is a significant step toward ensuring that people with disabilities are compensated fairly for their work and have access to better job opportunities in the communities. It focuses on phasing out subminimum wages over five years, and providing the necessary support for a smooth transition. Let’s break each section down.

Understanding the Phase Out of State Liceneses

1. After 90 days from when the law is passed, the Director of Commerce in charge of giving out state licenses cannot give out any new licenses or renew any existing licenses.

2. Also, starting on that same day, employers/providers can’t pay their workers less than the regular minimum wage unless two things are true:

If the employer/provider meets these two conditions, they may pay and employee/individuals with a disability subminimum wage or five more years, even though they cannot get new licenses after 90 days.

Condition one: The employer/provider employs that employee/individuals with a disability on and after the date this is ninety days after the effective date of this amendment.

Condition Two: The employer/provider on the date that is ninety days after the effective date of this amendment, hold an unexpired license that is not expired yet.

Example: Let’s say there’s an employer/provider named, "ABC Widgets. They currently have a valid state license. The serve ten employees/individuals with disabilities. After the law starts, "ABC Widgets" can continue to pay these employees/individuals with disabilities subminimum wage for the next five years, because they have a valid license. But if "ABC Widgets" license expires after 90 days, they can’t renew it, and they won’t be allowed to pay these ten employees/individuals with disabilities subminimum wage anymore. (Currently in Ohio, there is only one employer/provider has a state license)

Understanding the Prohibition

1. Starting five years after this law is passed, all employers/providers will not be allowed to pay any employee/individuals with a disability subminimum wage. This means that every employer/provider must pay these employees at least the minimum wage in Ohio.

2.For the year 2025, the minimum wage in Ohio is $10.70 an hour.

Example: Let’s say there’s an employer/provider named, "Supportive Pathways." right now, they can pay their 100 employees/individuals with a disabilities, subminimum wage. After five years from the day this law is passed, "Supportive Pathways" will have to start paying these employees/individuals with disabilities at least $10.70 an hour.

Understanding the Interaction with Federal Law

There’s a federal law, called the Fair Labor Standards Act (FLSA), that sets rules about how much workers should be paid. Here are the main points to understand:

1. In the U.S., the federal law (Fair Labor Standards Act or FLSA) says that most employers must pay their workers at least $7.25 an hour.

2. There is an exception for employees with disabilities. Employers/providers can pay these workers less than the minimum wage if they have a special certificate from the U.S. Department of Labor. This is called a 14(c) certificate.

3. Employers might need to follow both the federal law (FLSA) and Ohio's state law on minimum wage.

4. Currently, Ohio has a minimum wage that is higher than the federal minimum wage. Ohio's minimum wage is $10.70 an hour (2025). This means that employers/providers in Ohio must pay at least the state's minimum wage, even if they have a 14(c) certificate.

Example: Let's say there is an employer/provider named, "Empowering Employment" provides employment opportunities for 300 people with disabilities. "Empowerment Employment" holds a 14(c) certificate from the U.S. of Labor, allowing them to pay their 300 employees/individuals with disabilities subminimum wages. However, "Empowerment Alliance" must also follow Ohio's minimum wage law. They cannot pay these 300 employees/individuals disabilities less than Ohio's minimum wage of $10.70 an hour, which is compliant with the Ohio law and higher than the federal minimum wage law.

Understanding the Employer Transition Plans

There is a requirement for employers/providers who pay their workers with disabilities less than the regular minimum wage. Here’s what you need to know:

1. Within 15 months after the law is passed, employers/providers who have a special state license or a 14(c) certificate (which allows them to pay subminimum wages) must create and a transition plan and submit to the Department of Developmental Dishabilles.

2. The plan must include two important things:

Each employer/provider must explain how they will phase out subminimum wages within five years after the law is passed. This means they need to find ways to pay all employees/individuals with disabilities, at least the minimum wage.
Each employer/provider must also show how they will help employees/individuals with disabilities pursue competitive integrated employment.

