238 
section 309(j)(8)(G) of the Commu-
nications Act of 1934. 
(ii) DEFINITION.—In this clause, the 
term ‘‘appropriate committees of Con-
gress’’ means— 
(I) the Committee on Commerce, 
Science, and Transportation of the 
Senate; 
(II) the Committee on Appropria-
tions of the Senate; 
(III) the Committee on Energy 
and Commerce of the House of Rep-
resentatives; and 
(IV) the Committee on Appro-
priations of the House of Representa-
tives. 
(2) INCENTIVE AUCTION RELOCATION FUND.— 
Not more than $1,000,000,000 shall be deposited in 
the Incentive Auction Relocation Fund established 
under section 309(j)(8)(G) of the Communications 
Act of 1934. 
(3) STATE
AND
LOCAL
IMPLEMENTATION 
FUND.—$200,000,000 shall be deposited in the 
State and Local Implementation Fund established 
under section 295. 
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239 
(4) PUBLIC
SAFETY
BROADBAND
CORPORA-
TION.—$6,450,000,000 shall be deposited with the 
Public Safety Broadband Corporation established 
under section 284, of which pursuant to its respon-
sibilities and duties set forth under section 288 to 
deploy and operate a nationwide public safety inter-
operable broadband network. Funds deposited with 
the Public Safety Broadband Corporation shall be 
available after submission of a five-year budget by 
the Corporation and approval by the Secretary of 
Commerce, in consultation with the Secretary of 
Homeland Security, the Director of the Office of 
Management and Budget, and the Attorney General 
of the United States. 
(5) PUBLIC SAFETY RESEARCH AND DEVELOP-
MENT.—After approval by the Office of Management 
and Budget of a spending plan developed by the Di-
rector of NIST, a Wireless Innovation (WIN) Fund 
of up to $300,000,000 shall be made available for 
use by the Director of NIST to carry out the re-
search program established under section 296 and 
be 
available 
until 
expended. 
If 
less 
than 
$300,000,000 is approved by the Office of Manage-
ment and Budget, the remainder shall be transferred 
to the Public Safety Broadband Corporation estab-
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240 
lished in section 284 and be available for duties set 
forth under section 288 to deploy and operate a na-
tionwide public safety interoperable broadband net-
work. 
(6) DEFICIT
REDUCTION.—Any amounts re-
maining after the deduction of the amounts required 
under paragraphs (1) through (5) shall be deposited 
in the General Fund of the Treasury, where such 
amounts shall be dedicated for the sole purpose of 
deficit reduction. 
SEC. 298. FCC REPORT ON EFFICIENT USE OF PUBLIC 
SAFETY SPECTRUM. 
(a) IN GENERAL.—Not later than 180 days after the 
date of the enactment of this subtitle and every 2 years 
thereafter, the Commission shall, in consultation with the 
Assistant Secretary and the Director of NIST, conduct a 
study and submit to the appropriate committees of Con-
gress a report on the spectrum allocated for public safety 
use. 
(b) CONTENTS.—The report required by subsection 
(a) shall include— 
(1) an examination of how such spectrum is 
being used; 
(2) recommendations on how such spectrum 
may be used more efficiently; 
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241 
(3) an assessment of the feasibility of public 
safety entities relocating from other bands to the 
public safety broadband spectrum; and 
(4) an assessment of whether any spectrum 
made available by the relocation described in para-
graph (3) could be returned to the Commission for 
reassignment through auction, including through use 
of incentive auction authority under subparagraph 
(G) of section 309(j)(8) of the Communications Act 
of 1934 (47 U.S.C. 309(j)(8)), as added by section 
273 of this subtitle. 
SEC. 299. PUBLIC SAFETY ROAMING AND PRIORITY AC-
CESS. 
The Commission may adopt rules, if necessary in the 
public interest, to improve the ability of public safety users 
to roam onto commercial networks and to gain priority 
access to commercial networks in an emergency if— 
(1) the public safety entity equipment is tech-
nically compatible with the commercial network; 
(2) the commercial network is reasonably com-
pensated; and 
(3) such access does not preempt or otherwise 
terminate or degrade all existing voice conversations 
or data sessions. 
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242 
TITLE III—ASSISTANCE FOR THE 
UNEMPLOYED 
AND 
PATH-
WAYS BACK TO WORK 
Subtitle A—Supporting 
Unemployed Workers 
SEC. 301. SHORT TITLE. 
This subtitle may be cited as the ‘‘Supporting Unem-
ployed Workers Act of 2011’’. 
PART I—EXTENSION OF EMERGENCY UNEMPLOY-
MENT COMPENSATION AND CERTAIN EX-
TENDED BENEFITS PROVISIONS, AND ESTAB-
LISHMENT OF SELF-EMPLOYMENT ASSIST-
ANCE PROGRAM 
SEC. 311. EXTENSION OF EMERGENCY UNEMPLOYMENT 
COMPENSATION PROGRAM. 
(a) IN GENERAL.—Section 4007 of the Supplemental 
Appropriations Act, 2008 (Public Law 110–252; 26 
U.S.C. 3304 note) is amended— 
(1) by striking ‘‘January 3, 2012’’ each place 
it appears and inserting ‘‘January 3, 2013’’; 
(2) in the heading for subsection (b)(2), by 
striking ‘‘JANUARY 3, 2012’’ and inserting ‘‘JANUARY 
3, 2013’’; and 
(3) in subsection (b)(3), by striking ‘‘June 9, 
2012’’ and inserting ‘‘June 8, 2013’’. 
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(b) FUNDING.—Section 4004(e)(1) of the Supple-
mental Appropriations Act, 2008 (Public Law 110–252; 
26 U.S.C. 3304 note) is amended— 
(1) in subparagraph (F), by striking ‘‘and’’ at 
the end; and 
(2) by inserting after subparagraph (G) the fol-
lowing: 
‘‘(H) the amendments made by section 
311(a) of the Supporting Unemployed Workers 
Act of 2011; and’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the enact-
ment of the Tax Relief, Unemployment Insurance Reau-
thorization, and Job Creation Act of 2010 (Public Law 
111–312; 26 U.S.C. 3304 note). 
SEC. 312. TEMPORARY EXTENSION OF EXTENDED BENEFIT 
PROVISIONS. 
(a) IN GENERAL.—Section 2005 of the Assistance for 
Unemployed Workers and Struggling Families Act, as 
contained in Public Law 111–5 (26 U.S.C. 3304 note), 
is amended— 
(1) by striking ‘‘January 4, 2012’’ each place 
it appears and inserting ‘‘January 4, 2013’’; and 
(2) in subsection (c), by striking ‘‘June 11, 
2012’’ and inserting ‘‘June 11, 2013’’. 
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(b) EXTENSION OF MATCHING FOR STATES WITH 
NO WAITING WEEK.—Section 5 of the Unemployment 
Compensation Extension Act of 2008 (Public Law 110– 
449; 26 U.S.C. 3304 note) is amended by striking ‘‘June 
10, 2012’’ and inserting ‘‘June 9, 2013’’. 
(c) EXTENSION OF MODIFICATION OF INDICATORS 
UNDER THE EXTENDED BENEFIT PROGRAM.—Section 
203 of the Federal-State Extended Unemployment Com-
pensation Act of 1970 (26 U.S.C. 3304 note) is amend-
ed— 
(1) in subsection (d), by striking ‘‘December 
31, 2011’’ and inserting ‘‘December 31, 2012’’; and 
(2) in subsection (f)(2), by striking ‘‘December 
31, 2011’’ and inserting ‘‘December 31, 2012’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the enact-
ment of the Tax Relief, Unemployment Insurance Reau-
thorization, and Job Creation Act of 2010 (Public Law 
111–312; 26 U.S.C. 3304 note). 
SEC. 313. REEMPLOYMENT SERVICES AND REEMPLOYMENT 
AND ELIGIBILITY ASSESSMENT ACTIVITIES. 
(a) IN GENERAL.— 
(1) PROVISION OF SERVICES AND ACTIVITIES.— 
Section 4001 of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 
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245 
note) is amended by inserting the following new sub-
section (h): 
‘‘(h) IN GENERAL.— 
‘‘(1) REQUIRED PROVISION OF SERVICES AND 
ACTIVITIES.—An agreement under this section shall 
require that the State provide reemployment services 
and reemployment and eligibility assessment activi-
ties to each individual receiving emergency unem-
ployment compensation who, on or after the date 
that is 30 days after the date of enactment of the 
Supporting Unemployed Workers Act of 2011, es-
tablishes an account under section 4002(b), com-
mences receiving the amounts described in section 
4002(c), commences receiving the amounts described 
in section 4002(d), or commences receiving the 
amounts described in subsection 4002(e), whichever 
occurs first. Such services and activities shall be pro-
vided by the staff of the State agency responsible for 
administration of the State unemployment com-
pensation law or the Wagner-Peyser Act from funds 
available pursuant to section 4004(c)(2) and may 
also be provided from funds available under the 
Wagner-Peyser Act. 
‘‘(2) DESCRIPTION OF SERVICES AND ACTIVI-
TIES.—The reemployment services and in-person re-
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employment and eligibility assessment activities pro-
vided to individuals receiving emergency unemploy-
ment compensation described in paragraph (1)— 
‘‘(A) shall include— 
‘‘(i) the provision of labor market and 
career information; 
‘‘(ii) an assessment of the skills of the 
individual; 
‘‘(iii) orientation to the services avail-
able through the One-Stop centers estab-
lished under title I of the Workforce In-
vestment Act of 1998; 
‘‘(iv) job search counseling and the 
development or review of an individual re-
employment plan that includes participa-
tion in job search activities and appro-
priate workshops and may include referrals 
to appropriate training services; and 
‘‘(v) review of the eligibility of the in-
dividual for emergency unemployment com-
pensation relating to the job search activi-
ties of the individual; and 
‘‘(B) may include the provision of— 
‘‘(i) comprehensive and specialized as-
sessments; 
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247 
‘‘(ii) individual and group career 
counseling; and 
‘‘(iii) additional reemployment serv-
ices. 
‘‘(3) PARTICIPATION REQUIREMENT.—As a con-
dition of continuing eligibility for emergency unem-
ployment compensation for any week, an individual 
who has been referred to reemployment services or 
reemployment and eligibility assessment activities 
under this subsection shall participate, or shall have 
completed participation in, such services or activi-
ties, unless the State agency responsible for the ad-
ministration of State unemployment compensation 
law determines that there is justifiable cause for fail-
ure to participate or complete such services or activi-
ties, as defined in guidance to be issued by the Sec-
retary of Labor.’’. 
(2) ISSUANCE OF GUIDANCE.—Not later than 
30 days after the date of enactment of this Act, the 
Secretary shall issue guidance on the implementation 
of the reemployment services and reemployment and 
eligibility assessments activities required to be pro-
vided under the amendment made by paragraph (1). 
(b) FUNDING.— 
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248 
(1) IN GENERAL.—Section 4004(c) of the Sup-
plemental Appropriations Act, 2008 (Public Law 
110–252; 26 U.S.C. 3304 note), is amended— 
(A) by striking ‘‘There’’ and inserting ‘‘(1) 
ADMINISTRATION.—There’’; and 
(B) by inserting the following new para-
graph: 
‘‘(2) REEMPLOYMENT
SERVICES
AND
REEM-
PLOYMENT
AND
ELIGIBILITY
ASSESSMENT
ACTIVI-
TIES.— 
‘‘(A) APPROPRIATION.—There are appro-
priated from the general fund of the Treasury, 
without fiscal year limitation, out of the em-
ployment security administration account as es-
tablished by section 901(a) of the Social Secu-
rity Act, such sums as determined by the Sec-
retary of Labor in accordance with subpara-
graph (B) to assist States in providing reem-
ployment services and reemployment and eligi-
bility assessment activities described in section 
4001(h)(2). 
‘‘(B) 
DETERMINATION
OF
TOTAL 
AMOUNT.—The amount referred to in subpara-
graph (A) is the amount the Secretary esti-
mates is equal to— 
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249 
‘‘(i) the number of individuals who 
will receive reemployment services and re-
employment eligibility and assessment ac-
tivities described in section 4001(h)(2) in 
all States through the date specified in sec-
tion 4007(b)(3), multiplied by 
‘‘(ii) $200. 
‘‘(C) DISTRIBUTION AMONG STATES.—Of 
the amounts appropriated under subparagraph 
(A), the Secretary of Labor shall distribute 
amounts to each State, in accordance with sec-
tion 4003(c), that the Secretary estimates is 
equal to— 
‘‘(i) the number of individuals who 
will receive reemployment services and re-
employment and eligibility assessment ac-
tivities described in section 4001(h)(2) in 
such State through the date specified in 
section 4007(b)(3), multiplied by 
‘‘(ii) $200.’’. 
(2) TRANSFER OF FUNDS.—Section 4004(e) of 
the Supplemental Appropriations Act, 2008 (Public 
Law 110–252; 26 U.S.C. 3304 note) is amended— 
(A) in paragraph (2), by striking the pe-
riod and inserting ‘‘; and’’; and 
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250 
(B) by inserting the following paragraph 
(3): 
‘‘(3) to the employment security administration 
account (as established by section 901(a) of the So-
cial Security Act) such sums as the Secretary of 
Labor determines to be necessary in accordance with 
subsection (c)(2) to assist States in providing reem-
ployment services and reemployment eligibility and 
assessment 
activities 
described 
in 
section 
4001(h)(2).’’. 
SEC. 314. FEDERAL-STATE AGREEMENTS TO ADMINISTER A 
SELF-EMPLOYMENT ASSISTANCE PROGRAM. 
Section 4001 of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 note), 
as amended by section 313, is further amended by insert-
ing a new subsection (i) as follows: 
‘‘(i) AUTHORITY TO CONDUCT SELF-EMPLOYMENT 
ASSISTANCE PROGRAM.— 
‘‘(1) IN GENERAL.— 
‘‘(A) ESTABLISHMENT.—Any agreement 
under subsection (a) may provide that the State 
agency of the State shall establish a self-em-
ployment assistance program described in para-
graph (2), to provide for the payment of emer-
gency unemployment compensation as self-em-
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251 
ployment assistance allowances to individuals 
who meet the eligibility criteria specified in sub-
section (b). 
‘‘(B) PAYMENT
OF
ALLOWANCES.—The 
self-employment assistance allowance described 
in subparagraph (A) shall be paid for up to 26 
weeks to an eligible individual from such indi-
vidual’s emergency unemployment compensation 
account described in section 4002, and the 
amount in such account shall be reduced ac-
cordingly. 
‘‘(2) DEFINITION OF ‘SELF-EMPLOYMENT AS-
SISTANCE PROGRAM’.—For the purposes of this title, 
the term ‘self-employment assistance program’ 
means a program as defined under section 3306(t) 
of the Internal Revenue Code of 1986 (26 U.S.C. 
3306(t)), except as follows: 
‘‘(A) all references to ‘regular unemploy-
ment compensation under the State law’ shall 
be deemed to refer instead to ‘emergency unem-
ployment compensation under title IV of the 
Supplemental Appropriations Act, 2008 (Public 
Law 110–252; 26 U.S.C. 3304 note)’; 
‘‘(B) paragraph (3)(B) shall not apply; 
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252 
‘‘(C) clause (i) of paragraph (3)(C) shall 
be deemed to state as follows: 
‘‘ ‘(i) 
include 
any 
entrepreneurial 
training that the State may provide in co-
ordination with programs of training of-
fered by the Small Business Administra-
tion, which may include business coun-
seling, mentorship for participants, access 
to small business development resources, 
and technical assistance; and’; 
‘‘(D) the reference to ‘5 percent’ in para-
graph (4) shall be deemed to refer instead to ‘1 
percent’; and 
‘‘(E) paragraph (5) shall not apply. 
‘‘(3) AVAILABILITY OF SELF-EMPLOYMENT AS-
SISTANCE
ALLOWANCES.—In the case of an indi-
vidual who has received any emergency unemploy-
ment compensation payment under this title, such 
individual shall not receive self-employment assist-
ance allowances under this subsection unless the 
State agency has a reasonable expectation that such 
individual will be entitled to at least 26 times the in-
dividual’s average weekly benefit amount of emer-
gency unemployment compensation. 
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253 
‘‘(4) PARTICIPANT OPTION TO TERMINATE PAR-
TICIPATION IN SELF-EMPLOYMENT ASSISTANCE PRO-
GRAM.— 
‘‘(A) TERMINATION.—An individual who is 
participating in a State’s self-employment as-
sistance program may opt to discontinue par-
ticipation in such program. 
‘‘(B) CONTINUED ELIGIBILITY FOR EMER-
GENCY
UNEMPLOYMENT
COMPENSATION.—An 
individual whose participation in the self-em-
ployment assistance program is terminated as 
described in paragraph (1) or who has com-
pleted participation in such program, and who 
continues to meet the eligibility requirements 
for emergency unemployment compensation 
under this title, shall receive emergency unem-
ployment compensation payments with respect 
to subsequent weeks of unemployment, to the 
extent that amounts remain in the account es-
tablished for such individual under section 
4002(b) or to the extent that such individual 
commences receiving the amounts described in 
subsections (c), (d), or (e) of such section, re-
spectively.’’. 
