NATIONAL
CORRECTIONAL
INDUSTRIES

NCIA

ASSOCIATION

NATIONAL CORRECTIONAL INDUSTRIES ASSOCIATION, INC.
1202 North Charles St. *

Baltimore, MD 21201 *

(410) 230-3972

*

Fax (410) 230-3981

SUMMARY FINDINGS OF THE 2009-2010
PIECP COMPLIANCE SITE ASSESSMENTS

December 9, 2010

Prepared By:
Barbara J. Auerbach
PIECP Technical Coordinator
National Correctional Industries Association, Inc.

Prepared under Grant No. 2009-DD-BX-K029
Prison Industry Enhancement Certification Program (PIECP) Technical Assistance Project
United States Department of Justice
Bureau of Justice Assistance

BACKGROUND
BJA’s Prison Industry Enhancement Certification Program (PIECP) was established by Congress
in 1979 in an effort to address prison management concerns about prisoner idleness, to train the
growing prison population in marketable job skills, and to benefit taxpayers through inmate wage
deductions for room and board, victims’ compensation, family support, and taxes. BJA’s goal is
to encourage partnerships between state and county prison industries and private sector
companies that employ inmate workers in manufacturing operations that resemble the real world
as closely as possible.
The sale of inmate-made goods in interstate commerce is prohibited except for projects certified
by BJA as meeting the conditions of the PIECP statute [18 USC 1761(c)]. The prohibition
applies only to originally manufactured goods produced by inmates that cross state lines,
entering into interstate commerce. Service operations, such as refurbishing goods that have
already entered into interstate commerce, are not prohibited. Goods produced in conjunction
with private sector partners which do not cross state lines are subject only to state law which
varies from state to state. Agricultural goods are exempt from regulation as are goods produced
for a non-profit organization.
Over the approximately 30 years of its existence, the program has attracted primarily small and
medium-sized private sector companies. Participation has been steady for several years at
approximately 200 separate operations or Cost Accounting Centers (CACs) and 4,500 to 5,000
inmate workers nation-wide, though there has been a noticeable decline during the current
economic recession (there were 188 CACs as of June 30, 2010).
BJA has Certified 43 jurisdictions as of 6/30/10. New Hampshire is in the process of applying
for certification; Kentucky, Michigan, and Pennsylvania have introduced legislation.
As the program arm of the U.S. Department of Justice, BJA has no criminal enforcement power
over violations of the PIECP statute. That power rests with the Criminal Division of the USDOJ.
However, as the agency identified by Congress to administer the PIECP program, BJA does have
the authority to rescind a jurisdiction’s PIECP Certification if the jurisdiction is found to be out
of compliance with PIECP mandatory requirements and if the jurisdiction is unwilling to work
with BJA to come into compliance.
Since 1995, BJA has provided grant funding to the National Correctional Industries Association
(NCIA) to perform assessments to provide BJA with sufficient information to make compliance
decisions. NCIA’s goal is to identify any non-compliant conditions and to assist the Certificate
Holder to return to compliance within a reasonable period of time (usually 60 to 90 days). If
compliance requirements cannot be met, BJA will rescind the PIECP Certificate.
Mandatory requirements include meeting legal and administrative eligibility criteria; the
payment of a wage comparable to the wages of similarly situated civilian workers in the locality;
the avoidance of displacement of civilian workers in the locality; the provision of benefits
comparable to those made available to other workers on the basis of their employment (workers’

2

compensation and FICA in some cases 1); voluntary inmate participation; wage deductions
limited to 80% of gross salary and only for taxes, room and board, victims’
compensation/restitution, and family support; prior notification to organized labor and local
business organizations of proposed operations; and compliance with the National Environmental
Protection Act (NEPA).
Grant funds have been significantly reduced in recent years, necessitating a cutback in the
performance of on-site assessments. However, NCIA was funded to perform fifteen site
assessments in 2010. When a site assessment is performed, a PIECP Certificate Holder must
provide two actual payrolls along with wage determination letters from its State Department of
Economic Security (DES). Information on wages paid to civilian workers used to set
comparable wages for PIE workers is now available on the Internet through websites
administered by State Departments of Labor and the Federal Bureau of Labor Statistics.
Assessors use this information to determine whether inmate workers were paid the comparable
wage, including overtime at time-and-a-half, and did not displace civilian workers in the locality
where the work takes place. They review payrolls to determine if PIECP inmate workers were
moved from training wages to full comparable wages once DES approved training times have
expired. Deductions and benefits are also tracked by payroll and other financial documents; a
review of voluntary participation forms and changes in NEPA are included in the on site
assessment as well. Inmates are interviewed and each operation is toured by the assessor.
Certificate Holders have taken the process seriously and submitted the required documentation
without exception.
SCOPE OF THE ASSESSMENT PROCESS
As of June 30, 2010 there were thirty (30) jurisdictions with active PIECP operations. 2 Of those,
fourteen (14) jurisdictions had site assessments and one had a desk assessment (the CAC in
question was no longer active) with a total of 38 CACs assessed. The assessments were
performed by experienced prison industry managers with PIECP programs of their own, and by
NCIA staff.

