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Officials outline next steps after California ends subminimum-wage employment settings
Summary
State officials, the Department of Rehabilitation and Department of Developmental Services described efforts to transition people out of 14(c) subminimum-wage settings and expand competitive integrated employment; advocates urged a dedicated Employment First office and clearer statewide coordination.
State officials and advocates told Assembly Budget Subcommittee 2 panels that California has completed the statutory phase‑out of subminimum wage under 14(c) certificates and is focusing on placing people into competitive integrated employment (CIE).
CalHHS and department officials said the state will coordinate existing resources rather than create a stand‑alone new agency, but advocates and several legislators pushed for the full, funded Employment First office the Legislature authorized in the 2023 Budget Act.
Why it matters: Ending subminimum wage is a high‑priority employment policy shift for people with intellectual and developmental disabilities. The hearing focused on how to turn the initial transition into durable, state‑wide CIE outcomes.
What officials said: Deborah Cooper, Assistant Secretary at CalHHS, said the Budget Act of 2023 established an Office of Employment First with $1,000,000 in 2024 but that the administration reduced the CalHHS operational budget during the 2024-25 budget adjustments and reallocated that $1,000,000 while pledging to use existing departmental leadership in DDS and DOR to carry the office’s functions. ‘‘The Administration applauds the passage of SB 639 ... and supported the phasing out of subminimum wage,’’ Cooper said.
Ernie Cruz, Deputy Director at DDS, described monthly tracking of individuals transitioning out of subminimum‑wage settings and noted new services and rates meant to support job development, job coaching and the coordinated career pathways pilot. He said the paid internship program produced more than 3,100 paid internships in FY 2023–24 with roughly $20 million in expenditures that year.
Victor Duran (Department of Rehabilitation) said DOR’s career counseling, information and referral service targeted to people in subminimum‑wage settings has led some participants to enroll in DOR services and that hundreds achieved competitive integrated employment outcomes.
Advocates and local providers: The State Council on Developmental Disabilities described that long‑term employment rates for adults with IDD have remained near 15% and argued an Employment First office outside any single department could better coordinate cross‑agency work — including education, labor, and behavioral health — and address payment and rate‑structure barriers that currently favor nonemployment services. Progressive Employment Concepts and other providers described pilots in San Diego involving community college partners and research collaborators to test strategies for job entry and employer engagement.
Legislative response: Chair Jackson pressed administration officials to provide a detailed timeline and process for implementing the Employment First office and requested quarterly reporting on the status and outcomes of individuals who recently transitioned out of subminimum‑wage settings beginning July 1, 2025. LAO staff said they would assist with potential legislative language to support oversight.
Outstanding issues: The administration said it would continue to coordinate across DDS and DOR and convene partners, but advocates warned the $1,000,000 set aside in 2024 should be restored to create an office with dedicated staff. LAO urged regular updates on whether people who left subminimum‑wage settings have moved into competitive integrated employment.