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254 
SEC. 315. CONFORMING AMENDMENT ON PAYMENT OF 
BRIDGE TO WORK WAGES. 
Section 4001 of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 note), 
as amended by section 314, is further amended by insert-
ing a new subsection (j) as follows: 
‘‘(j) AUTHORIZATION TO PAY WAGES FOR PURPOSES 
OF A BRIDGE TO WORK PROGRAM.—Any State that estab-
lishes a Bridge to Work program under section 324 of the 
Supporting Unemployed Workers Act of 2011 is author-
ized to deduct from an emergency unemployment com-
pensation account established for such individual under 
section 4002 such sums as may be necessary to pay wages 
for such individual as authorized under section 324(b)(1) 
of such Act.’’. 
SEC. 316. ADDITIONAL EXTENDED UNEMPLOYMENT BENE-
FITS UNDER THE RAILROAD UNEMPLOY-
MENT INSURANCE ACT. 
(a) EXTENSION.—Section 2(c)(2)(D)(iii) of the Rail-
road Unemployment Insurance Act, as added by section 
2006 of the American Recovery and Reinvestment Act of 
2009 (Public Law 111–5) and as amended by section 9 
of the Worker, Homeownership, and Business Assistance 
Act of 2009 (Public Law 111–92), is amended— 
(1) by striking ‘‘June 30, 2011’’ and inserting 
‘‘June 30, 2012’’; and 
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255 
(2) by striking ‘‘December 31, 2011’’ and in-
serting ‘‘December 31, 2012’’. 
(b) 
CLARIFICATION
ON
AUTHORITY
TO
USE 
FUNDS.—Funds appropriated under either the first or 
second sentence of clause (iv) of section 2(c)(2)(D) of the 
Railroad Unemployment Insurance Act shall be available 
to cover the cost of additional extended unemployment 
benefits provided under such section 2(c)(2)(D) by reason 
of the amendments made by subsection (a) as well as to 
cover the cost of such benefits provided under such section 
2(c)(2)(D), as in effect on the day before the date of the 
enactment of this Act. 
PART II—REEMPLOYMENT NOW PROGRAM 
SEC. 321. ESTABLISHMENT OF REEMPLOYMENT NOW PRO-
GRAM. 
(a) IN GENERAL.—There is hereby established the 
Reemployment NOW program to be carried out by the 
Secretary of Labor in accordance with this part in order 
to facilitate the reemployment of individuals who are re-
ceiving emergency unemployment compensation under title 
IV of the Supplemental Appropriations Act, 2008 (Public 
Law 110–252; 26 U.S.C. 3304 note) (hereafter in this 
part referred to as ‘‘EUC claimants’’). 
(b) AUTHORIZATION
AND APPROPRIATION.—There 
are authorized to be appropriated and appropriated from 
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the general fund of the Treasury for fiscal year 2012 
$4,000,000,000 to carry out the Reemployment NOW pro-
gram under this part. 
SEC. 322. DISTRIBUTION OF FUNDS. 
(a) IN GENERAL.—Of the funds appropriated under 
section 321(b) to carry out this part, the Secretary of 
Labor shall— 
(1) reserve up to 1 percent for the costs of Fed-
eral administration and for carrying out rigorous 
evaluations of the activities conducted under this 
part; and 
(2) allot the remainder of the funds not re-
served under paragraph (1) in accordance with the 
requirements of subsection (b) and (c) to States that 
have approved plans under section 323. 
(b) ALLOTMENT FORMULA.— 
(1) FORMULA
FACTORS.—The Secretary of 
Labor shall allot the funds available under sub-
section (a)(2) as follows: 
(A) two-thirds of such funds shall be allot-
ted on the basis of the relative number of un-
employed individuals in each State, compared to 
the total number of unemployed individuals in 
all States; 
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257 
(B) one-third of such funds shall be allot-
ted on the basis of the relative number of indi-
viduals in each State who have been unem-
ployed for 27 weeks or more, compared to the 
total number of individuals in all States who 
have been unemployed for 27 weeks or more. 
(2) CALCULATION.—For purposes of paragraph 
(1), the number of unemployed individuals and the 
number of individuals unemployed for 27 weeks or 
more shall be based on the data for the most recent 
12-month period, as determined by the Secretary. 
(c) REALLOTMENT.— 
(1) FAILURE TO SUBMIT STATE PLAN.—If a 
State does not submit a State plan by the time spec-
ified in section 323(b), or a State does not receive 
approval of a State plan, the amount the State 
would have been eligible to receive pursuant to the 
formula under subsection (b) shall be allotted to 
States that receive approval of the State plan under 
section 323 in accordance with the relative allot-
ments of such States as determined by the Secretary 
under subsection (b). 
(2) FAILURE TO IMPLEMENT ACTIVITIES ON A 
TIMELY BASIS.—The Secretary of Labor may, in ac-
cordance with procedures and criteria established by 
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258 
the Secretary, recapture the portion of the State al-
lotment under this part that remains unobligated if 
the Secretary determines such funds are not being 
obligated at a rate sufficient to meet the purposes 
of this part. The Secretary shall reallot such recap-
tured funds to other States that are not subject to 
recapture in accordance with the relative share of 
the allotments of such States as determined by the 
Secretary under subsection (b). 
(3) RECAPTURE OF FUNDS.—Funds recaptured 
under paragraph (2) shall be available for reobliga-
tion not later than December 31, 2012. 
SEC. 323. STATE PLAN. 
(a) IN GENERAL.—For a State to be eligible to re-
ceive an allotment under section 322, a State shall submit 
to the Secretary of Labor a State plan in such form and 
containing such information as the Secretary may require, 
which at a minimum shall include: 
(1) a description of the activities to be carried 
out by the State to assist in the reemployment of eli-
gible individuals to be served in accordance with this 
part, including which of the activities authorized in 
sections 324–328 the State intends to carry out and 
an estimate of the amounts the State intends to allo-
cate to the activities, respectively; 
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259 
(2) a description of the performance outcomes 
to be achieved by the State through the activities 
carried out under this part, including the employ-
ment outcomes to be achieved by participants and 
the processes the State will use to track perform-
ance, consistent with guidance provided by the Sec-
retary of Labor regarding such outcomes and proc-
esses; 
(3) a description of coordination of activities to 
be carried out under this part with activities under 
title I of the Workforce Investment Act of 1998, the 
Wagner-Peyser Act, and other appropriate Federal 
programs; 
(4) the timelines for implementation of the ac-
tivities described in the plan and the number of 
EUC claimants expected to be enrolled in such ac-
tivities by quarter; 
(5) assurances that the State will participate in 
the evaluation activities carried out by the Secretary 
of Labor under this section; 
(6) assurances that the State will provide ap-
propriate reemployment services, including coun-
seling, to any EUC claimant who participates in any 
of the programs authorized under this part; and 
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(7) assurances that the State will report such 
information as the Secretary may require relating to 
fiscal, performance and other matters, including em-
ployment outcomes and effects, which the Secretary 
determines are necessary to effectively monitor the 
activities carried out under this part. 
(b) PLAN SUBMISSION
AND APPROVAL.—A State 
plan under this section shall be submitted to the Secretary 
of Labor for approval not later than 30 days after the 
Secretary issues guidance relating to submission of such 
plan. The Secretary shall approve such plans if the Sec-
retary determines that the plans meet the requirements 
of this part and are appropriate and adequate to carry 
out the purposes of this part. 
(c) PLAN MODIFICATIONS.—A State may submit 
modifications to a State plan that has been approved 
under this part, and the Secretary of Labor may approve 
such modifications, if the plan as modified would meet the 
requirements of this part and are appropriate and ade-
quate to carry out the purposes of this part. 
SEC. 324. BRIDGE TO WORK PROGRAM. 
(a) IN GENERAL.—A State may use funds allotted 
to the State under this part to establish and administer 
a Bridge to Work program described in this section. 
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(b) DESCRIPTION
OF PROGRAM.—In order to in-
crease individuals’ opportunities to move to permanent 
employment, a State may establish a Bridge to Work pro-
gram to provide an EUC claimant with short-term work 
experience placements with an eligible employer, during 
which time such individual— 
(1) shall be paid emergency unemployment 
compensation payable under title IV of the Supple-
mental Appropriations Act, 2008 (Public Law 110– 
252; 26 U.S.C. 3304 note), as wages for work per-
formed, and as specified in subsection (c); 
(2) shall be paid the additional amount de-
scribed in subsection (e) as augmented wages for 
work performed; and 
(3) may be paid compensation in addition to 
the amounts described in paragraphs (1) and (2) by 
a State or by a participating employer as wages for 
work performed. 
(c) PROGRAM ELIGIBILITY AND OTHER REQUIRE-
MENTS.—For purposes of this program— 
(1) individuals who, except for the requirements 
described in paragraph (3), are eligible to receive 
emergency unemployment compensation payments 
under title IV of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 
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note), and who choose to participate in the program 
described in subsection (b), shall receive such pay-
ments as wages for work performed during their vol-
untary participation in the program described under 
subsection (b); 
(2) the wages payable to individuals described 
in paragraph (1) shall be paid from the emergency 
unemployment compensation account for such indi-
vidual as described in section 4002 of the Supple-
mental Appropriations Act, 2008 (Public Law 110– 
252; 26 U.S.C. 3304 note), and the amount in such 
individual’s account shall be reduced accordingly; 
(3) the wages payable to an individual described 
in paragraph (1) shall be payable in the same 
amount, at the same interval, on the same terms, 
and subject to the same conditions under title IV of 
the Supplemental Appropriations Act, 2008 (Public 
Law 110–252; 26 U.S.C. 3304 note), except that— 
(A) State requirements applied under such 
Act relating to availability for work and active 
search for work are not applicable to such indi-
viduals who participate for at least 25 hours 
per week in the program described in subsection 
(b) for the duration of such individual’s partici-
pation in the program; 
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(B) State requirements applied under such 
Act relating to disqualifying income regarding 
wages earned shall not apply to such individuals 
who participate for at least 25 hours per week 
in the program described in subsection (b), and 
shall not apply with respect to— 
(i) the wages described under sub-
section (b); and 
(ii) any wages, in addition to those de-
scribed under subsection (b), whether paid 
by a State or a participating employer for 
the same work activities; 
(C) State prohibitions or limitations ap-
plied under such Act relating to employment 
status shall not apply to such individuals who 
participate in the program described in sub-
section (b); and 
(D) State requirements applied under such 
Act relating to an individual’s acceptance of an 
offer of employment shall not apply with regard 
to an offer of long-term employment from a 
participating employer made to such individual 
who is participating in the program described in 
subsection (b) in a work experience provided by 
such employer, where such long-term employ-
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ment is expected to commence or commences at 
the conclusion of the duration specified in para-
graph (4)(A); 
(4) the program shall be structured so that in-
dividuals described in paragraph (1) may participate 
in the program for up to— 
(A) 8 weeks, and 
(B) 38 hours for each such week; 
(5) a State shall ensure that all individuals par-
ticipating in the program are covered by a workers’ 
compensation insurance program; and 
(6) the program meets such other requirements 
as the Secretary of Labor determines to be appro-
priate in guidance issued by the Secretary. 
(d) STATE REQUIREMENTS.— 
(1) CERTIFICATION OF ELIGIBLE EMPLOYER.— 
A State may certify as eligible for participation in 
the program under this section any employer that 
meets the eligibility criteria as established in guid-
ance by the Secretary of Labor, except that an em-
ployer shall not be certified as eligible for participa-
tion in the program described under subsection 
(b)— 
(A) if such employer— 
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(i) is a Federal, State, or local govern-
ment entity; 
(ii) would engage an eligible individual 
in work activities under any employer’s 
grant, contract, or subcontract with a Fed-
eral, State, or local government entity, ex-
cept with regard to work activities under 
any employer’s supply contract or sub-
contract; 
(iii) is delinquent with respect to any 
taxes or employer contributions described 
under sections 3301 and 3302(a)(1) of the 
Internal Revenue Code of 1986 or with re-
spect to any related reporting require-
ments; 
(iv) is engaged in the business of sup-
plying workers to other employers and 
would participate in the program for the 
purpose of supplying individuals partici-
pating in the program to other employers; 
or 
(v) has previously participated in the 
program and the State has determined 
that such employer has failed to abide by 
any of the requirements specified in sub-
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266 
sections (h), (i), or (j), or by any other re-
quirements that the Secretary may estab-
lish for employers under subsection (c)(6); 
and 
(B) unless such employer provides assur-
ances that it has not displaced existing workers 
pursuant to the requirements of subsection (h). 
(2) AUTHORIZED ACTIVITIES.—Funds allotted 
to a State under this part for the program— 
(A) shall be used to— 
(i) recruit employers for participation 
in the program; 
(ii) review and certify employers iden-
tified by eligible individuals seeking to par-
ticipate in the program; 
(iii) ensure that reemployment and 
counseling services are available for pro-
gram participants, including services de-
scribing the program under subsection (b), 
prior to an individual’s participation in 
such program; 
(iv) establish and implement processes 
to monitor the progress and performance 
of individual participants for the duration 
of the program; 
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267 
(v) prevent misuse of the program; 
and 
(vi) pay augmented wages to eligible 
individuals, if necessary, as described in 
subsection (e); and 
(B) may be used— 
(i) to pay workers’ compensation in-
surance premiums to cover all individuals 
participating in the program, except that, 
if a State opts not to make such payments 
directly to a State administered workers’ 
compensation program, the State involved 
shall describe in the approved State plan 
the means by which such State shall en-
sure workers’ compensation or equivalent 
coverage for all individuals who participate 
in the program; 
(ii) to pay compensation to a partici-
pating individual that is in addition to the 
amounts described in subsections (c)(1) 
and (e) as wages for work performed; 
(iii) to provide supportive services, 
such as transportation, child care, and de-
pendent care, that would enable individuals 
to participate in the program; 
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268 
(iv) for the administration and over-
sight of the program; and 
(v) to fulfill additional program re-
quirements included in the approved State 
plan. 
(e) PAYMENT
OF AUGMENTED WAGES
IF NEC-
ESSARY.—In the event that the wages described in sub-
section (c)(1) are not sufficient to equal or exceed the min-
imum wages that are required to be paid by an employer 
under section 6(a)(1) of the Fair Labor Standards Act 
of 1938 (29 U.S.C. 206(a)(1)) or the applicable State or 
local minimum wage law, whichever is higher, a State shall 
pay augmented wages to a program participant in any 
amount necessary to cover the difference between— 
(1) such minimum wages amount; and 
(2) the wages payable under subsection (c)(1). 
(f) EFFECT OF WAGES ON ELIGIBILITY FOR OTHER 
PROGRAMS.—None of the wages paid under this section 
shall be considered as income for the purposes of deter-
mining eligibility for and the amount of income transfer 
and in-kind aid furnished under any Federal or Federally 
assisted program based on need. 
(g) EFFECT
OF WAGES, WORK ACTIVITIES, AND 
PROGRAM PARTICIPATION ON CONTINUING ELIGIBILITY 
FOR EMERGENCY UNEMPLOYMENT COMPENSATION.— 
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Any wages paid under this section and any additional 
wages paid by an employer to an individual described in 
subsection (c)(1), and any work activities performed by 
such individual as a participant in the program, shall not 
be construed so as to render such individual ineligible to 
receive emergency unemployment compensation under title 
IV of the Supplemental Appropriations Act, 2008 (Public 
Law 110–252; 26 U.S.C. 3304 note). 
(h) NONDISPLACEMENT OF EMPLOYEES.— 
(1) PROHIBITION.—An employer shall not use a 
program participant to displace (including a partial 
displacement, such as a reduction in the hours of 
non-overtime work, wages, or employment benefits) 
any current employee (as of the date of the partici-
pation). 
(2) OTHER PROHIBITIONS.—An employer shall 
not permit a program participant to perform work 
activities related to any job for which— 
(A) any other individual is on layoff from 
the same or any substantially equivalent posi-
tion; 
(B) the employer has terminated the em-
ployment of any employee or otherwise reduced 
the workforce of the employer with the inten-
tion of filling or partially filling the vacancy so 
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270 
created with the work activities to be performed 
by a program participant; 
(C) there is a strike or lock out at the 
worksite that is the participant’s place of em-
ployment; or 
(D) the job is created in a manner that 
will infringe in any way upon the promotional 
opportunities of currently employed individuals 
(as of the date of the participation). 
(i) PROHIBITION ON IMPAIRMENT OF CONTRACTS.— 
An employer shall not, by means of assigning work activi-
ties under this section, impair an existing contract for 
services or a collective bargaining agreement, and no such 
activity that would be inconsistent with the terms of a col-
lective bargaining agreement shall be undertaken without 
the written concurrence of the labor organization that is 
signatory to the collective bargaining agreement. 
(j) LIMITATION ON EMPLOYER PARTICIPATION.—If, 
after 24 weeks of participation in the program, an em-
ployer has not made an offer of suitable long-term employ-
ment to any individual described under subsection (c)(1) 
who was placed with such employer and has completed the 
program, a State shall bar such employer from further 
participation in the program. States may impose addi-
tional conditions on participating employers to ensure that 
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271 
an appropriate number of participants receive offers of 
suitable long term employment. 