1

The IRS has ruled that only PIECP inmate workers who work in an Employer Model CAC, where the workers are
directly supervised and paid by the private sector company, are eligible for FICA. In Customer Model CACs, where
the inmate workers are supervised and paid by the prison industry operation, inmate workers are not eligible to
participate in FICA.
2

They included: Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas,
Louisiana, Maine, Maryland, Minnesota, Hennepin County (MN), Mississippi, Montana, Nebraska, Nevada,
Strafford County (NH), North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas
Oversight Authority, Utah, and Utah County (UT). There were 13 inactive Certificate Holders as of 3/31/09
including: Alaska, Belknap County (NH), Connecticut, Denver County Sheriff’s Department, New Mexico, North
Carolina, Ohio, Vermont, Virginia, Washington, Washington State Jail Industries Board, Wisconsin, and Wyoming.

3

SITE

DATE

# CAC(S)
ASSESSOR
ASSESSED

1.

Arkansas

5/27/10

1

Bob Carter

2.

Colorado

4/30/10

3

Tony Ellis

3.

Florida

5/28/10

10

Sahra Nadiir

4.

Hennepin Cty (MN)

5/20/10

2

Wil Heslop

5.

Idaho

5/24-26/10

3

Gay Zalman

6.

Indiana

6/24/10

3

Lee Bond

7.

Kansas

6/23/10

3

Becky Deeb

8.

Maryland

6/8/10

1

Wil Heslop

9.

Minnesota

5/18-19/10

3

Tom Vohs

10.

Mississippi

5/25/10

1

Bob Carter

11.

Montana

6/23-24/10

2

Gay Zalman

12.

Nebraska

7/8/10

2

Wil Heslop

13.

North Carolina

7/16/10

1

Wil Heslop

14.

Oregon

5/18/10

2

Bob Carter

15.

South Dakota

7/14/10

1

Barbara Auerbach

4

THE ASSESSMENT PROCESS



In 2010, NCIA reviewed all active CACs and assessed the top 15 jurisdictions based
upon the potential risk for non-compliance due to not being assessed for two or more
cycles or for being a new project that had never been assessed. In most cases this
resulted in the assessment of two or three CACs. In the case of Florida, where seven
CACs were assessed because they had not been assessed for two or more cycles, it was
cost-effective to assess the other three active CACs as well, since the assessor was
already visiting the relevant institutions.



Assessment materials were upgraded to reflect changes resulting from the previous
assessment round as well as policy decisions made by BJA in the interim.



NCIA hosted a Webinar training session for all Certificate Holders in January 2010,
focused on all substantive and process requirements for the upcoming assessments. A
separate Webinar training session was held for the assessors in February 2010. In March
2010, a PIECP Training Forum was held in Cincinnati where PIECP managers could
review their individual practices against PIECP requirements.



Prior to the assessment, the Certificate Holders provided NCIA with the requested
information on wages, displacement as it relates to annual wage determination, benefits,
deductions, voluntary participation, and changes NEPA conditions for all CACs to be
assessed. Determinations of eligibility and non-displacement of civilian workers, as well
as the notification of local private business and organized labor, take place at the time of
CAC designation and therefore had already been reviewed.



As much as possible, NCIA personnel and the assessor utilized email to transfer
information among the parties to the assessment. All of NCIA’s 2010 assessment
materials were created in Microsoft Word and Microsoft Excel so that all parties could
easily manipulate the information necessary to complete the assessment. Assessment
materials also were available on NCIA’s website: www.nationalcia.org.

For each Certificate Holder:
•
•

•
•

Program performance was compared against statutory and administrative requirements for
participation in the PIECP.
Payroll review for two separate months (June 2009 and January 2010) was performed to
verify that comparable wages were actually being paid to PIECP inmate workers, including
a comparison of training times authorized by the Department of Economic Security (DES)
against actual time spent in training.
Supporting documentation to and from the State DES for comparable wage and nondisplacement determinations was reviewed and verified.
Deductions for taxes (state, federal, and FICA), room and board, victims'
compensation/restitution, and family support were examined and verified.

5

•

•
•

The existence of Workers' Compensation insurance was verified by reviewing actual
Workers' Compensation insurance policies or their equivalent and comparing coverage for
PIECP inmate workers against their private sector counterparts (similarly situated civilian
workers for Employer Model CACs and correctional industries employees for Customer
Model CACs).
The voluntary status of inmate workers was confirmed through verification of relevant
documents and inmate interviews.
Changes in NEPA since the time of designation were reviewed and the operation was toured
by the assessor; inmate interviews also included questions on this topic.

What follows is an issue-by-issue description of the findings of the assessments. A summary
discussion of substantive findings completes this report. All assessment instruments were
developed in cooperation with and approved by BJA. They are publicly available at
http://www.nationalcia.org/pieforms.html.