Example: Let’s think about an employer/provider called, "Limitless Horizons," that currently pays 175 employees/individuals with disabilities subminimum wage. After the law is enacted, "Limitless Horizons provider" is granted 15 months to develop a transition plan. In this plan, they will outline their strategies for supporting employees and individuals with disabilities. This could include such supports as retraining the employees with disabilities to acquire new skills, implementing necessary accommodations, facilitating referrals for a Benefits Analysis to assess how a wage increase will impact their benefits, and providing training for their staff to adapt to these new support methods. By the end of five years, "Limitless Horizons provider" will ensure none of their employees/individuals with disabilities are paid subminimum wage, while also supporting them through the transition out of subminimum wage.

Understanding the Phase-Out Assistance for Employers

This law will help employers/providers throughout the phase out of subminimum wage. Here’s what the law says will happen:

1. The Director of Developmental Disabilities in consultation with the Opportunities for Ohioans with Disabilities Agency (OOD), to support employers/providers in making the transition changes.

2. Key Support Actions:

They will ensure that employees/individuals with disabilities can get jobs in competitive integrated employment. This can happen anytime throughout the phase out.
They will collaborate with employees/individuals with disabilities, employers/providers, organizations, and other groups that are affected by the changes to help them understand and carry out their transition plans.
They will gather (data) information about employers/providers who have state licenses or 14(c) certificates for five years. This will help track how many employers/providers are making these changes.
They will propose a plan to establish, monitor, and evaluate how well the transition plans are working each year until subminimum wages are completely phased out.
They will track employee/individuals with disabilities outcomes.
They will identify programs and strategies focused on improving wages, reducing unemployment rates, and providing necessary training and support services.
They will identify and recommend sustainable funding and resources that will assist individuals with disabilities in transitioning away from subminimum wage employment. It emphasizes the need for financial support to develop and provide effective employment services, training, and ongoing support, ensuring that these individuals receive equitable wages and opportunities in the workforce.
They must make sure that the employer/provider transition plans follow laws that protect the rights of people with disabilities, including the Americans with Disabilities Act and Ohio’s Civil Rights Law.

Example: While transitioning out of subminimum wage, with the help of the Director of Developmental Disabilities and Opportunities for Ohioans with Disabilities, they’ll work together to ensure employers can find ways to pay everyone fairly while also helping their employees gain new skills. They might help them with training programs and other resources, making sure that their plans also follow important laws that protect their employees with disabilities.

Understanding the Reporting Requirements

There’s a part of the law that explains how the Director of Developmental Disabilities must report on the support for employers. Here’s what you need to know:

1.The Director has to submit their first report by January 1 of the year after the law becomes effective. This means if the law starts on a specific date in 2026, the Director’s first report will be due on January 1, 2027.

2. After the first report, the Director must also submit a report every year by January 1 for the next five years. So, if the law was effective starting in 2026, there would be reports due on January 1 each year until 2031.

3. These reports will share all the important information about how employers are being assisted in phasing out subminimum wages. This includes details on the help provided, progress made, and any data collected that shows how well the transition plans are working.

Example: Let’s say the law goes into effect on July 1, 2026. The Director will need to write the first report and send it to the Governor and the General Assembly by January 1, 2027. Then, each year until January 1, 2031, the Director will continue to provide updates on how things are going with supporting employers/providers and helping workers with disabilities.

Understanding the Requesting assistance

The new law requires the Director of Developmental Disabilities, in consultation with the executive director of the Opportunities for Ohioans with Disabilities, to seek assistance all of the following in carrying out their responsibilities. Here’s what that means:

1. The Director must ask for assistance from different organizations and people as they work on the goals of the law.

2. Who to Ask for Help:

Employment First Task Force (established under section 5123.023 of the Ohio Revised Code): This is a group that focuses on the coordination of the state's efforts to address the needs of individuals with disabilities who seek community employment as defined by 5123.022 of the revised code;
Stakeholders who have expertise about employment of individuals with disabilities, at least 20% of these experts must be individuals with disabilities themselves.
The Director can also ask families of individuals with disabilities for their insights and experiences;
Organizations that advocate on behalf of individuals with disabilities;
Service providers that offer services to individuals with disabilities;
Local Governments;
Business Associations;
Each department that employs or provides employment services to individuals with disabilities shall do both of the following:
- Coordinate and collaborate with other departments to ensure that state programs, policies, and procedures, and funding contribute toward the competitive, integrated employment of individuals with disabilities.
- Share nonconfidential data and other information with other departments to track progress with respect to phasing out subminimum wage not later than the date that is five years after the effective date of this section.