(k) FAILURE TO MEET PROGRAM REQUIREMENTS.— 
If a State makes a determination based on information 
provided to the State, or acquired by the State by means 
of its administration and oversight functions, that a par-
ticipating employer under this section has violated a re-
quirement of this section, the State shall bar such em-
ployer from further participation in the program. The 
State shall establish a process whereby an individual de-
scribed in subsection (c)(1), or any other affected indi-
vidual or entity, may file a complaint with the State relat-
ing to a violation of any requirement or prohibition under 
this section. 
(l) PARTICIPANT OPTION TO TERMINATE PARTICIPA-
TION IN BRIDGE TO WORK PROGRAM.— 
(1) TERMINATION.—An individual who is par-
ticipating in a program described in subsection (b) 
may opt to discontinue participation in such pro-
gram. 
(2) CONTINUED ELIGIBILITY FOR EMERGENCY 
UNEMPLOYMENT
COMPENSATION.—An 
individual 
who opts to discontinue participation in such pro-
gram, is terminated from such program by a partici-
pating employer, or who has completed participation 
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272 
in such program, and who continues to meet the eli-
gibility requirements for emergency unemployment 
compensation under title IV of the Supplemental 
Appropriations Act, 2008 (Public Law 110–252; 26 
U.S.C. 3304 note), shall receive emergency unem-
ployment compensation payments with respect to 
subsequent weeks of unemployment, to the extent 
that amounts remain in the account established for 
such individual under section 4002(b) of such Act or 
to the extent that such individual commences receiv-
ing the amounts described in subsections (c), (d), or 
(e) of such section, respectively. 
(m) EFFECT OF OTHER LAWS.—Unless otherwise 
provided in this section, nothing in this section shall be 
construed to alter or affect the rights or obligations under 
any Federal, State, or local laws with respect to any indi-
vidual described in subsection (c)(1) and with respect to 
any participating employer under this section. 
(n) TREATMENT OF PAYMENTS.—All wages or other 
payments to an individual under this section shall be treat-
ed as payments of unemployment compensation for pur-
poses of section 209 of the Social Security Act (42 U.S.C. 
409) and for purposes of subtitle A and sections 3101, 
3111, and 3301 of the Internal Revenue Code of 1986. 
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273 
SEC. 325. WAGE INSURANCE. 
(a) IN GENERAL.—A State may use the funds allot-
ted to the State under this part to provide a wage insur-
ance program for EUC claimants. 
(b) BENEFITS.—The wage insurance program pro-
vided under this section may use funds allotted to the 
State under this part to pay, for a period not to exceed 
2 years, to a worker described in subsection (c), up to 50 
percent of the difference between— 
(1) the wages received by the worker at the 
time of separation; and 
(2) the wages received by the worker for reem-
ployment. 
(c) INDIVIDUAL
ELIGIBILITY.—The benefits de-
scribed in subsection (b) may be paid to an individual who 
is an EUC claimant at the time such individual obtains 
reemployment and who— 
(1) is at least 50 years of age; 
(2) earns not more than $50,000 per year in 
wages from reemployment; 
(3) is employed on a full-time basis as defined 
by the law of the State; and 
(4) is not employed by the employer from which 
the individual was last separated. 
(d) TOTAL AMOUNT OF PAYMENTS.—A State shall 
establish a maximum amount of payments per individual 
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for purposes of payments described in subsection (b) dur-
ing the eligibility period described in such subsection. 
(e) NON-DISCRIMINATION REGARDING WAGES.—An 
employer shall not pay a worker described in subsection 
(c) less than such employer pays to a regular worker in 
the same or substantially equivalent position. 
SEC. 326. ENHANCED REEMPLOYMENT STRATEGIES. 
(a) IN GENERAL.—A State may use funds allotted 
under this part to provide a program of enhanced reem-
ployment services to EUC claimants. In addition to the 
provision of services to such claimants, the program may 
include the provision of reemployment services to individ-
uals who are unemployed and have exhausted their rights 
to emergency unemployment compensation under title IV 
of the Supplemental Appropriations Act, 2008, (Public 
Law 110–252; 26 U.S.C. 3304 note). The program shall 
provide reemployment services that are more intensive 
than the reemployment services provided by the State 
prior to the receipt of the allotment under this part. 
(b) TYPES OF SERVICES.—The enhanced reemploy-
ment services described in subsection (a) may include serv-
ices such as— 
(1) assessments, counseling, and other intensive 
services that are provided by staff on a one-to-one 
basis and may be customized to meet the reemploy-
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275 
ment needs of EUC claimants and individuals de-
scribed in subsection (a); 
(2) comprehensive assessments designed to 
identify alternative career paths; 
(3) case management; 
(4) reemployment services that are provided 
more frequently and more intensively than such re-
employment services have previously been provided 
by the State; and 
(5) services that are designed to enhance com-
munication skills, interviewing skills, and other skills 
that would assist in obtaining reemployment. 
SEC. 327. SELF-EMPLOYMENT PROGRAMS. 
A State may use funds allotted to the State under 
this part, in an amount specified under an approved State 
plan, for the administrative costs associated with starting 
up the self-employment assistance program described in 
section 4001(i) of the Supplemental Appropriations Act, 
2008, (Public Law 110–252; 26 U.S.C. 3304 note). 
SEC. 328. ADDITIONAL INNOVATIVE PROGRAMS. 
(a) IN GENERAL.—A State may use funds allotted 
under this part to provide a program for innovative activi-
ties, which use a strategy that is different from the reem-
ployment strategies described in sections 324–327 and 
which are designed to facilitate the reemployment of EUC 
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276 
claimants. In addition to the provision of activities to such 
claimants, the program may include the provision of activi-
ties to individuals who are unemployed and have exhausted 
their rights to emergency unemployment compensation 
under title IV of the Supplemental Appropriations Act, 
2008, (Public Law 110–252; 26 U.S.C. 3304 note). 
(b) CONDITIONS.—The innovative activities approved 
in accordance with subsection (a)— 
(1) shall directly benefit EUC claimants and, if 
applicable, individuals described in subsection (a), ei-
ther as a benefit paid to such claimant or individual 
or as a service provided to such claimant or indi-
vidual; 
(2) shall not result in a reduction in the dura-
tion or amount of, emergency unemployment com-
pensation for which EUC claimants would otherwise 
be eligible; 
(3) shall not include a reduction in the dura-
tion, amount of or eligibility for regular compensa-
tion or extended benefits; 
(4) shall not be used to displace (including a 
partial displacement, such as a reduction in the 
hours of non-overtime work, wages, or employment 
benefits) any currently employed employee (as of the 
date of the participation) or allow a program partici-
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277 
pant to perform work activities related to any job for 
which— 
(A) any other individual is on layoff from 
the same or any substantially equivalent job; 
(B) the employer has terminated the em-
ployment of any regular employee or otherwise 
reduced the workforce of the employer with the 
intention of filling or partially filling the va-
cancy so created with the work activities to be 
performed by a program participant; 
(C) there is a strike or lock out at the 
worksite that is the participant’s place of em-
ployment; or 
(D) the job is created in a manner that 
will infringe in any way upon the promotional 
opportunities of currently employed individuals 
(as of the date of the participation); and 
(5) shall not be in violation of any Federal, 
State, or local law. 
SEC. 329. GUIDANCE AND ADDITIONAL REQUIREMENTS. 
The Secretary of Labor may establish through guid-
ance, without regard to the requirements of section 553 
of title 5, United States Code, such additional require-
ments, including requirements regarding the allotment, re-
capture, and reallotment of funds, and reporting require-
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ments, as the Secretary determines to be necessary to en-
sure fiscal integrity, effective monitoring, and appropriate 
and prompt implementation of the activities under this 
Act. 
SEC. 330. REPORT OF INFORMATION AND EVALUATIONS TO 
CONGRESS AND THE PUBLIC. 
The Secretary of Labor shall provide to the appro-
priate Committees of the Congress and make available to 
the public the information reported pursuant to section 
329 and the evaluations of activities carried out pursuant 
to the funds reserved under section 322(a)(1). 
SEC. 331. STATE. 
For purposes of this part, the term ‘‘State’’ has the 
meaning given that term in section 205 of the Federal- 
State Extended Unemployment Compensation Act of 1970 
(26 U.S.C. 3304 note). 
PART III—SHORT-TIME COMPENSATION 
PROGRAM 
SEC. 341. TREATMENT OF SHORT-TIME COMPENSATION 
PROGRAMS. 
(a) DEFINITION.— 
(1) IN GENERAL.—Section 3306 of the Internal 
Revenue Code of 1986 (26 U.S.C. 3306) is amended 
by adding at the end the following new subsection: 
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‘‘(v) SHORT-TIME COMPENSATION PROGRAM.—For 
purposes of this chapter, the term ‘short-time compensa-
tion program’ means a program under which— 
‘‘(1) the participation of an employer is vol-
untary; 
‘‘(2) an employer reduces the number of hours 
worked by employees in lieu of layoffs; 
‘‘(3) such employees whose workweeks have 
been reduced by at least 10 percent, and by not 
more than the percentage, if any, that is determined 
by the State to be appropriate (but in no case more 
than 60 percent), are eligible for unemployment 
compensation; 
‘‘(4) the amount of unemployment compensa-
tion payable to any such employee is a pro rata por-
tion of the unemployment compensation which would 
otherwise be payable to the employee if such em-
ployee were totally unemployed from the partici-
pating employer; 
‘‘(5) such employees meet the availability for 
work and work search test requirements while col-
lecting short-time compensation benefits, by being 
available for their workweek as required by their 
participation in the short-time compensation pro-
gram; 
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‘‘(6) eligible employees may participate, as ap-
propriate, in training (including employer-sponsored 
training or worker training funded under the Work-
force Investment Act of 1998) to enhance job skills 
if such program has been approved by the State 
agency; 
‘‘(7) the State agency shall require employers to 
certify that if the employer provides health benefits 
and retirement benefits under a defined benefit plan 
(as defined in section 414(j)) or contributions under 
a defined contribution plan (as defined in section 
414(i)) to any employee whose workweek is reduced 
under the program that such benefits will continue 
to be provided to employees participating in the 
short-time compensation program under the same 
terms and conditions as though the workweek of 
such employee had not been reduced or to the same 
extent as other employees not participating in the 
short-time compensation program, subject to other 
requirements in this section; 
‘‘(8) the State agency shall require an employer 
to submit a written plan describing the manner in 
which the requirements of this subsection will be im-
plemented (including a plan for giving advance no-
tice, where feasible, to an employee whose workweek 
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281 
is to be reduced) together with an estimate of the 
number of layoffs that would have occurred absent 
the ability to participate in short-time compensation 
and such other information as the Secretary of 
Labor determines is appropriate; 
‘‘(9) in the case of employees represented by a 
union as the sole and exclusive representative, the 
appropriate official of the union has agreed to the 
terms of the employer’s written plan and implemen-
tation is consistent with employer obligations under 
the applicable Federal laws; and 
‘‘(10) upon request by the State and approval 
by the Secretary of Labor, only such other provi-
sions are included in the State law that are deter-
mined to be appropriate for purposes of a short-time 
compensation program.’’. 
(2) EFFECTIVE DATE.—Subject to paragraph 
(3), the amendment made by paragraph (1) shall 
take effect on the date of the enactment of this Act. 
(3) TRANSITION
PERIOD
FOR
EXISTING
PRO-
GRAMS.—In the case of a State that is administering 
a short-time compensation program as of the date of 
the enactment of this Act and the State law cannot 
be administered consistent with the amendment 
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282 
made by paragraph (1), such amendment shall take 
effect on the earlier of— 
(A) the date the State changes its State 
law in order to be consistent with such amend-
ment; or 
(B) the date that is 2 years and 6 months 
after the date of the enactment of this Act. 
(b) CONFORMING AMENDMENT.— 
(1) INTERNAL REVENUE CODE OF 1986.— 
(A) 
Subparagraph 
(E) 
of 
section 
3304(a)(4) of the Internal Revenue Code of 
1986 is amended to read as follows: 
‘‘(E) amounts may be withdrawn for the 
payment of short-time compensation under a 
short-time compensation program (as defined 
under section 3306(v));’’. 
(B) Subsection (f) of section 3306 of the 
Internal Revenue Code of 1986 is amended— 
(i) by striking paragraph (5) (relating 
to short-time compensation) and inserting 
the following new paragraph: 
‘‘(5) amounts may be withdrawn for the pay-
ment of short-time compensation under a short-time 
compensation program (as defined in subsection (v)); 
and’’; and 
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(ii) by redesignating paragraph (5) 
(relating to self-employment assistance 
program) as paragraph (6). 
(2) SOCIAL SECURITY ACT.—Section 303(a)(5) 
of the Social Security Act is amended by striking 
‘‘the payment of short-time compensation under a 
plan approved by the Secretary of Labor’’ and in-
serting ‘‘the payment of short-time compensation 
under a short-time compensation program (as de-
fined in section 3306(v) of the Internal Revenue 
Code of 1986)’’. 
(3) UNEMPLOYMENT
COMPENSATION
AMEND-
MENTS OF 1992.—Subsections (b) through (d) of sec-
tion 401 of the Unemployment Compensation 
Amendments of 1992 (26 U.S.C. 3304 note) are re-
pealed. 
SEC. 342. TEMPORARY FINANCING OF SHORT-TIME COM-
PENSATION PAYMENTS IN STATES WITH PRO-
GRAMS IN LAW. 
(a) PAYMENTS TO STATES.— 
(1) IN GENERAL.—Subject to paragraph (3), 
there shall be paid to a State an amount equal to 
100 percent of the amount of short-time compensa-
tion paid under a short-time compensation program 
(as defined in section 3306(v) of the Internal Rev-
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284 
enue Code of 1986, as added by section 341(a)) 
under the provisions of the State law. 
(2) TERMS OF PAYMENTS.—Payments made to 
a State under paragraph (1) shall be payable by way 
of reimbursement in such amounts as the Secretary 
estimates the State will be entitled to receive under 
this section for each calendar month, reduced or in-
creased, as the case may be, by any amount by 
which the Secretary finds that the Secretary’s esti-
mates for any prior calendar month were greater or 
less than the amounts which should have been paid 
to the State. Such estimates may be made on the 
basis of such statistical, sampling, or other method 
as may be agreed upon by the Secretary and the 
State agency of the State involved. 
(3) LIMITATIONS ON PAYMENTS.— 
(A) GENERAL
PAYMENT
LIMITATIONS.— 
No payments shall be made to a State under 
this section for short-time compensation paid to 
an individual by the State during a benefit year 
in excess of 26 times the amount of regular 
compensation (including dependents’ allow-
ances) under the State law payable to such in-
dividual for a week of total unemployment. 
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285 
(B) EMPLOYER
LIMITATIONS.—No pay-
ments shall be made to a State under this sec-
tion for benefits paid to an individual by the 
State under a short-time compensation program 
if such individual is employed by the partici-
pating employer on a seasonal, temporary, or 
intermittent basis. 
(b) APPLICABILITY.— 
(1) IN GENERAL.—Payments to a State under 
subsection (a) shall be available for weeks of unem-
ployment— 
(A) beginning on or after the date of the 
enactment of this Act; and 
(B) ending on or before the date that is 3 
years and 6 months after the date of the enact-
ment of this Act. 
(2) THREE-YEAR
FUNDING
LIMITATION
FOR 
COMBINED
PAYMENTS
UNDER
THIS
SECTION
AND 
SECTION 343.—States may receive payments under 
this section and section 343 with respect to a total 
of not more than 156 weeks. 
(c) TWO-YEAR TRANSITION PERIOD FOR EXISTING 
PROGRAMS.—During any period that the transition provi-
sion under section 341(a)(3) is applicable to a State with 
respect to a short-time compensation program, such State 
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shall be eligible for payments under this section. Subject 
to paragraphs (1)(B) and (2) of subsection (b), if at any 
point after the date of the enactment of this Act the State 
enacts a State law providing for the payment of short- 
time compensation under a short-time compensation pro-
gram that meets the definition of such a program under 
section 3306(v) of the Internal Revenue Code of 1986, as 
added by section 341(a), the State shall be eligible for pay-
ments under this section after the effective date of such 
enactment. 
(d) FUNDING AND CERTIFICATIONS.— 
(1) FUNDING.—There are appropriated, out of 
moneys in the Treasury not otherwise appropriated, 
such sums as may be necessary for purposes of car-
rying out this section. 
(2) 
CERTIFICATIONS.—The 
Secretary 
shall 
from time to time certify to the Secretary of the 
Treasury for payment to each State the sums pay-
able to such State under this section. 
(e) DEFINITIONS.—In this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Labor. 
(2) STATE; STATE AGENCY; STATE LAW.—The 
terms ‘‘State’’, ‘‘State agency’’, and ‘‘State law’’ 
have the meanings given those terms in section 205 
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of the Federal-State Extended Unemployment Com-
pensation Act of 1970 (26 U.S.C. 3304 note). 
