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b. 1. Work-Based Training Models

If the State is utilizing work-based training models (e.g. on-the-job training, incumbent worker training, transitional jobs, and customized training) as part of its training strategy and these strategies are not already discussed in other sections of the plan, describe the State’s strategies for how these models ensure high quality training for both the participant and the employer.

Current Narrative:

Michigan faces acute talent shortages as many individuals have low educational attainment rates and inadequate skills to earn enough to support themselves and their families.  A concerted learning of foundational competencies by a significant portion of Michigan’s adults is needed to ensure that they can obtain self-sufficiency while taking advantage of the extensive job and training opportunities that Michigan offers and promises to offer in the future. 

Work-based training is employer-driven with the goal of unsubsidized employment after participation.  Generally, work-based training involves a commitment by an employer or employers to fully employ successful participants after they have completed the program.  Work-based training can be an effective training strategy that can provide additional opportunities for participants and employers in both finding high-quality work and in developing a high-quality workforce.  Customized training, On-the-Job Training (OJT), incumbent worker training, and Registered Apprenticeships are all identified as work-based training services.  Each of these work-based training models can be effectively used to target different job seeker and employer needs.

 The Michigan Works! Agencies (MWAs) are required to have a local policy in place that includes a strategy for providing work-based training services.  The work-based training policies for each of the work-based training services may be under separate cover or may be included in the MWA’s Workforce Innovation and Opportunity Act (WIOA) comprehensive plan.  Local training policies and contracts are reviewed during the WIOA programmatic reviews. 

Customized Training:  Customized training is designed to provide local areas with the flexibility to ensure that training meets the unique needs of job seekers and employers or groups of employers.  Customized training is to be used to meet the special requirements of an employer or group of employers and conducted with a commitment by the employer to employ all individuals upon successful completion of training. 

Employers pay a significant portion of the training costs, as determined by the local board, taking into account the size of the employer and other factors that may include the number of employees participating in training; the wage and benefit levels of the employees (at present and anticipated upon completion of the training); the relation of the training to the competitiveness of the participant; and other employer-provided training and advancement opportunities. 

For employed workers to qualify for customized training, the employee must not be earning a self-sufficient wage or wages comparable to or higher than wages from previous employment as determined by local board policy, and the aforementioned requirements must be met.  The training must incorporate new technologies, processes, or procedures, skills upgrades, workplace literacy, or other appropriate purposes as identified by the local board.

 The MWAs are required to have a local customized training policy for the execution of customized training contracts.  Since “significant portion of the training costs” is not identified under the WIOA, the MWAs will be allowed to locally define “significant portion” as part of their local customized training policy.

 On-the-Job Training:  The OJT is primarily designed to first hire the participant and provide the participant with the knowledge and skills necessary for the full performance of the job.  The OJT is a critical tool that can help job seekers enter into successful employment.  The term ‘‘on-the-job training’’ means training by an employer that is provided to a paid participant while engaged in productive work in a job that: 

  • Provides knowledge or skills essential to the full and adequate performance of the job.


  • Provides reimbursement to the employer of up to a percentage of the wage rate of the participant for the extraordinary costs of providing the training and additional supervision related to the training.
  • Is limited in duration as appropriate to the occupation for which the participant is being trained, taking into account the content of the training, the prior work experience of the participant, and the service strategy of the participant, as appropriate.


The MWAs are required to have a local OJT policy for the execution of OJT contracts.  Local OJT policies and contracts will continue to be reviewed during the WIOA Programmatic Reviews. 

Prior to approving an OJT, the local area must assess the potential participant to ensure suitability for the training.  The assessment, at a minimum, shall include the relevant occupation’s specific skill requirements, the participant’s academic and occupational skill level, prior work experience and the Individual Employment Plan (IEP) or Individual Service Strategy (ISS).  The IEP must reference the lack of skills and the need for OJT.  The results of the assessment will be used, in part, to determine the appropriateness of and suitability for the OJT, along with determining the duration of the training. 