Example: If the Director needs ideas and/input on how to help employers/providers transition away from subminimum wages, they might hold meetings with the Employment First Task Force to get advice. They could also talk with local business associations to understand how businesses can best support their employees with disabilities. And by including family members of individuals with disabilities, the Director ensures that the perspectives of those most affected are heard and their input is included.

Understanding State Agency Duties

The law requires certain state departments and agencies to take specific actions to help individuals with disabilities find jobs. Here's what they need to do:

1.The law says that cabinet-level departments and other state agencies that employ people or provide jobs for individuals with disabilities must coordinate and collaborate. This means they have to work together to make sure that their programs, policies, and funding all support getting people with disabilities good jobs in regular workplaces.

2. These agencies must also share nonconfidential data and information with each other. This is important because it helps everyone keep track of how well things are going in phasing out subminimum wages. By sharing information, they can see what is working and what needs improvement.

3. Agencies Involved: The following state departments and agencies are required to follow these rules:

Office of Budget and Management: Manages the state's budget and spending.
Department of Natural Resources: Works on conservation and natural resources, including employment within those fields.
Department of Mental Health and Addiction Services: Provides support for mental health and substance use issues, which can include employment services.

Department of Rehabilitation and Correction: Works with individuals who may have been in the justice system and need job support.
Department of Education and Workforce: Focuses on education and job training programs.

Example: If the Department of Education and Workforce develops a job training program for individuals with disabilities, they will need to coordinate with the Department of Rehabilitation and Correction to ensure that the program supports people coming out of the correctional system. They’ll also share data on how many individuals are finding jobs after going through this training, helping everyone understand if more changes are needed.

Understanding Political Subdivision Compliance

The law requires political subdivisions (like local governments) that give employment services to individuals with developmental disabilities to follow certain rules. Here’s what they need to do:

1. Each political subdivision must create a policy that aligns with Ohio’s commitment to providing employment services aimed at community employment. This means that the services should help individuals with developmental disabilities find jobs in competitive integrated employment where they can work alongside people without disabilities.

2. Once the policy is created, it must be followed every time employment services are provided. This ensures that the services truly support community integrated employment.

3. Definitions

Competitive Integrated Employment: This is work in the regular job market where employees are paid at least the minimum wage. They should also receive the same benefits that other workers in similar jobs (without disabilities) receive.
Integrated Setting: This means that the workplace is a community setting where individuals with developmental disabilities can interact with individuals without disabilities, just like other employees do.

Example: Imagine a local city government running a program to help people with developmental disabilities find jobs. The city's policy will focus on placing these individuals in community jobs, like in local stores or offices, where they can work alongside others without disabilities. Whenever they assist someone in finding a job, they need to make sure they follow this policy to ensure everyone has the chance to work in a supportive and integrated environment.

Understanding the Employment First Task Force Duties

The law gives the Employment First Task Force important responsibilities to help individuals with developmental disabilities find jobs in competitive integrated employment. Here’s what the Task Force shall do:

1. The Task Force will look at the plans that employers create to phase out subminimum wages. They will help develop long-term strategies to assist employers/providers in making this transition smoothly no later than the date that is fie years after the effective date of this amendment.

2. The Task Force will also review and develop recommendations to transition developmental disabilities from subminimum wages and to support these individuals in seeking competitive integrated employment.

3. The Task Force will work with other agency partners to ensure that services for individuals with developmental disabilities match up with national best practices. This means making sure the services provided are effective and beneficial.

4. The Task Force will use information from the Department of Developmental Disabilities to find ways to improve health outcomes for individuals with developmental disabilities. This could include looking for ways to enhance overall well-being and access to healthcare.

Example: Let’s say the Task Force notices that some employers need help transitioning away from subminimum wages. They might meet with these employers to discuss what training or resources they need to support their workers with disabilities. Additionally, they might analyze health data to see if there are common health issues among individuals with developmental disabilities and suggest programs that could help improve their health as well as their job opportunities.

Understanding the Reporting Requirements for the Task Force

The law states that the Employment First Task Force has specific reporting duties to fulfill. Here’s what they need to do:

1. The Task Force must submit their first report by March 1 of the year immediately after the law becomes effective. After that, they will submit a report every even-numbered year by March 1.