SEC. 343. TEMPORARY FINANCING OF SHORT-TIME COM-
PENSATION AGREEMENTS. 
(a) FEDERAL-STATE AGREEMENTS.— 
(1) IN GENERAL.—Any State which desires to 
do so may enter into, and participate in, an agree-
ment under this section with the Secretary provided 
that such State’s law does not provide for the pay-
ment of short-time compensation under a short-time 
compensation program (as defined in section 
3306(v) of the Internal Revenue Code of 1986, as 
added by section 341(a)). 
(2) ABILITY TO TERMINATE.—Any State which 
is a party to an agreement under this section may, 
upon providing 30 days’ written notice to the Sec-
retary, terminate such agreement. 
(b) PROVISIONS OF FEDERAL-STATE AGREEMENT.— 
(1) IN GENERAL.—Any agreement under this 
section shall provide that the State agency of the 
State will make payments of short-time compensa-
tion under a plan approved by the State. Such plan 
shall provide that payments are made in accordance 
with the requirements under section 3306(v) of the 
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288 
Internal Revenue Code of 1986, as added by section 
341(a). 
(2) LIMITATIONS ON PLANS.— 
(A) GENERAL PAYMENT LIMITATIONS.—A 
short-time compensation plan approved by a 
State shall not permit the payment of short- 
time compensation to an individual by the State 
during a benefit year in excess of 26 times the 
amount of regular compensation (including de-
pendents’ allowances) under the State law pay-
able to such individual for a week of total un-
employment. 
(B) EMPLOYER
LIMITATIONS.—A short- 
time compensation plan approved by a State 
shall not provide payments to an individual if 
such individual is employed by the participating 
employer on a seasonal, temporary, or intermit-
tent basis. 
(3) EMPLOYER
PAYMENT
OF
COSTS.—Any 
short-time compensation plan entered into by an em-
ployer must provide that the employer will pay the 
State an amount equal to one-half of the amount of 
short-time compensation paid under such plan. Such 
amount shall be deposited in the State’s unemploy-
ment fund and shall not be used for purposes of cal-
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289 
culating an employer’s contribution rate under sec-
tion 3303(a)(1) of the Internal Revenue Code of 
1986. 
(c) PAYMENTS TO STATES.— 
(1) IN GENERAL.—There shall be paid to each 
State with an agreement under this section an 
amount equal to— 
(A) one-half of the amount of short-time 
compensation paid to individuals by the State 
pursuant to such agreement; and 
(B) any additional administrative expenses 
incurred by the State by reason of such agree-
ment (as determined by the Secretary). 
(2) TERMS OF PAYMENTS.—Payments made to 
a State under paragraph (1) shall be payable by way 
of reimbursement in such amounts as the Secretary 
estimates the State will be entitled to receive under 
this section for each calendar month, reduced or in-
creased, as the case may be, by any amount by 
which the Secretary finds that the Secretary’s esti-
mates for any prior calendar month were greater or 
less than the amounts which should have been paid 
to the State. Such estimates may be made on the 
basis of such statistical, sampling, or other method 
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290 
as may be agreed upon by the Secretary and the 
State agency of the State involved. 
(3) FUNDING.—There are appropriated, out of 
moneys in the Treasury not otherwise appropriated, 
such sums as may be necessary for purposes of car-
rying out this section. 
(4) 
CERTIFICATIONS.—The 
Secretary 
shall 
from time to time certify to the Secretary of the 
Treasury for payment to each State the sums pay-
able to such State under this section. 
(d) APPLICABILITY.— 
(1) IN GENERAL.—An agreement entered into 
under this section shall apply to weeks of unemploy-
ment— 
(A) beginning on or after the date on 
which such agreement is entered into; and 
(B) ending on or before the date that is 2 
years and 13 weeks after the date of the enact-
ment of this Act. 
(2) TWO-YEAR
FUNDING
LIMITATION.—States 
may receive payments under this section with re-
spect to a total of not more than 104 weeks. 
(e) SPECIAL RULE.—If a State has entered into an 
agreement under this section and subsequently enacts a 
State law providing for the payment of short-time com-
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291 
pensation under a short-time compensation program that 
meets the definition of such a program under section 
3306(v) of the Internal Revenue Code of 1986, as added 
by section 341(a), the State— 
(1) shall not be eligible for payments under this 
section for weeks of unemployment beginning after 
the effective date of such State law; and 
(2) subject to paragraphs (1)(B) and (2) of sec-
tion 342(b), shall be eligible to receive payments 
under section 342 after the effective date of such 
State law. 
(f) DEFINITIONS.—In this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Labor. 
(2) STATE; STATE AGENCY; STATE LAW.—The 
terms ‘‘State’’, ‘‘State agency’’, and ‘‘State law’’ 
have the meanings given those terms in section 205 
of the Federal-State Extended Unemployment Com-
pensation Act of 1970 (26 U.S.C. 3304 note). 
SEC. 344. GRANTS FOR SHORT-TIME COMPENSATION PRO-
GRAMS. 
(a) GRANTS.— 
(1) FOR IMPLEMENTATION OR IMPROVED AD-
MINISTRATION.—The Secretary shall award grants 
to States that enact short-time compensation pro-
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292 
grams (as defined in subsection (i)(2)) for the pur-
pose of implementation or improved administration 
of such programs. 
(2) FOR PROMOTION AND ENROLLMENT.—The 
Secretary shall award grants to States that are eligi-
ble and submit plans for a grant under paragraph 
(1) for such States to promote and enroll employers 
in short-time compensation programs (as so de-
fined). 
(3) ELIGIBILITY.— 
(A) IN GENERAL.—The Secretary shall de-
termine eligibility criteria for the grants under 
paragraph (1) and (2). 
(B) 
CLARIFICATION.—A 
State 
admin-
istering a short-time compensation program, in-
cluding a program being administered by a 
State that is participating in the transition 
under the provisions of sections 341(a)(3) and 
342(c), that does not meet the definition of a 
short-time compensation program under section 
3306(v) of the Internal Revenue Code of 1986 
(as added by 341(a)), and a State with an 
agreement under section 343, shall not be eligi-
ble to receive a grant under this section until 
such time as the State law of the State provides 
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293 
for payments under a short-time compensation 
program that meets such definition and such 
law. 
(b) AMOUNT OF GRANTS.— 
(1) IN GENERAL.—The maximum amount avail-
able for making grants to a State under paragraphs 
(1) and (2) shall be equal to the amount obtained 
by multiplying $700,000,000 (less the amount used 
by the Secretary under subsection (e)) by the same 
ratio as would apply under subsection (a)(2)(B) of 
section 903 of the Social Security Act (42 U.S.C. 
1103) for purposes of determining such State’s 
share of any excess amount (as described in sub-
section (a)(1) of such section) that would have been 
subject to transfer to State accounts, as of October 
1, 2010, under the provisions of subsection (a) of 
such section. 
(2) AMOUNT
AVAILABLE
FOR
DIFFERENT 
GRANTS.—Of the maximum incentive payment deter-
mined under paragraph (1) with respect to a 
State— 
(A) one-third shall be available for a grant 
under subsection (a)(1); and 
(B) two-thirds shall be available for a 
grant under subsection (a)(2). 
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(c) GRANT APPLICATION AND DISBURSAL.— 
(1) APPLICATION.—Any State seeking a grant 
under paragraph (1) or (2) of subsection (a) shall 
submit an application to the Secretary at such time, 
in such manner, and complete with such information 
as the Secretary may require. In no case may the 
Secretary award a grant under this section with re-
spect to an application that is submitted after De-
cember 31, 2014. 
(2) NOTICE.—The Secretary shall, within 30 
days after receiving a complete application, notify 
the State agency of the State of the Secretary’s find-
ings with respect to the requirements for a grant 
under paragraph (1) or (2) (or both) of subsection 
(a). 
(3) CERTIFICATION.—If the Secretary finds 
that the State law provisions meet the requirements 
for a grant under subsection (a), the Secretary shall 
thereupon make a certification to that effect to the 
Secretary of the Treasury, together with a certifi-
cation as to the amount of the grant payment to be 
transferred to the State account in the Unemploy-
ment Trust Fund (as established in section 904(a) 
of the Social Security Act (42 U.S.C. 1104(a))) pur-
suant to that finding. The Secretary of the Treasury 
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295 
shall make the appropriate transfer to the State ac-
count within 7 days after receiving such certifi-
cation. 
(4) REQUIREMENT.—No certification of compli-
ance with the requirements for a grant under para-
graph (1) or (2) of subsection (a) may be made with 
respect to any State whose— 
(A) State law is not otherwise eligible for 
certification under section 303 of the Social Se-
curity Act (42 U.S.C. 503) or approvable under 
section 3304 of the Internal Revenue Code of 
1986; or 
(B) short-time compensation program is 
subject to discontinuation or is not scheduled to 
take effect within 12 months of the certifi-
cation. 
(d) USE
OF FUNDS.—The amount of any grant 
awarded under this section shall be used for the implemen-
tation of short-time compensation programs and the over-
all administration of such programs and the promotion 
and enrollment efforts associated with such programs, 
such as through— 
(1) the creation or support of rapid response 
teams to advise employers about alternatives to lay-
offs; 
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(2) the provision of education or assistance to 
employers to enable them to assess the feasibility of 
participating in short-time compensation programs; 
and 
(3) the development or enhancement of systems 
to automate— 
(A) the submission and approval of plans; 
and 
(B) the filing and approval of new and on-
going short-time compensation claims. 
(e) ADMINISTRATION.—The Secretary is authorized 
to use 0.25 percent of the funds available under subsection 
(g) to provide for outreach and to share best practices with 
respect to this section and short-time compensation pro-
grams. 
(f) RECOUPMENT.—The Secretary shall establish a 
process under which the Secretary shall recoup the 
amount of any grant awarded under paragraph (1) or (2) 
of subsection (a) if the Secretary determines that, during 
the 5-year period beginning on the first date that any such 
grant is awarded to the State, the State— 
(1) terminated the State’s short-time compensa-
tion program; or 
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297 
(2) failed to meet appropriate requirements 
with respect to such program (as established by the 
Secretary). 
(g) FUNDING.—There are appropriated, out of mon-
eys in the Treasury not otherwise appropriated, to the 
Secretary, $700,000,000 to carry out this section, to re-
main available without fiscal year limitation. 
(h) REPORTING.—The Secretary may establish re-
porting requirements for States receiving a grant under 
this section in order to provide oversight of grant funds. 
(i) DEFINITIONS.—In this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Labor. 
(2) SHORT-TIME
COMPENSATION
PROGRAM.— 
The term ‘‘short-time compensation program’’ has 
the meaning given such term in section 3306(v) of 
the Internal Revenue Code of 1986, as added by sec-
tion 341(a). 
(3) STATE; STATE AGENCY; STATE LAW.—The 
terms ‘‘State’’, ‘‘State agency’’, and ‘‘State law’’ 
have the meanings given those terms in section 205 
of the Federal-State Extended Unemployment Com-
pensation Act of 1970 (26 U.S.C. 3304 note). 
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298 
SEC. 345. ASSISTANCE AND GUIDANCE IN IMPLEMENTING 
PROGRAMS. 
(a) IN GENERAL.—In order to assist States in estab-
lishing, qualifying, and implementing short-time com-
pensation programs (as defined in section 3306(v) of the 
Internal Revenue Code of 1986, as added by section 
341(a)), the Secretary of Labor (in this section referred 
to as the ‘‘Secretary’’) shall— 
(1) develop model legislative language which 
may be used by States in developing and enacting 
such programs and periodically review and revise 
such model legislative language; 
(2) provide technical assistance and guidance in 
developing, enacting, and implementing such pro-
grams; 
(3) establish reporting requirements for States, 
including reporting on— 
(A) the number of estimated averted lay-
offs; 
(B) the number of participating employers 
and workers; and 
(C) such other items as the Secretary of 
Labor determines are appropriate. 
(b) MODEL LANGUAGE AND GUIDANCE.—The model 
language and guidance developed under subsection (a) 
shall allow sufficient flexibility by States and participating 
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employers while ensuring accountability and program in-
tegrity. 
(c) CONSULTATION.—In developing the model legisla-
tive language and guidance under subsection (a), and in 
order to meet the requirements of subsection (b), the Sec-
retary shall consult with employers, labor organizations, 
State workforce agencies, and other program experts. 
SEC. 346. REPORTS. 
(a) REPORTS.— 
(1) IN GENERAL.—Not later than 4 years after 
the date of the enactment of this Act, the Secretary 
of Labor shall submit to Congress and to the Presi-
dent a report or reports on the implementation of 
the provisions of this Act. 
(2) REQUIREMENTS.—Any report under para-
graph (1) shall at a minimum include the following: 
(A) A description of best practices by 
States and employers in the administration, 
promotion, and use of short-time compensation 
programs (as defined in section 3306(v) of the 
Internal Revenue Code of 1986, as added by 
section 341(a)). 
(B) An analysis of the significant chal-
lenges to State enactment and implementation 
of short-time compensation programs. 
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300 
(C) A survey of employers in States that 
have not enacted a short-time compensation 
program or entered into an agreement with the 
Secretary on a short-time compensation plan to 
determine the level of interest among such em-
ployers in participating in short-time compensa-
tion programs. 
(b) FUNDING.—There are appropriated, out of any 
moneys in the Treasury not otherwise appropriated, to the 
Secretary of Labor, $1,500,000 to carry out this section, 
to remain available without fiscal year limitation. 
Subtitle B—Long Term 
Unemployed Hiring Preferences 
SEC. 351. LONG TERM UNEMPLOYED WORKERS WORK OP-
PORTUNITY TAX CREDITS. 
(a) IN GENERAL.—Paragraph (3) of section 51(b) of 
the Internal Revenue Code is amended by inserting 
‘‘$10,000 per year in the case of any individual who is 
a qualified long term unemployed individual by reason of 
subsection (d)(11), and’’ before ‘‘$12,000 per year’’. 
(b) LONG TERM UNEMPLOYEED INDIVIDUALS TAX 
CREDITS.—Paragraph (d) of section 51 of the Internal 
Revenue Code is amended by— 
(1) inserting ‘‘(J) qualified long term unem-
ployed individual’’ at the end of paragraph (d)(1), 
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(2) inserting a new paragraph after paragraph 
(10) as follows: 
‘‘(11) QUALIFIED
LONG
TERM
UNEMPLOYED 
INDIVIDUAL.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
long term unemployed individual’ means any in-
dividual who was not a student for at least 6 
months during the 1-year period ending on the 
hiring date and is certified by the designated 
local agency as having aggregate periods of un-
employment during the 1-year period ending on 
the hiring date which equal or exceed 6 months. 
‘‘(B) STUDENT.—For purposes of this sub-
section, a student is an individual enrolled at 
least half-time in a program that leads to a de-
gree, certificate, or other recognized educational 
credential for at least 6 months whether or not 
consecutive during the 1-year period ending on 
the hiring date.’’; and 
(3) renumbering current paragraphs (11) 
through (14) as paragraphs (12) through (15). 
(c) SIMPLIFIED CERTIFICATION.—Section 51(d) of 
the Internal Revenue Code is amended by adding a new 
paragraph 16 as follows: 
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‘‘(16) Credit allowed for qualified long term un-
employed individuals. 
‘‘(A) IN
GENERAL.—Any qualified long 
term unemployed individual under paragraph 
(11) will be treated as certified by the des-
ignated local agency as having aggregate peri-
ods of unemployment if— 
‘‘(i) the individual is certified by the 
designated local agency as being in receipt 
of 
unemployment 
compensation 
under 
State or Federal law for not less than 6 
months during the 1-year period ending on 
the hiring date. 
‘‘(B) REGULATORY AUTHORITY.—The Sec-
retary in his discretion may provide alternative 
methods for certification.’’. 
(d) CREDIT MADE AVAILABLE TO TAX-EXEMPT EM-
PLOYERS IN CERTAIN CIRCUMSTANCES.—Section 52(c) of 
the Internal Revenue Code is amended— 
(1) by striking the word ‘‘No’’ at the beginning 
of the section and replacing it with ‘‘Except as pro-
vided in this subsection, no’’; and 
(2) the following new paragraphs are inserted 
at the end of section 52(c)— 
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‘‘(1) IN GENERAL.—In the case of a tax-exempt 
employer, there shall be treated as a credit allowable 
under subpart C (and not allowable under subpart 
D) the lesser of— 
‘‘(A) the amount of the work opportunity 
credit determined under this subpart with re-
spect to such employer that is related to the 
hiring of qualified long term unemployed indi-
viduals described in subsection (d)(11); or 
‘‘(B) the amount of the payroll taxes of the 
employer during the calendar year in which the 
taxable year begins. 
‘‘(2) CREDIT AMOUNT.—In calculating tax-ex-
empt employers, the work opportunity credit shall be 
determined by substituting ‘26 percent’ for ‘40 per-
cent’ in section 51(a) and by substituting ‘16.25 
percent’ for ‘25 percent’ in section 51(i)(3)(A). 