The OJT is provided under an agreement with an employer with a public or private non-profit agency or the private sector.  Prior to entering into an OJT agreement with an employer, the local MWA shall conduct a pre-screening to ensure that the employer meets the minimum standards and can provide both training and long-term employment to an OJT participant.

 A local area may not enter into an OJT contract with an employer who has previously exhibited a pattern of failing to provide OJT participants with continued long-term employment as regular employees with wages and employment benefits, including health benefits) and working conditions at the same level and to the same extent as other employees working a similar length of time and doing the same type of work.  Training positions covered by an OJT contract must not have been created by the displacement of employed workers in the same or similar position.  A local area may not enter into an OJT contract with employers who have relocated their business or part of their business from any location in the Unites States, in the past 120 days, that has resulted in any employee losing his or her job at the original location.

 Employers must offer wages, benefits, and working conditions that are equal to those provided to regular employees who have worked for a similar length of time and are doing the same type of work.  The employer must comply with all applicable federal, state, and local laws and regulations providing safe and clean working conditions.

 If a union is present at the worksite, a union concurrence is required as part of the contract. 

Local areas should target priority industries identified by local Workforce Development Boards consistent with a demand-driven workforce system.  Occupations targeted for OJT should be defined in the local OJT policy and should align and support the Michigan Industry Cluster Approach.  Targeted outreach should then occur within those industries.

 On-the-Job Training and Staffing Agencies:  Many job openings are filled by “host employers” using staffing or personnel agencies.  Staffing agencies are usually the employer of record.  They provide pay and benefits and are responsible for payroll taxes and workers’ compensation.  The host employer is usually responsible for providing the work and workspace.  Training can be the responsibility of the host employer, the staffing agency, or both.

 When formula WIOA funds are used for an employment situation involving a staffing agency, several factors must be considered prior to approving OJT funding: 

  • Turnover pattern;
  • Pay and benefits;
  • Documentation; and
  • The reimbursement check.
    On-the-Job Training and Employed Workers:  An OJT contract may be written for eligible employed workers when the following circumstances are met:
  • The employee is not earning a self-sufficient wage or wages comparable to or higher than wages from previous employment, as determined by local board policy;
  • Requirements in Section 680.700 of the WIOA rules are met; and
  • The OJT relates to the introduction of new technologies, introduction to new production or service procedures, upgrading to a new job that requires additional skills, workplace literacy, or other appropriate purposes as identified by the local board. 

Employer Reimbursement:  Payments to employers are deemed to be compensation for the extraordinary costs associated with training participants and potentially lower productivity of the participation while in the OJT.  Employers are not required to document such extraordinary costs.  However, they are understood to include costs resulting from: 

  • More intensive supervision;
  • Above average material waste;
  • Abnormal wear on tools;
  • Down time; and
  • Lower rates of production.
    The reimbursement is not a wage subsidy.  Expectations are that the participant will continue working even after the payments to the employer end and that the participant will continue to receive compensation and benefits commensurate with the job performance.
    Reimbursement to employers shall be managed by a system that clearly documents the number of hours worked each day by the participant and rate of pay for the time period.  Supporting documents must be signed by both the participant and the employer or only by the employer if accompanying documentation (timesheets/timecards) is signed by the participant.  Reimbursement is for straight time worked and must not include overtime pay, holiday, sick pay, or commissions.
    Reimbursements are limited to 50 percent of the wage rate of an OJT participant.  Under certain conditions, the OJT reimbursement rate may be raised to 75 percent of the wage rate when considering all of the following factors.
  • The characteristics of the participants taking into consideration whether they are “individuals with barriers to employment” as defined in the WIOA Section 3(24);
  • The size of the employer, with an emphasis on small businesses;
  • The quality of employer-provided training advancement opportunities, for example if the OJT contract is for an in-demand occupation and will lead to an industry-recognized credential; and