2. Each report must include several key pieces of information:

How individuals with developmental disabilities are doing in terms of employment, what successful methods are being used, and any problems they encounter.
Ways to better support individuals with developmental disabilities in finding and maintaining employment.
Provide suggestions for legislative recommendations that could improve the system of care for individuals with developmental disabilities. This helps guide the state in making necessary improvements.

Example: If the law starts on July 1, 2026, the Task Force will need to submit their first report by March 1, 2028. In this report, they must discuss how many individuals were able to find community jobs, what programs helped them the most, and any obstacles they faced, like transportation issues. They may also propose new legislation to create better job training programs to support these individuals.

Understanding New Payment Rules for Hospital Patients and Institution Residents

The new law makes important changes to how patients and residents in certain facilities are paid for their work. Here’s what you need to know:

1. The law states that hospitals for individuals with mental illnesses and institutions for individuals with intellectual disabilities can no longer pay patients or residents less than the minimum wage for work they do. Previously, these facilities could pay subminimum wages for voluntary work.

2. Under the new law, if a patient or resident volunteers to work, they must be compensated based on the value of the work they perform. This means they should be paid fairly and at a rate that considers the prevailing wage rate for similar work done by individuals without disabilities.

Example: If a resident at a facility helps with kitchen duties, they cannot be paid less than the minimum wage just because they are a patient. Instead, they will receive a wage that reflects what similar kitchen jobs pay in the community. So, if the prevailing wage for kitchen help is $12 an hour, then that is what the resident should earn, ensuring fair treatment for their work.

Understanding the Tax Credit for Purchases from Nonprofit Organizations

The bill introduces a tax credit designed to encourage support for nonprofit organizations that employ individuals with physical or intellectual disabilities. Here’s how it works:

1. Both businesses and individuals can take advantage of this tax credit when they buy goods or services from qualifying nonprofit organizations.

2. The nonprofit organizations must specifically employ individuals with physical or intellectual disabilities to qualify for this tax credit.

3. The tax credit is 15% of the cost of the purchases made from these qualifying organizations. This means that if a business spends $1,000 on goods or services from such an organization, they can claim a credit of $150 against their income tax or commercial activity tax (CAT).

Example: Let’s say a local business buys supplies worth $2,000 from a nonprofit that has employees with disabilities. The local business can claim a tax credit of 15% on this purchase. So, 15% of $2,000 is $300. This $300 can be deducted from their tax bill, making it financially beneficial for the business to support organizations that employ individuals with disabilities.

Understanding Purchase Requirements for the Tax Credit

To take advantage of the tax credit for purchases made from nonprofit organizations, Here’s what the taxpayer needs to know:

1. The taxpayer must purchase goods or services from a 501(c)(3) nonprofit corporation that has been certified as a qualified vendor.

2. A nonprofit organization can receive certification if the nonprofit meets the following conditions:

At least 20% of the individuals employed by the nonprofit are individuals with disabilities, and those individuals are employed in an integrated setting.
The nonprofit must employ these individuals in an “integrated setting-5123.022 of the Ohio Revised Code,” meaning that employees with disabilities must have the same opportunities to interact with employees without disabilities in the workplace.
The organization must provide health insurance to its employees with disabilities through one or more of the following methods:
- Offering an employer-sponsored health plan.
- Contributing at least 75% of the employee's premium cost for individual health insurance coverage for each eligible employee.
- Offers an eligible employer-sponsored insurance plan und the Affordable Care Act (ACA).
- If not subject to the employer mandate, but offers assistance to eligible employees to cover at least 75% of the employees' health insurance costs through a health savings account or other similar method.
(Keep in mind, if employees with disabilities have Medicaid and/or Medicare, they can accept health insurance and keep their Medicaid and/or Medicare. OR, they can decline their employer's health insurance and continue with their Medicaid and/or Medicare.)

3. A nonprofit corporation can apply to the Opportunities for Ohioans with Disabilities (OOD) to become certified as a qualified vendor. If certified, the organization must inform OOD if it no longer meets the qualifying criteria.

4. OOD has the authority to revoke the certification if they receive notice that the organization no longer qualifies or if they determine, through their own investigation, that the nonprofit no longer meets the requirements of a qualified vendor.