‘‘(3) TAX-EXEMPT
EMPLOYER.—For purposes 
of this subtitle, the term ‘tax-exempt employer’ 
means an employer that is— 
‘‘(A) an organization described in section 
501(c) and exempt from taxation under section 
501(a), or 
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‘‘(B) a public higher education institution 
(as defined in section 101 of the Higher Edu-
cation Act of 1965). 
‘‘(4) PAYROLL TAXES.—For purposes of this 
subsection: 
‘‘(A) IN
GENERAL.—The term ‘payroll 
taxes’ means— 
‘‘(i) amounts required to be withheld 
from the employees of the tax-exempt em-
ployer under section 3401(a), 
‘‘(ii) amounts required to be withheld 
from such employees under section 3101, 
and 
‘‘(iii) amounts of the taxes imposed on 
the tax-exempt employer under section 
3111.’’ 
(e) TREATMENT OF POSSESSIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR
CODE
POSSESSIONS.—The 
Secretary of the Treasury shall pay to each pos-
session of the United States with a mirror code 
tax system amounts equal to the loss to that 
possession by reason of the application of this 
section (other than this subsection). Such 
amounts shall be determined by the Secretary 
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305 
of the Treasury based on information provided 
by the government of the respective possession 
of the United States. 
(B) OTHER POSSESSIONS.—The Secretary 
of the Treasury shall pay to each possession of 
the United States, which does not have a mirror 
code tax system, amounts estimated by the Sec-
retary of the Treasury as being equal to the ag-
gregate credits that would have been provided 
by the possession by reason of the application 
of this section (other than this subsection) if a 
mirror code tax system had been in effect in 
such possession. The preceding sentence shall 
not apply with respect to any possession of the 
United States unless such possession has a 
plan, which has been approved by the Secretary 
of the Treasury, under which such possession 
will promptly distribute such payments. 
(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No in-
crease in the credit determined under section 38(b) 
of the Internal Revenue Code of 1986 that is attrib-
utable to the credit provided by this section (other 
than this subsection (e)) shall be taken into account 
with respect to any person— 
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306 
(A) to whom a credit is allowed against 
taxes imposed by the possession of the United 
States by reason of this section for such taxable 
year; or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B) with respect 
to such taxable year. 
(3) DEFINITIONS AND SPECIAL RULES.— 
(A) 
POSSESSION
OF
THE
UNITED 
STATES.—For purposes of this subsection (e), 
the term ‘‘possession of the United States’’ in-
cludes American Samoa, the Commonwealth of 
the Northern Mariana Islands, the Common-
wealth of Puerto Rico, Guam, and the United 
States Virgin Islands. 
(B) MIRROR CODE TAX SYSTEM.—For pur-
poses of this subsection, the term ‘‘mirror code 
tax system’’ means, with respect to any posses-
sion of the United States, the income tax sys-
tem of such possession if the income tax liabil-
ity of the residents of such possession under 
such system is determined by reference to the 
income tax laws of the United States as if such 
possession were the United States. 
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307 
(C) TREATMENT OF PAYMENTS.—For pur-
poses of section 1324(b)(2) of title 31, United 
States Code, rules similar to the rules of section 
1001(b)(3)(C) of the American Recovery and 
Reinvestment Tax Act of 2009 shall apply. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to individuals who begin work for 
the employer after the date of the enactment of this Act. 
Subtitle C—Pathways Back to 
Work 
SEC. 361. SHORT TITLE. 
This subtitle may be cited as the ‘‘Pathways Back 
to Work Act of 2011’’. 
SEC. 362. ESTABLISHMENT OF PATHWAYS BACK TO WORK 
FUND. 
(a) ESTABLISHMENT.—There is established in the 
Treasury of the United States a fund which shall be 
known as the Pathways Back to Work Fund (hereafter 
in this Act referred to as ‘‘the Fund’’). 
(b) DEPOSITS
INTO
THE
FUND.—Out of any 
amounts in the Treasury of the United States not other-
wise appropriated, there are appropriated $5,000,000,000 
for payment to the Fund to be used by the Secretary of 
Labor to carry out this Act. 
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308 
SEC. 363. AVAILABILITY OF FUNDS. 
(a) IN GENERAL.—Of the amounts available to the 
Fund under section 362(b), the Secretary of Labor shall— 
(1) allot $2,000,000,000 in accordance with 
section 364 to provide subsidized employment to un-
employed, low-income adults; 
(2) allot $1,500,000,000 in accordance with 
section 365 to provide summer and year-round em-
ployment opportunities to low-income youth; and 
(3) award $1,500,000,000 in competitive grants 
in accordance with section 366 to local entities to 
carry out work-based training and other work-re-
lated and educational strategies and activities of 
demonstrated effectiveness to unemployed, low-in-
come adults and low-income youth to provide the 
skills and assistance needed to obtain employment. 
(b) RESERVATION.—The Secretary of Labor may re-
serve not more than 1 percent of amounts available to the 
Fund under each of paragraphs (1)–(3) of subsection (a) 
for the costs of technical assistance, evaluations and Fed-
eral administration of this Act. 
(c) PERIOD OF AVAILABILITY.—The amounts appro-
priated under this Act shall be available for obligation by 
the Secretary of Labor until December 31, 2012, and shall 
be available for expenditure by grantees and subgrantees 
until September 30, 2013. 
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309 
SEC. 364. SUBSIDIZED EMPLOYMENT FOR UNEMPLOYED, 
LOW-INCOME ADULTS. 
(a) IN GENERAL.— 
(1) ALLOTMENTS.—From the funds available 
under section 363(a)(1), the Secretary of Labor 
shall make an allotment under subsection (b) to each 
State that has a State plan approved under sub-
section (c) and to each outlying area and Native 
American grantee under section 166 of the Work-
force Investment Act of 1998 that meets the re-
quirements of this section, for the purpose of pro-
viding subsidized employment opportunities to unem-
ployed, low-income adults. 
(2) GUIDANCE.—Not later than 30 days after 
the date of enactment of this Act, the Secretary of 
Labor, in coordination with the Secretary of Health 
and Human Services, shall issue guidance regarding 
the implementation of this section. Such guidance 
shall, consistent with this section, include procedures 
for the submission and approval of State and local 
plans and the allotment and allocation of funds, in-
cluding reallotment and reallocation of such funds, 
that promote the expeditious and effective implemen-
tation of the activities authorized under this section. 
(b) STATE ALLOTMENTS.— 
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310 
(1) RESERVATIONS FOR OUTLYING AREAS AND 
TRIBES.—Of the funds described subsection (a)(1), 
the Secretary shall reserve— 
(A) not more than one-quarter of one per-
cent to provide assistance to outlying areas to 
provide subsidized employment to low-income 
adults who are unemployed; and 
(B) 1.5 percent to provide assistance to 
grantees of the Native American programs 
under section 166 of the Workforce Investment 
Act of 1998 to provide subsidized employment 
to low-income adults who are unemployed. 
(2) STATES.—After determining the amounts to 
be reserved under paragraph (1), the Secretary of 
Labor shall allot the remainder of the amounts de-
scribed in subsection (a)(1) among the States as fol-
lows— 
(A) one-third shall be allotted on the basis 
of the relative number of unemployed individ-
uals in areas of substantial unemployment in 
each State, compared to the total number of 
unemployed individuals in areas of substantial 
unemployment in all States; 
(B) one-third shall be allotted on the basis 
of the relative excess number of unemployed in-
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311 
dividuals in each State, compared to the total 
excess number of unemployed individuals in all 
States; and 
(C) one-third shall be allotted on the basis 
of the relative number of disadvantaged adults 
and youth in each State, compared to the total 
number of disadvantaged adults and youth in 
all States. 
(3) DEFINITIONS.—For purposes of the for-
mula described in paragraph (2)— 
(A) AREA
OF
SUBSTANTIAL
UNEMPLOY-
MENT.—The term ‘‘area of substantial unem-
ployment’’ means any contiguous area with a 
population of at least 10,000 and that has an 
average rate of unemployment of at least 6.5 
percent for the most recent 12 months, as de-
termined by the Secretary. 
(B) 
DISADVANTAGED
ADULTS
AND 
YOUTH.—The term ‘‘disadvantaged adults and 
youth’’ means an individual who is age 16 and 
older (subject to section 132(b)(1)(B)(v)(I) of 
the Workforce Investment Act of 1998) who re-
ceived an income, or is a member of a family 
that received a total family income, that, in re-
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313 
Fund and added to the amounts available for the 
competitive grants under section 363(a)(3). 
(c) STATE PLAN.— 
(1) IN GENERAL.—For a State to be eligible to 
receive an allotment of the funds under subsection 
(b), the Governor of the State shall submit to the 
Secretary of Labor a State plan in such form and 
containing such information as the Secretary may 
require. At a minimum, such plan shall include— 
(A) a description of the strategies and ac-
tivities to be carried out by the State, in coordi-
nation with employers in the State, to provide 
subsidized employment opportunities to unem-
ployed, low-income adults, including strategies 
relating to the level and duration of subsidies 
consistent with subsection (e)(2); 
(B) a description of the requirements the 
State will apply relating to the eligibility of un-
employed, low-income adults, consistent with 
section 368(6), for subsidized employment op-
portunities, which may include criteria to target 
assistance to particular categories of such 
adults, such as individuals with disabilities or 
individuals who have exhausted all rights to un-
employment compensation; 
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315 
(G) assurances that the State will report 
such information as the Secretary of Labor may 
require relating to fiscal, performance and other 
matters that the Secretary determines is nec-
essary to effectively monitor the activities car-
ried out under this section; and 
(H) assurances that the State will ensure 
compliance with the labor standards and protec-
tions described in section 367(a) of this Act. 
(2) SUBMISSION
AND
APPROVAL
OF
STATE 
PLAN.— 
(A) SUBMISSION
WITH
OTHER
PLANS.— 
The State plan described in this subsection may 
be submitted in conjunction with the State plan 
modification or request for funds required 
under section 365, and may be submitted as a 
modification to a State plan that has been ap-
proved under section 112 of the Workforce In-
vestment Act of 1998. 
(B) SUBMISSION AND APPROVAL.— 
(i) SUBMISSION.—The Governor shall 
submit a plan to the Secretary of Labor 
not later than 75 days after the enactment 
of this Act and the Secretary of Labor 
shall make a determination regarding the 
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316 
approval or disapproval of such plans not 
later than 45 days after the submission of 
such plan. If the plan is disapproved, the 
Secretary of Labor may provide a reason-
able period of time in which a disapproved 
plan may be amended and resubmitted for 
approval. 
(ii) APPROVAL.—The Secretary of 
Labor shall approve a State plan that the 
Secretary determines is consistent with re-
quirements of this section and reasonably 
appropriate and adequate to carry out the 
purposes of this section. If the plan is ap-
proved, the Secretary shall allot funds to 
States within 30 days after such approval. 
(3) MODIFICATIONS
TO
STATE
PLAN.—The 
Governor may submit a modification to a State plan 
under this subsection consistent with the require-
ments of this section. 
(d) ADMINISTRATION WITHIN THE STATE.— 
(1) OPTION.—The State may administer the 
funds for activities under this section through— 
(A) the State and local entities responsible 
for the administration of the adult formula pro-
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317 
gram under title I–B of the Workforce Invest-
ment Act of 1998; 
(B) the entities responsible for the admin-
istration of the TANF program under part A of 
title IV of the Social Security Act; or 
(C) a combination of the entities described 
in subparagraphs (A) and (B). 
(2) WITHIN-STATE ALLOCATIONS.— 
(A) ALLOCATION
OF
FUNDS.—The Gov-
ernor may reserve up to 5 percent of the allot-
ment under subsection (b)(2) for administration 
and technical assistance, and shall allocate the 
remainder, in accordance with the option elect-
ed under paragraph (1)— 
(i) among local workforce investment 
areas within the State in accordance with 
the factors identified in subsection (b)(2), 
except that for purposes of such allocation 
references to a State in such paragraph 
shall be deemed to be references to a local 
workforce investment area and references 
to all States shall be deemed to be ref-
erences to all local areas in the State in-
volved, of which not more than 10 percent 
of the funds allocated to a local workforce 
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318 
investment area may be used for the costs 
of administration of this section; or 
(ii) through entities responsible for 
the administration of the TANF program 
under part A of title IV of the Social Secu-
rity Act in local areas in such manner as 
the State may determine appropriate. 
(B) LOCAL PLANS.— 
(i) IN GENERAL.—In the case where 
the responsibility for the administration of 
activities is to be carried out by the enti-
ties described under paragraph (1)(A), in 
order to receive an allocation under sub-
paragraph (A)(i), a local workforce invest-
ment board, in partnership with the chief 
elected official of the local workforce in-
vestment area involved, shall submit to the 
Governor a local plan for the use of such 
funds under this section not later than 30 
days after the submission of the State 
plan. Such local plan may be submitted as 
a modification to a local plan approved 
under section 118 of the Workforce Invest-
ment Act of 1998. 
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319 
(ii) CONTENTS.—The local plan de-
scribed in clause (i) shall contain the ele-
ments described in subparagraphs (A)–(H) 
of subsection (c)(1), as applied to the local 
workforce investment area. 
(iii) APPROVAL.—The Governor shall 
approve or disapprove the local plan sub-
mitted under clause (i) within 30 days 
after submission, or if later, 30 days after 
the approval of the State plan. The Gov-
ernor shall approve the plan unless the 
Governor determines that the plan is in-
consistent with requirements of this section 
or is not reasonably appropriate and ade-
quate to carry out the purposes of this sec-
tion. If the Governor has not made a de-
termination within the period specified 
under the first sentence of this clause, the 
plan shall be considered approved. If the 
plan is disapproved, the Governor may pro-
vide a reasonable period of time in which 
a disapproved plan may be amended and 
resubmitted for approval. The Governor 
shall allocate funds to local workforce in-
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320 
vestment areas with approved plans within 
30 days after such approval. 
(C) REALLOCATION OF FUNDS TO LOCAL 
AREAS.—If a local workforce investment board 
does not submit a local plan by the time speci-
fied in subparagraph (B) or the Governor does 
not approve a local plan, the amount the local 
workforce investment area would have been eli-
gible to receive pursuant to the formula under 
subparagraph (A)(i) shall be allocated to local 
workforce investment areas that receive ap-
proval of the local plan under subparagraph 
(B). Such reallocations shall be made in accord-
ance with the relative share of the allocations to 
such local workforce investment areas applying 
the formula factors described under subpara-
graph (A)(i). 
(e) USE OF FUNDS.— 
(1) IN GENERAL.—The funds under this section 
shall be used to provide subsidized employment for 
unemployed, low-income adults. The State and local 
entities described in subsection (d)(1) may use a va-
riety of strategies in recruiting employers and identi-
fying appropriate employment opportunities, with a 
priority to be provided to employment opportunities 
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321 
likely to lead to unsubsidized employment in emerg-
ing or in-demand occupations in the local area. 
Funds under this section may be used to provide 
support services, such as transportation and child 
care, that are necessary to enable the participation 
of individuals in subsidized employment opportuni-
ties. 
(2) LEVEL OF SUBSIDY AND DURATION.—The 
States or local entities described in subsection (d)(1) 
may determine the percentage of the wages and 
costs of employing a participant for which an em-
ployer may receive a subsidy with the funds provided 
under this section, and the duration of such subsidy, 
in accordance with guidance issued by the Secretary. 
The State or local entities may establish criteria for 
determining such percentage or duration using ap-
propriate factors such as the size of the employer 
and types of employment. 
(f) COORDINATION OF FEDERAL ADMINISTRATION.— 
The Secretary of Labor shall administer this section in 
coordination with the Secretary of Health and Human 
Services to ensure the effective implementation of this sec-
tion. 
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322 
SEC. 365. SUMMER EMPLOYMENT AND YEAR-ROUND EM-
PLOYMENT 
OPPORTUNITIES 
FOR 
LOW-IN-
COME YOUTH. 
(a) IN GENERAL.—From the funds available under 
section 363(a)(2), the Secretary of Labor shall make an 
allotment under subsection (c) to each State that has a 
State plan modification (or other form of request for funds 
specified in guidance under subsection (b)) approved 
under subsection (d) and to each outlying area and Native 
American grantee under section 166 of the Workforce In-
vestment Act of 1998 that meets the requirements of this 
section, for the purpose of providing summer employment 
and year-round employment opportunities to low-income 
youth. 
(b) GUIDANCE
AND APPLICATION
OF REQUIRE-
MENTS.— 
(1) GUIDANCE.—Not later than 20 days after 
the date of enactment of this Act, the Secretary of 
Labor shall issue guidance regarding the implemen-
tation of this section. Such guidance shall, consistent 
with this section, include procedures for the submis-
sion and approval of State plan modifications, or for 
forms of requests for funds by the State as may be 
identified in such guidance, local plan modifications, 
or other forms of requests for funds from local work-
force investment areas as may be identified in such 
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323 
guidance, and the allotment and allocation of funds, 
including reallotment and reallocation of such funds, 
that promote the expeditious and effective implemen-
tation of the activities authorized under this section. 
(2) REQUIREMENTS.—Except as otherwise pro-
vided in the guidance described in paragraph (1) 
and in this section and other provisions of this Act, 
the funds provided for activities under this section 
shall be administered in accordance with subtitles B 
and E of title I of the Workforce Investment Act of 
1998 relating to youth activities. 
