Temporary Assistance/Case Management Manual

0275.020.10.15 Compensation in Lieu of Wages

IM-37 June 17, 2011

Compensation in lieu of wages includes an agreement to “work off” some type of payment (i.e. rent received, automobile, etc.) and is documented through the MWA Compensation in Lieu of Wages form or another written document containing identical information. When the agreement contains a set wage (that is at least equal to the federal minimum wage), a countable hour is equal to an hour at the worksite.

When there is no set wage in the agreement, a countable hour is based on the federal minimum wage calculation which takes the monthly amount of income divided by federal minimum wage divided by 4.3.

After documentation is obtained, enter the monthly wage under the Compensation in Lieu of Wages service on the Participation Hours Verification or Mass Participation Hours Verification screen in the MWA System and place the documentation in the paper file.

The MWA System automatically calculates the Compensation in Lieu of Wages weekly hours based on the entry of the monthly amount for the next six months (refer to Section 0275.020.05 Projection of Hours).

Example:  Compensation in Lieu of Wages with Set Hours:

  • Dave paid the first month rent and deposit for Tom, totaling $700. In return, Tom is working for Dave for the equivalent of $7.25 an hour for 25 hours a week for the next 5 weeks. The weekly participation hours = 25. The MWA System only allows entry based on the monthly amount. Therefore, for this example, the weekly hours are converted to a monthly amount of income by taking: 25 hours x 4.3 x $7.25 = $779 is entered as the Monthly Amount on the Participation Hours Verification or Mass Participation Hours Verification screen in the MWA System. The service is ended in the MWA System at the end of the assignment (5 weeks).

Example: Compensation in Lieu of Wages with No Set Hours:

  • Joe provides handyman services at his apartment complex in exchange for his rent. He has no set hours and takes calls and makes repairs as needed. His apartment normally rents for $450 per month. $450 is entered for “Monthly Amount” on the Participation Hours Verification or Mass Participation Hours Verification screen in the MWA System. The MWA System calculation: $450 / $7.25 / 4.3 = 14 weekly hours for the next 6 months.
  • John received a truck valued at $1,700 (Per NADA blue book) from Bill. In return, John is working for Bill for the next two months. $1700 / 2 months = $850 is entered for “Monthly Amount” on the Participation Hours Verification or Mass Participation Hours Verification screen in the MWA System. The MWA System calculation: $850 / $7.25 / 4.3 = 27 weekly hours for the next 6 months.

    The service is ended in the MWA System at the end of the assignment (2 months).

    NOTE: The MWA System only displays the hours for one week into the future. The hours do not need to be updated weekly, as they are still projected for six months.