Example: Let’s say an employer/provider named "All About Us/Provider" that sells handmade goods applies for certification. If they can show that they meet all the requirements, they could be approved as a qualified vendor. If they later stop meeting these criteria, they must inform OOD, which could then revoke their certification.

Understanding the Credit Amount and Limitations

The tax credit for purchases made from certified qualified vendors has specific rules and limitations. Here’s what you need to know:

1. The tax credit is 15% of the price of purchases made from a qualifying nonprofit organization.

2. Annual Limits:

The Opportunities for Ohioans with Disabilities (OOD) can issue a total of no more than $8 million in credits each year. This means that taxpayers can make up to $53.3 million in eligible purchases overall.
There is a cap on how much credit can be issued from a single vendor. No more than $500,000 in credits can be issued per year for purchases from any one vendor, translating to $3.3 million in eligible purchases from that vendor.

3. The price used to calculate the credit is the same price used to calculate sales taxes. This ensures consistency in how the credit is applied.

4. The credit is nonrefundable, which means it can reduce a taxpayer's liability to zero but cannot result in a refund. For example, if a taxpayer owes $1,000 in taxes and has a credit of $1,500, they can use the credit to eliminate their tax liability, but won’t receive the remaining $500 as a refund.

5. If the credit amount exceeds a taxpayer's tax liability, they can carry forward the excess credit for up to four years. This allows taxpayers to use any unused credit against future tax liabilities

Example: If a business purchases $10,000 worth of goods from a certified vendor, they can claim a tax credit of 15%, amounting to $1,500. If the business owes $1,000 in taxes, the tax credit will reduce their liability to zero. However, since the credit is nonrefundable, they will lose the remaining $500 of the credit, as it cannot be refunded to them. Conversely, if the business only owed $500 in taxes, they would use $500 of the credit, which would eliminate their tax liability, and they might have a remaining excess credit that they could potentially carry forward to use in the next four years, depending on specific tax regulations.

Understanding the Application Procedure for the Tax Credit

To receive the tax credit for purchases made from certified qualified vendors, taxpayers need to follow these steps:

1. Taxpayers must submit their applications to the Opportunities for Ohioans with Disabilities (OOD) between January 1 and January 21 following the year in which the eligible purchases were made.

2. In the application, taxpayers must specify whether they intend to claim the credit against the Commercial Activity Tax (CAT) or the income tax. This information is important for proper processing.

3. OOD will review applications on a first-come, first-served basis. This means that applications will be processed in the order they are received during the application period.

4. If OOD approves an application, they will issue a tax credit certificate to the applicant. This certificate will state:

The amount of the credit allowed.
The specific tax (CAT or income tax) against which the credit can be claimed.

Example: If a business makes qualifying purchases in 2026, they should apply for the tax credit between January 1 and January 21, 2027. They will indicate on the application whether the credit will apply to their income tax or CAT. If approved, OOD will send them a tax credit certificate outlining how much credit they can claim.

Understanding the Annual Report for the Tax Credit Program

The new law requires the Opportunities for Ohioans with Disabilities (OOD) to create an annual report regarding the tax credit program. Here’s what the report must include:

1. The report must detail the number of tax credit certificates issued during the year prior. This helps track how many taxpayers are taking advantage of the credit.

2. OOD must include the total amount of credits awarded through the program in the report. This figure indicates the financial impact of the tax credit.

3. OOD can include any other relevant information they believe is important to share with the General Assembly about the tax credit program. This might involve insights on trends, challenges, or the effectiveness of the program.

Example At the end of each year, OOD will compile a report that tells the General Assembly how many tax credits were granted, how much money was awarded in total, and any other important details they think lawmakers should know to evaluate the tax credit program’s success

Example of how a business might choose between claiming a CAT or Income Tax

Imagine a small coffee shop called "Joe's Beans" that sells $50,000 worth of coffee and pastries each year, with annual expenses of $45,000. Joe's net income is $5,000, resulting in an income tax of $1,000 at a 20% tax rate. Alternatively, under a Commercial Activity Tax (CAT) with a 1% rate, Joe would owe $500 since CAT is based on total sales. If Joe's expenses increased to $48,000, his net income would drop to $2,000, leading to an income tax of only $400, which is lower than the CAT amount. In this scenario, Joe can see that the CAT is more favorable. As he plans for future growth, he should think about which tax structure will benefit him the most.