(c) STATE ALLOTMENTS.— 
(1) RESERVATIONS FOR OUTLYING AREAS AND 
TRIBES.—Of the funds described subsection (a), the 
Secretary shall reserve— 
(A) not more than one-quarter of one per-
cent to provide assistance to outlying areas to 
provide summer and year-round employment 
opportunities to low-income youth; and 
(B) 1.5 percent to provide assistance to 
grantees of the Native American programs 
under section 166 of the Workforce Investment 
Act of 1998 to provide summer and year-round 
employment opportunities to low-income youth. 
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324 
(2) STATES.—After determining the amounts to 
be reserved under paragraph (1), the Secretary of 
Labor shall allot the remainder of the amounts de-
scribed in subsection (a) among the States in ac-
cordance with the factors described in section 
364(b)(2) of this Act. 
(3) REALLOTMENT.—If the Governor of a State 
does not submit a State plan modification or other 
request for funds specified in guidance under sub-
section (b) by the time specified in subsection 
(d)(2)(B), or a State does not receive approval of 
such State plan modification or request, the amount 
the State would have been eligible to receive pursu-
ant to the formula under paragraph (2) shall be 
transferred within the Fund and added to the 
amounts available for the competitive grants under 
section 363(a)(3). 
(d) STATE PLAN MODIFICATION.— 
(1) IN GENERAL.—For a State to be eligible to 
receive an allotment of the funds under subsection 
(c), the Governor of the State shall submit to the 
Secretary of Labor a modification to a State plan 
approved under section 112 of the Workforce Invest-
ment Act of 1998, or other request for funds de-
scribed in guidance in subsection (b), in such form 
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and containing such information as the Secretary 
may require. At a minimum, such plan modification 
or request shall include— 
(A) a description of the strategies and ac-
tivities to be carried out to provide summer em-
ployment opportunities and year-round employ-
ment opportunities, including the linkages to 
educational activities, consistent with subsection 
(f); 
(B) a description of the requirements the 
States will apply relating to the eligibility of 
low-income 
youth, 
consistent 
with 
section 
368(4), for summer employment opportunities 
and 
year-round 
employment 
opportunities, 
which may include criteria to target assistance 
to particular categories of such low-income 
youth, such as youth with disabilities, con-
sistent with subsection (f); 
(C) a description of the performance out-
comes to be achieved by the State through the 
activities carried out under this section and the 
processes the State will use to track perform-
ance, consistent with guidance provided by the 
Secretary of Labor regarding such outcomes 
and processes and with section 367(b); 
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(D) a description of the timelines for im-
plementation of the activities described in sub-
paragraph (A), and the number of low-income 
youth expected to be placed in summer employ-
ment opportunities, and year-round employment 
opportunities, respectively, by quarter; 
(E) assurances that the State will report 
such information as the Secretary may require 
relating to fiscal, performance and other mat-
ters that the Secretary determines is necessary 
to effectively monitor the activities carried out 
under this section; and 
(F) assurances that the State will ensure 
compliance with the labor standards protections 
described in section 367(a). 
(2) SUBMISSION
AND
APPROVAL
OF
STATE 
PLAN MODIFICATION OR REQUEST.— 
(A) SUBMISSION.—The Governor shall 
submit a modification of the State plan or other 
request for funds described in guidance in sub-
section (b) to the Secretary of Labor not later 
than 30 days after the issuance of such guid-
ance. The State plan modification or request for 
funds required under this subsection may be 
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submitted in conjunction with the State plan re-
quired under section 364. 
(B) APPROVAL.—The Secretary of Labor 
shall approve the plan or request submitted 
under subparagraph (A) within 30 days after 
submission, unless the Secretary determines 
that the plan or request is inconsistent with the 
requirements of this section. If the Secretary 
has not made a determination within 30 days, 
the plan or request shall be considered ap-
proved. If the plan or request is disapproved, 
the Secretary may provide a reasonable period 
of time in which a disapproved plan or request 
may be amended and resubmitted for approval. 
If the plan or request is approved, the Sec-
retary shall allot funds to States within 30 days 
after such approval. 
(3) MODIFICATIONS
TO
STATE
PLAN
OR
RE-
QUEST.—The Governor may submit further modi-
fications to a State plan or request for funds identi-
fied under subsection (b) to carry out this section in 
accordance with the requirements of this section. 
(e) WITHIN-STATE ALLOCATION AND ADMINISTRA-
TION.— 
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proved under section 118 of the Workforce In-
vestment Act of 1998, or other form of request 
for funds as may be identified in the guidance 
issued under subsection (b), not later than 30 
days after the submission by the State of the 
modification to the State plan or other request 
for funds identified in subsection (b), describing 
the strategies and activities to be carried out 
under this section. 
(B) APPROVAL.—The Governor shall ap-
prove the local plan submitted under subpara-
graph (A) within 30 days after submission, un-
less the Governor determines that the plan is 
inconsistent with requirements of this section. 
If the Governor has not made a determination 
within 30 days, the plan shall be considered ap-
proved. If the plan is disapproved, the Governor 
may provide a reasonable period of time in 
which a disapproved plan may be amended and 
resubmitted for approval. The Governor shall 
allocate funds to local workforce investment 
areas with approved plans within 30 days after 
approval. 
(3) REALLOCATION.—If a local workforce in-
vestment board does not submit a local plan modi-
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fication (or other request for funds identified in 
guidance under subsection (b)) by the time specified 
in paragraph (2), or does not receive approval of a 
local plan, the amount the local workforce invest-
ment area would have been eligible to receive pursu-
ant to the formula under paragraph (1)(B) shall be 
allocated to local workforce investment areas that re-
ceive approval of the local plan modification or re-
quest for funds under paragraph (2). Such realloca-
tions shall be made in accordance with the relative 
share of the allocations to such local workforce in-
vestment areas applying the formula factors de-
scribed under paragraph (1)(B). 
(f) USE OF FUNDS.— 
(1) IN GENERAL.—The funds provided under 
this section shall be used— 
(A) to provide summer employment oppor-
tunities for low-income youth, ages 16 through 
24, with direct linkages to academic and occu-
pational learning, and may include the provision 
of supportive services, such as transportation or 
child care, necessary to enable such youth to 
participate; and 
(B) to provide year round employment op-
portunities, which may be combined with other 
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activities authorized under section 129 of the 
Workforce Investment Act of 1998,to low-in-
come youth, ages 16 through 24, with a priority 
to out-of school youth who are— 
(i) high school dropouts; or 
(ii) recipients of a secondary school 
diploma or its equivalent but who are basic 
skills deficient unemployed or under-
employed. 
(2) PROGRAM
PRIORITIES.—In administering 
the funds under this section, the local board and 
local chief elected officials shall give a priority to— 
(A) identifying employment opportunities 
that are— 
(i) in emerging or in-demand occupa-
tions in the local workforce investment 
area; or 
(ii) in the public or nonprofit sector 
that meet community needs; and 
(B) linking year-round program partici-
pants to training and educational activities that 
will provide such participants an industry-recog-
nized certificate or credential. 
(3) PERFORMANCE ACCOUNTABILITY.—For ac-
tivities funded under this section, in lieu of the re-
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quirements described in section 136 of the Work-
force Investment Act of 1998, State and local work-
force investment areas shall provide such reports as 
the Secretary of Labor may require regarding the 
performance 
outcomes 
described 
in 
section 
367(a)(5). 
SEC. 366. WORK-BASED EMPLOYMENT STRATEGIES OF 
DEMONSTRATED EFFECTIVENESS. 
(a) IN GENERAL.—From the funds available under 
section 363(a)(3), the Secretary of Labor shall award 
grants on a competitive basis to eligible entities to carry 
out work-based strategies of demonstrated effectiveness. 
(b) USE OF FUNDS.—The grants awarded under this 
section shall be used to support strategies and activities 
of demonstrated effectiveness that are designed to provide 
unemployed, low-income adults or low-income youth with 
the skills that will lead to employment as part of or upon 
completion of participation in such activities. Such strate-
gies and activities may include— 
(1) on-the-job training, registered apprentice-
ship programs, or other programs that combine work 
with skills development; 
(2) sector-based training programs that have 
been designed to meet the specific requirements of 
an employer or group of employers in that sector 
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and where employers are committed to hiring indi-
viduals upon successful completion of the training; 
(3) training that supports an industry sector or 
an employer-based or labor-management committee 
industry partnership which includes a significant 
work-experience component; 
(4) acquisition of industry-recognized creden-
tials in a field identified by the State or local work-
force investment area as a growth sector or demand 
industry in which there are likely to be significant 
job opportunities in the short-term; 
(5) connections to immediate work opportuni-
ties, including subsidized employment opportunities, 
or summer employment opportunities for youth, that 
includes concurrent skills training and other sup-
ports; 
(6) career academies that provide students with 
the academic preparation and training, including 
paid internships and concurrent enrollment in com-
munity colleges or other postsecondary institutions, 
needed to pursue a career pathway that leads to 
postsecondary credentials and high-demand jobs; 
and 
(7) adult basic education and integrated basic 
education and training models for low-skilled adults, 
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hosted at community colleges or at other sites, to 
prepare individuals for jobs that are in demand in 
a local area. 
(c) ELIGIBLE ENTITY.—An eligible entity shall in-
clude a local chief elected official, in collaboration with the 
local workforce investment board for the local workforce 
investment area involved (which may include a partnership 
with of such officials and boards in the region and in the 
State), or an entity eligible to apply for an Indian and 
Native American grant under section 166 of the Work-
force Investment Act of 1998, and may include, in part-
nership with such officials, boards, and entities, the fol-
lowing— 
(1) employers or employer associations; 
(2) adult education providers and postsecondary 
educational institutions, including community col-
leges; 
(3) community-based organizations; 
(4) joint labor-management committees; 
(5) work-related intermediaries; or 
(6) other appropriate organizations. 
(d) APPLICATION.—An eligible entity seeking to re-
ceive a grant under this section shall submit to the Sec-
retary of Labor an application at such time, in such man-
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ner, and containing such information as the Secretary may 
require. At a minimum, the application shall— 
(1) describe the strategies and activities of dem-
onstrated effectiveness that the eligible entities will 
carry out to provide unemployed, low-income adults 
and low-income youth with the skills that will lead 
to employment upon completion of participation in 
such activities; 
(2) describe the requirements that will apply re-
lating to the eligibility of unemployed, low-income 
adults or low-income youth, consistent with para-
graphs (4) and (6) of section 368, for activities car-
ried out under this section, which may include cri-
teria to target assistance to particular categories of 
such adults and youth, such as individuals with dis-
abilities or individuals who have exhausted all rights 
to unemployment compensation; 
(3) describe how the strategies and activities 
address the needs of the target populations identi-
fied in paragraph (2) and the needs of employers in 
the local area; 
(4) describe the expected outcomes to be 
achieved by implementing the strategies and activi-
ties; 
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(5) provide evidence that the funds provided 
may be expended expeditiously and efficiently to im-
plement the strategies and activities; 
(6) describe how the strategies and activities 
will be coordinated with other Federal, State and 
local programs providing employment, education and 
supportive activities; 
(7) provide evidence of employer commitment to 
participate in the activities funded under this sec-
tion, including identification of anticipated occupa-
tional and skill needs; 
(8) provide assurances that the grant recipient 
will report such information as the Secretary may 
require relating to fiscal, performance and other 
matters that the Secretary determines is necessary 
to effectively monitor the activities carried out under 
this section; and 
(9) provide assurances that the use of the funds 
provided under this section will comply with the 
labor standards and protections described section 
367(a). 
(e) PRIORITY
IN AWARDS.—In awarding grants 
under this section, the Secretary of Labor shall give a pri-
ority to applications submitted by eligible entities from 
areas of high poverty and high unemployment, as defined 
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by the Secretary, such as Public Use Microdata Areas 
(PUMAs) as designated by the Census Bureau. 
(f) COORDINATION OF FEDERAL ADMINISTRATION.— 
The Secretary of Labor shall administer this section in 
coordination with the Secretary of Education, Secretary 
of Health and Human Services, and other appropriate 
agency heads, to ensure the effective implementation of 
this section. 
SEC. 367. GENERAL REQUIREMENTS. 
(a) LABOR STANDARDS AND PROTECTIONS.—Activi-
ties provided with funds under this Act shall be subject 
to the requirements and restrictions, including the labor 
standards, described in section 181 of the Workforce In-
vestment Act of 1998 and the nondiscrimination provi-
sions of section 188 of such Act, in addition to other appli-
cable Federal laws. 
(b) REPORTING.—The Secretary may require the re-
porting of information relating to fiscal, performance and 
other matters that the Secretary determines is necessary 
to effectively monitor the activities carried out with funds 
provided under this Act. At a minimum, grantees and sub-
grantees shall provide information relating to— 
(1) the number individuals participating in ac-
tivities with funds provided under this Act and the 
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number of such individuals who have completed such 
participation; 
(2) the expenditures of funds provided under 
the Act; 
(3) the number of jobs created pursuant to the 
activities carried out under this Act; 
(4) the demographic characteristics of individ-
uals participating in activities under this Act; 
(5) the performance outcomes of individuals 
participating in activities under this Act, including— 
(A) for adults participating in activities 
funded under section 364 of this Act— 
(i) entry in unsubsidized employment, 
(ii) retention in unsubsidized employ-
ment, and 
(iii) earnings in unsubsidized employ-
ment; 
(B) for low-income youth participating in 
summer employment activities under sections 
365 and 366— 
(i) work readiness skill attainment 
using an employer validated checklist; and 
(ii) placement in or return to sec-
ondary or postsecondary education or 
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training, or entry into unsubsidized em-
ployment; 
(C) for low-income youth participating in 
year-round employment activities under section 
365 or in activities under section 366— 
(i) placement in or return to post-sec-
ondary education; 
(ii) attainment of high school diploma 
or its equivalent; 
(iii) attainment of an industry-recog-
nized credential; and 
(iv) entry into unsubsidized employ-
ment, retention, and earnings as described 
in subparagraph (A); and 
(D) for unemployed, low-income adults 
participating in activities under section 366— 
(i) entry into unsubsidized employ-
ment, retention, and earnings as described 
in subparagraph (A); and 
(ii) the attainment of industry-recog-
nized credentials. 
(c) ACTIVITIES REQUIRED TO BE ADDITIONAL.— 
Funds provided under this Act shall only be used for ac-
tivities that are in addition to activities that would other-
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wise be available in the State or local area in the absence 
of such funds. 
(d) ADDITIONAL REQUIREMENTS.—The Secretary of 
Labor may establish such additional requirements as the 
Secretary determines may be necessary to ensure fiscal in-
tegrity, effective monitoring, and the appropriate and 
prompt implementation of the activities under this Act. 
(e) REPORT OF INFORMATION AND EVALUATIONS TO 
CONGRESS AND THE PUBLIC.—The Secretary of Labor 
shall provide to the appropriate Committees of the Con-
gress and make available to the public the information re-
ported pursuant to subsection (b) and the evaluations of 
activities carried out pursuant to the funds reserved under 
section 363(b). 
SEC. 368. DEFINITIONS. 
In this Act: 
(1) LOCAL
CHIEF
ELECTED
OFFICIAL.—The 
term ‘‘local chief elected official’’ means the chief 
elected executive officer of a unit of local govern-
ment in a local workforce investment area or in the 
case where more than one unit of general govern-
ment, the individuals designated under an agreement 
described in section 117(c)(1)(B) of the Workforce 
Investment Act of 1998. 
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(2) LOCAL WORKFORCE INVESTMENT AREA.— 
The term ‘‘local workforce investment area’’ means 
such area designated under section 116 of the Work-
force Investment Act of 1998. 
(3) LOCAL WORKFORCE INVESTMENT BOARD.— 
The term ‘‘local workforce investment board’’ means 
such board established under section 117 of the 
Workforce Investment Act of 1998. 
(4) LOW-INCOME YOUTH.—The term ‘‘low-in-
come youth’’ means an individual who— 
(A) is aged 16 through 24; 
(B) meets the definition of a low-income 
individual provided in section 101(25) of the 
Workforce Investment Act of 1998 , except that 
States, local workforce investment areas under 
section 365 and eligible entities under section 
366(c), subject to approval in the applicable 
State plans, local plans, and applications for 
funds, may increase the income level specified 
in subparagraph (B)(i) of such section to an 
amount not in excess of 200 percent of the pov-
erty line for purposes of determining eligibility 
for participation in activities under sections 365 
and 366 of this Act; and 
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(C) is in one or more of the categories 
specified in section 101(13)(C) of the Work-
force Investment Act of 1998. 
(5) OUTLYING
AREA.—The term ‘‘outlying 
area’’ means the United States Virgin Islands, 
Guam, American Samoa, the Commonwealth of the 
Northern Mariana Islands, and the Republic of 
Palau. 