  • Other factors the local board may determine to be appropriate, which may include the number of employees participating, the wage and benefit levels of the employees (both present and after OJT completion.
    Local boards must document, in their OJT policy, the factors used when deciding to increase the wage reimbursement levels above 50 percent up to 75 percent.
    Local areas may decide that the reimbursement, or a portion of the reimbursement, will be withheld and dispensed upon retention.  Local policy should clearly state the requirements for reimbursement and any exceptions to such (i.e., if the trainee quits or is fired for just cause).  The OJT reimbursements cannot exceed the amount obligated in the training plan, or any subsequent modifications.
    Incumbent Worker Training (IWT) Programs:  The IWT is designed to ensure that employees of a company are able to acquire the skills necessary to retain employment and advance within the company or to provide the skills necessary to avert a layoff and must increase both the participant’s and a company’s competitiveness.  An ideal IWT is one where a participant acquires new skills allowing the participant to move into a higher skilled and higher paid job within the company, thus allowing the company to hire a job seeker to backfill the incumbent worker’s position.  The training should, whenever possible, allow the participant to gain industry-recognized training experience and ultimately, should lead to an increase in wages.
    The IWT is designed to meet the special requirements of an employer (including a group of employers in partnership with other entities) to retain a skilled workforce, or to avert the need to lay off employees by assisting the workers in obtaining the skills necessary to retain employment.  The IWT is conducted with a commitment by the employer to retain or avert the layoffs of the incumbent workers being trained.
    To qualify as an incumbent worker, the individual must be employed, meet the Fair Labor Standards Act requirements for an employer/employee relationship, and have an established employment history with the employer for six months or more.  In the event that the IWT is being provided to a cohort of employees, not every employee in the cohort must have an established employment history for six or more months, as long as the majority of employees within the cohort do meet the requirements.
    Local areas may use up to 20 percent of their local Adult and Dislocated Worker funds for IWT.  The employer, or group of employers, must pay for a portion of the cost of providing the training to incumbent workers.  The portion of the training cost is the non-federal share of the cost of providing the training. 
    The MWAs utilizing IWT are required to have a local IWT policy in place.  The local policy must include a description of local and/or regional layoff aversion strategy being utilized including:
  • Strategies and services employed by the local area.  Examples may include:
  • Establishing an early warning network,
  • Economic trend monitoring,
  • Asset mapping,
  • Prefeasibility studies, and
  • Succession planning.
  • How the local Workforce Development Board (WDB) will employ IWT as part of its
    demand-driven strategy.


  • How the local WDB will ensure that IWT directly provides skill attainment activities for the participating workers.


  • Identification of any locally defined “at risk” indicators.


The local Workforce Development Board must use the following criteria when deciding on utilizing funds for incumbent worker training with the employer: 

  • The characteristics of the participants in the program;
  • The relationship of the training to the competitiveness of a participant and the employer; and
  • Other factors the local board determines appropriate, including the number of employees trained, wages and benefits including post training increases, and the existence of other training opportunities provided by the employer.
    Employers are required to contribute their share (the non-federal share) of the training costs, using the following sliding scale: 
  • No less than 10 percent of the cost for employers with 50 or fewer employees,
  • No less than 25 percent of the cost for employers with 51 to 100 employees, and
  • No less than 50 percent of the cost for employers with more than 100 employees.
    Calculation of the non-federal share of the training cost may include the wages paid by the employer to a worker while the worker is attending a training program.  The employer share may be cash or in-kind.
    Local policies and contracts for IWT will be reviewed during the WIOA Programmatic Reviews.
    Services and outcomes for any incumbent worker participant is reported in the WIOA Participant Individual Record Layout system and the One-Stop Management Information System (OSMIS): 
  • All participants in IWT projects, regardless of the fund source, must be reported in the OSMIS.
  • Incumbent worker participants are subject to selection for the federally mandated data validation.  Therefore, all documentation requirements apply to incumbent workers.