(6) UNEMPLOYED, LOW-INCOME ADULT.—The 
term ‘‘unemployed, low-income adult’’ means an in-
dividual who— 
(A) is age 18 or older; 
(B) is without employment and is seeking 
assistance under this Act to obtain employment; 
and 
(C) meets the definition of a ‘‘low-income 
individual’’ under section 101(25) of the Work-
force Investment Act of 1998, except that for 
that States, local entities described in section 
364(d)(1) and eligible entities under section 
366(c), subject to approval in the applicable 
State plans, local plans, and applications for 
funds, may increase the income level specified 
in subparagraph (B)(i) of such section to an 
amount not in excess of 200 percent of the pov-
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erty line for purposes of determining eligibility 
for participation in activities under sections 364 
and 366 of this Act. 
(7) STATE.—The term ‘‘State’’ means each of 
the several States of the United States, the District 
of Columbia, and Puerto Rico. 
Subtitle 
D—Prohibition 
of 
Dis-
crimination in Employment on 
the Basis of an Individual’s Sta-
tus as Unemployed 
SEC. 371. SHORT TITLE. 
This subtitle may be cited as the ‘‘Fair Employment 
Opportunity Act of 2011’’. 
SEC. 372. FINDINGS AND PURPOSE. 
(a) FINDINGS.—Congress finds that denial of em-
ployment opportunities to individuals because of their sta-
tus as unemployed is discriminatory and burdens com-
merce by— 
(1) reducing personal consumption and under-
mining economic stability and growth; 
(2) squandering human capital essential to the 
Nation’s economic vibrancy and growth; 
(3) increasing demands for Federal and State 
unemployment insurance benefits, reducing trust 
fund assets, and leading to higher payroll taxes for 
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employers, cuts in benefits for jobless workers, or 
both; 
(4) imposing additional burdens on publicly 
funded health and welfare programs; and 
(5) depressing income, property, and other tax 
revenues that the Federal Government, States, and 
localities rely on to support operations and institu-
tions essential to commerce. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to prohibit employers and employment agen-
cies from disqualifying an individual from employ-
ment opportunities because of that individual’s sta-
tus as unemployed; 
(2) to prohibit employers and employment agen-
cies from publishing or posting any advertisement or 
announcement for an employment opportunity that 
indicates that an individual’s status as unemployed 
disqualifies that individual for the opportunity; and 
(3) to eliminate the burdens imposed on com-
merce due to the exclusion of such individuals from 
employment. 
SEC. 373. DEFINITIONS. 
As used in this Act— 
(1) the term ‘‘affected individual’’ means any 
person who was subject to an unlawful employment 
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practice solely because of that individual’s status as 
unemployed; 
(2) the term ‘‘Commission’’ means the Equal 
Employment Opportunity Commission; 
(3) the term ‘‘employee’’ means— 
(A) an employee as defined in section 
701(f) of the Civil Rights Act of 1964 (42 
U.S.C. 2000e(f)); 
(B) a State employee to which section 
302(a)(1) of the Government Employee Rights 
Act of 1991 (42 U.S.C. 2000e-16b(a)(1)) ap-
plies; 
(C) a covered employee, as defined in sec-
tion 101 of the Congressional Accountability 
Act of 1995 (2 U.S.C. 1301) or section 411(c) 
of title 3, United States Code; or 
(D) an employee or applicant to which sec-
tion 717(a) of the Civil Rights Act of 1964 (42 
U.S.C. 2000e-16(a)) applies; 
(4) the term ‘‘employer’’ means— 
(A) a person engaged in an industry affect-
ing commerce (as defined in section 701(h) of 
the Civil Rights Act of 1964 (42 U.S.C. 
2000e(h)) who has 15 or more employees for 
each working day in each of 20 or more cal-
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346 
endar weeks in the current or preceding cal-
endar year, and any agent of such a person, but 
does not include a bona fide private member-
ship club that is exempt from taxation under 
section 501(c) of the Internal Revenue Code of 
1986; 
(B) an employing authority to which sec-
tion 302(a)(1) of the Government Employee 
Rights Act of 1991 applies; 
(C) an employing office, as defined in sec-
tion 101 of the Congressional Accountability 
Act of 1995 or section 411(c) of title 3, United 
States Code; or 
(D) an entity to which section 717(a) of 
the Civil Rights Act of 1964 (42 U.S.C. 2000e– 
16(a)) applies; 
(5) the term ‘‘employment agency’’ means any 
person regularly undertaking with or without com-
pensation to procure employees for an employer or 
to procure for individuals opportunities to work as 
employees for an employer and includes an agent of 
such a person, and any person who maintains an 
Internet website or print medium that publishes ad-
vertisements or announcements of openings in jobs 
for employees; 
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(6) the term ‘‘person’’ has the meaning given 
the term in section 701(a) of the Civil Rights Act 
of 1964 (42 U.S.C. 2000e(a)); 
(7) the term ‘‘status as unemployed’’, used with 
respect to an individual, means that the individual, 
at the time of application for employment or at the 
time of action alleged to violate this Act, does not 
have a job, is available for work and is searching for 
work. 
SEC. 374. PROHIBITED ACTS. 
(a) EMPLOYERS.—It shall be an unlawful employ-
ment practice for an employer to— 
(1) publish in print, on the Internet, or in any 
other medium, an advertisement or announcement 
for an employee for any job that includes— 
(A) any provision stating or indicating that 
an individual’s status as unemployed disquali-
fies the individual for any employment oppor-
tunity; or 
(B) any provision stating or indicating that 
an employer will not consider or hire an indi-
vidual for any employment opportunity based 
on that individual’s status as unemployed; or 
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348 
(2) fail or refuse to consider for employment, or 
fail or refuse to hire, an individual as an employee 
because of the individual’s status as unemployed; or 
(3) direct or request that an employment agen-
cy take an individual’s status as unemployed into ac-
count to disqualify an applicant for consideration, 
screening, or referral for employment as an em-
ployee. 
(b) EMPLOYMENT AGENCIES.—It shall be an unlaw-
ful employment practice for an employment agency to— 
(1) publish, in print or on the Internet or in 
any other medium, an advertisement or announce-
ment for any vacancy in a job, as an employee, that 
includes— 
(A) any provision stating or indicating that 
an individual’s status as unemployed disquali-
fies the individual for any employment oppor-
tunity; or 
(B) any provision stating or indicating that 
the employment agency or an employer will not 
consider or hire an individual for any employ-
ment opportunity based on that individual’s sta-
tus as unemployed; 
(2) screen, fail or refuse to consider, or fail or 
refuse to refer an individual for employment as an 
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349 
employee because of the individual’s status as unem-
ployed; or 
(3) limit, segregate, or classify any individual in 
any manner that would limit or tend to limit the in-
dividual’s access to information about jobs, or con-
sideration, screening, or referral for jobs, as employ-
ees, solely because of an individual’s status as unem-
ployed. 
(c) INTERFERENCE WITH RIGHTS, PROCEEDINGS OR 
INQUIRIES.—It shall be unlawful for any employer or em-
ployment agency to— 
(1) interfere with, restrain, or deny the exercise 
of or the attempt to exercise, any right provided 
under this Act; or 
(2) fail or refuse to hire, to discharge, or in any 
other manner to discriminate against any individual, 
as an employee, because such individual— 
(A) opposed any practice made unlawful by 
this Act; 
(B) has asserted any right, filed any 
charge, or has instituted or caused to be insti-
tuted any proceeding, under or related to this 
Act; 
(C) has given, or is about to give, any in-
formation in connection with any inquiry or 
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350 
proceeding relating to any right provided under 
this Act; or 
(D) has testified, or is about to testify, in 
any inquiry or proceeding relating to any right 
provided under this Act. 
(d) CONSTRUCTION.—Nothing in this Act is intended 
to preclude an employer or employment agency from con-
sidering an individual’s employment history, or from ex-
amining the reasons underlying an individual’s status as 
unemployed, in assessing an individual’s ability to perform 
a job or in otherwise making employment decisions about 
that individual. Such consideration or examination may in-
clude an assessment of whether an individual’s employ-
ment in a similar or related job for a period of time rea-
sonably proximate to the consideration of such individual 
for employment is job-related or consistent with business 
necessity. 
SEC. 375. ENFORCEMENT. 
(a) ENFORCEMENT POWERS.—With respect to the 
administration and enforcement of this Act— 
(1) the Commission shall have the same powers 
as the Commission has to administer and enforce— 
(A) title VII of the Civil Rights Act of 
1964 (42 U.S.C. 2000e et seq.); or 
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351 
(B) sections 302 and 304 of the Govern-
ment Employee Rights Act of 1991 (42 U.S.C. 
2000e–16b and 2000e–16c), in the case of an 
affected individual who would be covered by 
such title, or by section 302(a)(1) of the Gov-
ernment Employee Rights Act of 1991 (42 
U.S.C. 2000e–16b(a)(1)), respectively; 
(2) the Librarian of Congress shall have the 
same powers as the Librarian of Congress has to ad-
minister and enforce title VII of the Civil Rights Act 
of 1964 (42 U.S.C. 2000e et seq.) in the case of an 
affected individual who would be covered by such 
title; 
(3) the Board (as defined in section 101 of the 
Congressional Accountability Act of 1995 (2 U.S.C. 
1301)) shall have the same powers as the Board has 
to administer and enforce the Congressional Ac-
countability Act of 1995 (2 U.S.C. 1301 et seq.) in 
the case of an affected individual who would be cov-
ered by section 201(a)(1) of such Act (2 U.S.C. 
1311(a)(1)); 
(4) the Attorney General shall have the same 
powers as the Attorney General has to administer 
and enforce— 
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354 
(3) the procedures applicable for a violation of 
section 201(a)(1) of the Congressional Account-
ability Act of 1995 (2 U.S.C. 1311(a)(1)) in the 
case of a claim alleged by such individual for a viola-
tion of such section; and 
(4) the procedures applicable for a violation of 
section 411 of title 3, United States Code, in the 
case of a claim alleged by such individual for a viola-
tion of such section. 
(c) REMEDIES.— 
(1) In any claim alleging a violation of Section 
374(a)(1) or 374(b)(1) of this Act, an individual, or 
any person acting on behalf of the individual as set 
forth in Section 375(a) of this Act, may be awarded, 
as appropriate: 
(A) an order enjoining the respondent from 
engaging in the unlawful employment practice; 
(B) reimbursement of costs expended as a 
result of the unlawful employment practice; 
(C) an amount in liquidated damages not 
to exceed $1,000 for each day of the violation; 
and 
(D) reasonable attorney’s fees (including 
expert fees) and costs attributable to the pur-
suit of a claim under this Act, except that no 
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355 
person identified in Section 103(a) of this Act 
shall be eligible to receive attorney’s fees. 
(2) In any claim alleging a violation of any 
other subsection of this Act, an individual, or any 
person acting on behalf of the individual as set forth 
in Section 375(a) of this Act, may be awarded, as 
appropriate, the remedies available for a violation of 
title VII of the Civil Rights Act of 1964 (42 U.S.C. 
2000e et seq.), section 302(a)(1) of the Government 
Employee Rights Act of 1991 (42 U.S.C. 2000e– 
16b(a)(1)), section 201(a)(1) of the Congressional 
Accountability Act of 1995 (2 U.S.C. 1311(a)(1)), 
and section 411 of title 3, United States Code, ex-
cept that in a case in which wages, salary, employ-
ment benefits, or other compensation have not been 
denied or lost to the individual, damages may be 
awarded in an amount not to exceed $5,000. 
SEC. 376. FEDERAL AND STATE IMMUNITY. 
(a) ABROGATION
OF STATE IMMUNITY.—A State 
shall not be immune under the 11th Amendment to the 
Constitution from a suit brought in a Federal court of 
competent jurisdiction for a violation of this Act. 
(b) WAIVER OF STATE IMMUNITY.— 
(1) IN GENERAL.— 
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356 
(A) WAIVER.—A State’s receipt or use of 
Federal financial assistance for any program or 
activity of a State shall constitute a waiver of 
sovereign immunity, under the 11th Amend-
ment to the Constitution or otherwise, to a suit 
brought by an employee or applicant for em-
ployment of that program or activity under this 
Act for a remedy authorized under Section 
375(c) of this Act. 
(B) DEFINITION.—In this paragraph, the 
term ‘‘program or activity’’ has the meaning 
given the term in section 606 of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d–4a). 
(2) EFFECTIVE DATE.—With respect to a par-
ticular program or activity, paragraph (1) applies to 
conduct occurring on or after the day, after the date 
of enactment of this Act, on which a State first re-
ceives or uses Federal financial assistance for that 
program or activity. 
(c) REMEDIES AGAINST STATE OFFICIALS.—An offi-
cial of a State may be sued in the official capacity of the 
official by any employee or applicant for employment who 
has complied with the applicable procedures of this Act, 
for relief that is authorized under this Act. 
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357 
(d) REMEDIES AGAINST THE UNITED STATES AND 
THE STATES.—Notwithstanding any other provision of 
this Act, in an action or administrative proceeding against 
the United States or a State for a violation of this Act, 
remedies (including remedies at law and in equity) are 
available for the violation to the same extent as such rem-
edies would be available against a non-governmental enti-
ty. 
SEC. 377. RELATIONSHIP TO OTHER LAWS. 
This Act shall not invalidate or limit the rights, rem-
edies, or procedures available to an individual claiming 
discrimination prohibited under any other Federal law or 
regulation or any law or regulation of a State or political 
subdivision of a State. 
SEC. 378. SEVERABILITY. 
If any provision of this Act, or the application of the 
provision to any person or circumstance, is held to be in-
valid, the remainder of this Act and the application of the 
provision to any other person or circumstances shall not 
be affected by the invalidity. 
SEC. 379. EFFECTIVE DATE. 
This Act shall take effect on the date of enactment 
of this Act and shall not apply to conduct occurring before 
the effective date. 
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358 
TITLE IV—OFFSETS 
Subtitle A—28 Percent Limitation 
on Certain Deductions and Ex-
clusions 
SEC. 401. 28 PERCENT LIMITATION ON CERTAIN DEDUC-
TIONS AND EXCLUSIONS. 
(a) IN GENERAL.—Part I of subchapter B of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 69. LIMITATION ON CERTAIN DEDUCTIONS AND EX-
CLUSIONS. 
‘‘(a) IN GENERAL.—In the case of an individual for 
any taxable year, if— 
‘‘(1) the taxpayer’s adjusted gross income is 
above— 
‘‘(A) $250,000 in the case of a joint return 
within the meaning of section 6013, 
‘‘(B) $225,000 in the case of a head of 
household return, 
‘‘(C) $125,000 in the case of a married fil-
ing separately return, or 
‘‘(D) $200,000 in all other cases; and 
‘‘(2) the taxpayer’s adjusted taxable income for 
such taxable year exceeds the minimum marginal 
rate amount, then the tax imposed under section 1 
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359 
with respect to such taxpayer for such taxable year 
shall be increased by the amount determined under 
subsection (b). If the taxpayer is subject to tax 
under section 55, then in lieu of an increase in tax 
under section 1, the tax imposed under section 55 
with respect to such taxpayer for such taxable year 
shall be increased by the amount determined under 
subsection (c). 
‘‘(b) ADDITIONAL AMOUNT.—The amount deter-
mined under this subsection with respect to any taxpayer 
for any taxable year is the excess (if any) of— 
‘‘(1) the tax which would be imposed under sec-
tion 1 with respect to such taxpayer for such taxable 
year if ‘adjusted taxable income’ were substituted 
for ‘taxable income’ each place it appears therein, 
over 
‘‘(2) the sum of— 
‘‘(A) the tax which would be imposed 
under such section with respect to such tax-
payer for such taxable year on the greater of— 
‘‘(i) taxable income, or 
‘‘(ii) the minimum marginal rate 
amount, plus 
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‘‘(ii) the specified above-the-line de-
ductions and specified exclusions. 
‘‘(2) If the top of the AMT exemption phase- 
out range for the taxpayer exceeds the minimum 
marginal rate amount for the taxpayer and if the 
taxpayer’s alternative minimum taxable income does 
not exceed the top of the AMT exemption phase-out 
range, the taxpayer must increase its additional 
AMT amount by 7 percent of the excess of— 
‘‘(A) the lesser of— 
‘‘(i) the top of the AMT exemption 
phase-out range, or 
‘‘(ii) the taxpayer’s alternative min-
imum taxable income, computed— 
‘‘(I) 
without 
regard 
to 
any 
itemized deduction or any specified 
above-the-line deduction, and 
‘‘(II) by including the amount of 
any specified exclusion; over 
‘‘(B) the greater of— 
‘‘(i) the taxpayer’s alternative min-
imum taxable income, or 
‘‘(ii) the minimum marginal rate 
amount. 
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362 
‘‘(d) MINIMUM MARGINAL RATE AMOUNT.—For pur-
poses of this section, the term ‘minimum marginal rate 
amount’ means, with respect to any taxpayer for any tax-
able year, the highest amount of the taxpayer’s taxable 
income which would be subject to a marginal rate of tax 
under section 1 that is less than 36 percent with respect 
to such taxable year. 
‘‘(e) ADJUSTED TAXABLE INCOME.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘adjusted taxable 
income’ means taxable income computed— 
‘‘(A) without regard to any itemized deduc-
tion or any specified above-the-line deduction, 
and 
‘‘(B) by including in gross income any 
specified exclusion. 
‘‘(2) 
SPECIFIED
ABOVE-THE-LINE
DEDUC-
TION.—The term ‘specified above-the-line deduction’ 
means— 
‘‘(A) the deduction provided under section 
162(l) (relating to special rules for health insur-
ance costs of self-employed individuals), 
‘‘(B) the deduction provided under section 
199 (relating to income attributable to domestic 
production activities), and 
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‘‘(C) the deductions provided under the fol-
lowing paragraphs of section 62(a): 
‘‘(i) Paragraph (2) (relating to certain 
trade and business deductions of employ-
ees), other than subparagraph (A) thereof. 
‘‘(ii) Paragraph (15) (relating to mov-
ing expenses). 
‘‘(iii) Paragraph (16) (relating to Ar-
cher MSAs). 
‘‘(iv) Paragraph (17) (relating to in-
terest on education loans). 
‘‘(v) Paragraph (18) (relating to high-
er education expenses). 
‘‘(vi) Paragraph (19) (relating to 
health savings accounts). 
‘‘(3) SPECIFIED EXCLUSION.—The term ‘speci-
fied exclusion’ means— 
‘‘(A) any interest excluded under section 
103, 
‘‘(B) any exclusion with respect to the cost 
described in section 6051(a)(14) (without re-
gard to subparagraph (B) thereof), and 
‘‘(C) any foreign earned income excluded 
under section 911. 
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364 
‘‘(f) 
NON-PREFERENCE
DISALLOWED
DEDUC-
TIONS.—For purposes of this section, the term ‘AMT-al-
lowed deductions’ means all itemized deductions dis-
allowed by section 68 multiplied by the ratio that— 
‘‘(1) a taxpayer’s itemized deductions for the 
taxable year that are subject to section 68 (that is, 
not including those excluded under section 68(c)) 
and that are not limited under section 56(b)(1)(A) 
or (B), bears to 
‘‘(2) the taxpayer’s itemized deductions for the 
taxable year that are subject to section 68 (that is, 
not including those excluded under section 68(c)). 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations which provide appropriate 
adjustments to the additional AMT amount.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after January 1, 2013. 
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365 
Subtitle B—Tax Carried Interest in 
Investment Partnerships as Or-
dinary Income 
SEC. 411. PARTNERSHIP INTERESTS TRANSFERRED IN 
CONNECTION WITH PERFORMANCE OF SERV-
ICES. 
(a) MODIFICATION TO ELECTION TO INCLUDE PART-
NERSHIP INTEREST
IN GROSS INCOME
IN YEAR
OF 
TRANSFER.—Subsection (c) of section 83 of the Internal 
Revenue Code of 1986 is amended by redesignating para-
graph (4) as paragraph (5) and by inserting after para-
graph (3) the following new paragraph: 
‘‘(4) PARTNERSHIP
INTERESTS.—Except as 
provided by the Secretary— 
‘‘(A) IN
GENERAL.—In the case of any 
transfer of an interest in a partnership in con-
nection with the provision of services to (or for 
the benefit of) such partnership— 
‘‘(i) the fair market value of such in-
terest shall be treated for purposes of this 
section as being equal to the amount of the 
distribution which the partner would re-
ceive if the partnership sold (at the time of 
the transfer) all of its assets at fair market 
value and distributed the proceeds of such 
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366 
sale (reduced by the liabilities of the part-
nership) to its partners in liquidation of 
the partnership, and 
‘‘(ii) the person receiving such interest 
shall be treated as having made the elec-
tion under subsection (b)(1) unless such 
person makes an election under this para-
graph to have such subsection not apply. 
‘‘(B) ELECTION.—The election under sub-
paragraph (A)(ii) shall be made under rules 
similar to the rules of subsection (b)(2).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to interests in partnerships trans-
ferred after December 31, 2012. 
SEC. 412. SPECIAL RULES FOR PARTNERS PROVIDING IN-
VESTMENT 
MANAGEMENT 
SERVICES 
TO 
PARTNERSHIPS. 
(a) IN GENERAL.—Part I of subchapter K of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
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367 
‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN-
VESTMENT 
MANAGEMENT 
SERVICES 
TO 
PARTNERSHIPS. 
‘‘(a) TREATMENT
OF
DISTRIBUTIVE
SHARE
OF 
PARTNERSHIP ITEMS.—For purposes of this title, in the 
case of an investment services partnership interest— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
702(b)— 
‘‘(A) an amount equal to the net capital 
gain with respect to such interest for any part-
nership taxable year shall be treated as ordi-
nary income, and 
‘‘(B) subject to the limitation of paragraph 
(2), an amount equal to the net capital loss 
with respect to such interest for any partner-
ship taxable year shall be treated as an ordi-
nary loss. 
‘‘(2) RECHARACTERIZATION
OF
LOSSES
LIM-
ITED
TO
RECHARACTERIZED
GAINS.—The amount 
treated as ordinary loss under paragraph (1)(B) for 
any taxable year shall not exceed the excess (if any) 
of— 
‘‘(A) the aggregate amount treated as ordi-
nary income under paragraph (1)(A) with re-
spect to the investment services partnership in-
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368 
terest for all preceding partnership taxable 
years to which this section applies, over 
‘‘(B) the aggregate amount treated as or-
dinary loss under paragraph (1)(B) with re-
spect to such interest for all preceding partner-
ship taxable years to which this section applies. 
‘‘(3) ALLOCATION
TO
ITEMS
OF
GAIN
AND 
LOSS.— 
‘‘(A) NET
CAPITAL
GAIN.—The amount 
treated as ordinary income under paragraph 
(1)(A) shall be allocated ratably among the 
items of long-term capital gain taken into ac-
count in determining such net capital gain. 
‘‘(B) NET
CAPITAL
LOSS.—The amount 
treated as ordinary loss under paragraph (1)(B) 
shall be allocated ratably among the items of 
long-term capital loss and short-term capital 
loss taken into account in determining such net 
capital loss. 
‘‘(4) TERMS RELATING TO CAPITAL GAINS AND 
LOSSES.—For purposes of this section— 
‘‘(A) IN GENERAL.—Net capital gain, long- 
term capital gain, and long-term capital loss, 
with respect to any investment services partner-
ship interest for any taxable year, shall be de-
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369 
termined under section 1222, except that such 
section shall be applied— 
‘‘(i) without regard to the recharacter-
ization of any item as ordinary income or 
ordinary loss under this section, 
‘‘(ii) by only taking into account items 
of gain and loss taken into account by the 
holder of such interest under section 702 
with respect to such interest for such tax-
able year, 
‘‘(iii) by treating property which is 
taken into account in determining gains 
and losses to which section 1231 applies as 
capital assets held for more than 1 year, 
and 
‘‘(iv) without regard to section 1202. 
‘‘(B) NET CAPITAL LOSS.—The term ‘net 
capital loss’ means the excess of the losses from 
sales or exchanges of capital assets over the 
gains from such sales or exchanges. Rules simi-
lar to the rules of clauses (i) through (iv) of 
subparagraph (A) shall apply for purposes of 
the preceding sentence. 
‘‘(5) SPECIAL RULES FOR DIVIDENDS.— 
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370 
‘‘(A) INDIVIDUALS.—Any dividend allo-
cated to any investment services partnership in-
terest shall not be treated as qualified dividend 
income for purposes of section 1(h). 
‘‘(B) CORPORATIONS.—No deduction shall 
be allowed under section 243 or 245 with re-
spect to any dividend allocated to any invest-
ment services partnership interest. 
‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— 
‘‘(1) GAIN.— 
‘‘(A) IN GENERAL.—Any gain on the dis-
position of an investment services partnership 
interest shall be— 
‘‘(i) treated as ordinary income, and 
‘‘(ii) recognized notwithstanding any 
other provision of this subtitle. 
‘‘(B) EXCEPTIONS; CERTAIN
TRANSFERS 
TO CHARITIES AND RELATED PERSONS.—Sub-
paragraph (A) shall not apply to— 
‘‘(i) a disposition by gift, 
‘‘(ii) a transfer at death, or 
‘‘(iii) other disposition identified by 
the Secretary as a disposition with respect 
to which it would be inconsistent with the 
purposes of this section to apply subpara-
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371 
graph (A), if such gift, transfer, or other 
disposition is to an organization described 
in section 170(b)(1)(A) (other than any or-
ganization described in section 509(a)(3) 
or any fund or account described in section 
4966(d)(2)) or a person with respect to 
whom the transferred interest is an invest-
ment services partnership interest. 
‘‘(2) LOSS.—Any loss on the disposition of an 
investment services partnership interest shall be 
treated as an ordinary loss to the extent of the ex-
cess (if any) of— 
‘‘(A) the aggregate amount treated as ordi-
nary income under subsection (a) with respect 
to such interest for all partnership taxable 
years to which this section applies, over 
‘‘(B) the aggregate amount treated as or-
dinary loss under subsection (a) with respect to 
such interest for all partnership taxable years 
to which this section applies. 
‘‘(3) ELECTION WITH RESPECT TO CERTAIN EX-
CHANGES.—Paragraph (1)(A)(ii) shall not apply to 
the contribution of an investment services partner-
ship interest to a partnership in exchange for an in-
terest in such partnership if— 
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372 
‘‘(A) the taxpayer makes an irrevocable 
election to treat the partnership interest re-
ceived in the exchange as an investment serv-
ices partnership interest, and 
‘‘(B) the taxpayer agrees to comply with 
such reporting and recordkeeping requirements 
as the Secretary may prescribe. 
‘‘(4) DISTRIBUTIONS OF PARTNERSHIP PROP-
ERTY.— 
‘‘(A) IN GENERAL.—In the case of any dis-
tribution of property by a partnership with re-
spect to any investment services partnership in-
terest held by a partner, the partner receiving 
such property shall recognize gain equal to the 
excess (if any) of— 
‘‘(i) the fair market value of such 
property at the time of such distribution, 
over 
‘‘(ii) the adjusted basis of such prop-
erty in the hands of such partner (deter-
mined without regard to subparagraph 
(C)). 
‘‘(B) TREATMENT OF GAIN AS ORDINARY 
INCOME.—Any gain recognized by such partner 
under subparagraph (A) shall be treated as or-
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373 
dinary income to the same extent and in the 
same manner as the increase in such partner’s 
distributive share of the taxable income of the 
partnership would be treated under subsection 
(a) if, immediately prior to the distribution, the 
partnership had sold the distributed property at 
fair market value and all of the gain from such 
disposition were allocated to such partner. For 
purposes of applying paragraphs (2) and (3) of 
subsection (a), any gain treated as ordinary in-
come under this subparagraph shall be treated 
as an amount treated as ordinary income under 
subsection (a)(1)(A). 
‘‘(C) ADJUSTMENT OF BASIS.—In the case 
a distribution to which subparagraph (A) ap-
plies, the basis of the distributed property in 
the hands of the distributee partner shall be the 
fair market value of such property. 
‘‘(D) SPECIAL RULES WITH RESPECT TO 
MERGERS, DIVISIONS, AND TECHNICAL TERMI-
NATIONS.—In the case of a taxpayer which sat-
isfies requirements similar to the requirements 
of subparagraphs (A) and (B) of paragraph (3), 
this paragraph and paragraph (1)(A)(ii) shall 
not apply to the distribution of a partnership 
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374 
interest if such distribution is in connection 
with a contribution (or deemed contribution) of 
any property of the partnership to which sec-
tion 721 applies pursuant to a transaction de-
scribed in paragraph (1)(B) or (2) of section 
708(b). 
‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER-
EST.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘investment serv-
ices partnership interest’ means any interest in an 
investment partnership acquired or held by any per-
son in connection with the conduct of a trade or 
business described in paragraph (2) by such person 
(or any person related to such person). An interest 
in an investment partnership held by any person— 
‘‘(A) shall not be treated as an investment 
services partnership interest for any period be-
fore the first date on which it is so held in con-
nection with such a trade or business, 
‘‘(B) shall not cease to be an investment 
services partnership interest merely because 
such person holds such interest other than in 
connection with such a trade or business, and 
‘‘(C) shall be treated as an investment 
services partnership interest if acquired from a 
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related person in whose hands such interest was 
an investment services partnership interest. 
‘‘(2) BUSINESSES TO WHICH THIS SECTION AP-
PLIES.—A trade or business is described in this 
paragraph if such trade or business primarily in-
volves the performance of any of the following serv-
ices with respect to assets held (directly or indi-
rectly) by the investment partnership referred to in 
paragraph (1): 
‘‘(A) Advising as to the advisability of in-
vesting in, purchasing, or selling any specified 
asset. 
‘‘(B) Managing, acquiring, or disposing of 
any specified asset. 
‘‘(C) Arranging financing with respect to 
acquiring specified assets. 
‘‘(D) Any activity in support of any service 
described in subparagraphs (A) through (C). 
‘‘(3) INVESTMENT PARTNERSHIP.— 
‘‘(A) IN GENERAL.—The term ‘investment 
partnership’ means any partnership if, at the 
end of any calendar quarter ending after De-
cember 31, 2012— 
‘‘(i) substantially all of the assets of 
the partnership are specified assets (deter-
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mined without regard to any section 197 
intangible within the meaning of section 
197(d)), and 
‘‘(ii) more than half of the contributed 
capital of the partnership is attributable to 
contributions of property by one or more 
persons in exchange for interests in the 
partnership which (in the hands of such 
persons) constitute property held for the 
production of income. 
‘‘(B) SPECIAL RULES FOR DETERMINING 
IF PROPERTY HELD FOR THE PRODUCTION OF 
INCOME.—Except as otherwise provided by the 
Secretary, for purposes of determining whether 
any interest in a partnership constitutes prop-
erty held for the production of income under 
subparagraph (A)(ii)— 
‘‘(i) any election under subsection (e) 
or (f) of section 475 shall be disregarded, 
and 
‘‘(ii) paragraph (5)(B) shall not apply. 
‘‘(C) ANTIABUSE
RULES.—The Secretary 
may issue regulations or other guidance which 
prevent the avoidance of the purposes of sub-
paragraph (A), including regulations or other 
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377 
guidance which treat convertible and contingent 
debt (and other debt having the attributes of 
equity) as a capital interest in the partnership. 
‘‘(D) CONTROLLED
GROUPS
OF
ENTI-
TIES.— 
‘‘(i) IN GENERAL.—In the case of a 
controlled group of entities, if an interest 
in the partnership received in exchange for 
a contribution to the capital of the part-
nership by any member of such controlled 
group would (in the hands of such mem-
ber) constitute property not held for the 
production of income, then any interest in 
such partnership held by any member of 
such group shall be treated for purposes of 
subparagraph (A) as constituting (in the 
hands of such member) property not held 
for the production of income. 
‘‘(ii) CONTROLLED GROUP OF ENTI-
TIES.—For purposes of clause (i), the term 
‘controlled group of entities’ means a con-
trolled group of corporations as defined in 
section 1563(a)(1), applied without regard 
to subsections (a)(4) and (b)(2) of section 
1563. A partnership or any other entity 
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(other than a corporation) shall be treated 
as a member of a controlled group of enti-
ties if such entity is controlled (within the 
meaning of section 954(d)(3)) by members 
of such group (including any entity treated 
as a member of such group by reason of 
this sentence). 
‘‘(4) SPECIFIED
ASSET.—The term ‘specified 
asset’ means securities (as defined in section 
475(c)(2) without regard to the last sentence there-
of), real estate held for rental or investment, inter-
ests in partnerships, commodities (as defined in sec-
tion 475(e)(2)), cash or cash equivalents, or options 
or derivative contracts with respect to any of the 
foregoing. 
‘‘(5) RELATED PERSONS.— 
‘‘(A) IN
GENERAL.—A person shall be 
treated as related to another person if the rela-
tionship between such persons is described in 
section 267(b) or 707(b). 
‘‘(B) ATTRIBUTION
OF
PARTNER
SERV-
ICES.—Any service described in paragraph (2) 
which is provided by a partner of a partnership 
shall be treated as also provided by such part-
nership. 
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379 
‘‘(d) EXCEPTION
FOR CERTAIN CAPITAL INTER-
ESTS.— 
‘‘(1) IN GENERAL.—In the case of any portion 
of an investment services partnership interest which 
is a qualified capital interest, all items of gain and 
loss (and any dividends) which are allocated to such 
qualified capital interest shall not be taken into ac-
count under subsection (a) if— 
‘‘(A) allocations of items are made by the 
partnership to such qualified capital interest in 
the same manner as such allocations are made 
to other qualified capital interests held by part-
ners who do not provide any services described 
in subsection (c)(2) and who are not related to 
the partner holding the qualified capital inter-
est, and 
‘‘(B) the allocations made to such other in-
terests are significant compared to the alloca-
tions made to such qualified capital interest. 
‘‘(2) AUTHORITY TO PROVIDE EXCEPTIONS TO 
ALLOCATION
REQUIREMENTS.—To the extent pro-
vided by the Secretary in regulations or other guid-
ance— 
‘‘(A) ALLOCATIONS TO PORTION OF QUALI-
FIED CAPITAL INTEREST.—Paragraph (1) may 
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