COMPLIANCE ASSESSMENT FINDINGS AND BJA DETERMINATIONS
1.

Eligibility

BJA's 1999 Guideline states that all non-Federal departments of correction and juvenile justice
agencies authorized by law to administer correctional industry programs are eligible for PIECP
certification. Once certification is awarded, the Certificate Holder determines which specific
operations will be included under the PIECP. All production operations, where a nonagricultural commodity/product is produced for sale to the for-profit sector on the open market
and the product moves in interstate commerce, must be designated under the PIECP. Additional
enterprises may be included at the Certificate Holder's discretion. Once included, all PIECP
mandatory requirements must be met for all Cost Accounting Centers.
Findings:
All CACs assessed in 2010 had been through NCIA’s certification and designation processes and
therefore had already met this criterion.
2.

Inmate Worker Wages

The PIECP statute requires that inmate workers be paid "at a rate which is not less than that paid
for work of a similar nature in the locality in which the work is performed." BJA's
administrative Guideline for PIECP sets out procedures for determining the appropriate wage
under various conditions. The Guideline expressly states that wage determinations must be made
by State Department of Economic Security (DES) agencies. Certificate Holders must redetermine wages annually on or before the date the previous wage update was made. In
November 2006, BJA further specified that because of an “across-the-board change in how wage
data is reported by employment agencies…wages for PIECP inmate workers may not fall below
the tenth percentile (unless their employment agency provides express written agreement of a
wage less than the tenth percentile for a limited training period).”

6

Findings:
As has been the case in all past assessments, wages continue to be the single most difficult
requirement for PIECP Certificate Holders to implement. NCIA requested two separate payrolls
for each CAC it assessed (June 2009 and January 2010), thus providing the assessors with a
picture of wage practices over time and the opportunity to determine whether wages were raised
on or before July 24, 2009 when the Federal Minimum Wage was increased.
Five of the fifteen jurisdictions assessed had wage issues of some kind and all have been
resolved as of this writing. Back wages were assessed and paid in four of those jurisdictions; one
Certificate Holder has yet to complete its back payments, but will do so in the near future.

a.

The Training Wage Exception to the 10th Percentile Wage Floor

As noted above, because wage data for all states had become available electronically, BJA
determined in 2006 that wages must be set at or above the 10th percentile 3, as defined by the
State Department of Economic Security Agency. BJA takes the position that this is a “generous
interpretation of comparable, yet still fair to competitor manufacturers because of the “lack of
education, training, and experience typical of the inmate labor force.” 4 The one exception to the
10th percentile requirement is that inmate workers may be paid a training wage that falls below
the 10th percentile if “their employment agency provides express written agreement of a wage
less than the tenth percentile for a limited training period.”
Because the wage can never fall below the Federal or State minimum wage (whichever is
higher), training wages in most jurisdictions fall somewhere between the Federal or State
minimum wage and the 10th percentile. Of the states and counties assessed, eight use a training
wage that starts at the minimum wage and progresses to the 10th percentile over a period of time:
60 days (Florida and Idaho); 90 days (South Dakota and some workers in Kansas); 130 days
(Nebraska); 175 days (some workers in Kansas); 180 days (Indiana); 365 days (Montana); and
390 days (Mississippi). 5 Seven do not use a training wage: Arkansas, Colorado, Hennepin
County (MN), Maryland, Minnesota, North Carolina, and Oregon.
The assessors found five jurisdictions where some PIECP inmate workers had worked longer at
the training wage than the training period determined by the State DES. Back wages were paid
in four of those cases, and will be paid in the near future in the fifth case. In one of the four
cases there was legitimate confusion as to how to calculate wage increases for those individuals
already moving through the training wage plan. In that case, back wages were not assessed for
errors made during the training period, but were assessed for those workers who were not moved
to the 10th percentile upon the completion of the approved training period. In another
jurisdiction where back wages were assessed for inmate workers who had mot been moved to the
3

meaning that 90% of all workers performing similar work earn more than this amount, and 10% earn less
Letter to all Certificate Holders from Julius C. Dupree, Jr., PIECP Program Manager (November 17, 2006).
5
Authority to set training wages rests with the State DES agency and therefore the length of time allowed varies
from state to state.
4

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10th percentile at the end of the training period, there was a legitimate misunderstanding as to
how to measure the 10th percentile (versus a wage that would not displace local workers). Back
wages were not assessed for the period during which the 10th percentile was incorrectly
calculated.
b.

Annual Wage Updates Not Implemented in a Timely Fashion

One jurisdiction did not implement wage updates on or before the anniversary date of the
previous update and back wages have been paid.
c.

10th Percentile Not Implemented as Wage Plan Floor

One jurisdiction had not understood that the 10th percentile is the lowest possible wage to be
paid to inmates unless the State DES provides an exemption for a limited training period.
Because BJA had approved the jurisdiction’s wage plan and there was legitimate confusion, back
wages were not assessed, but the jurisdiction has revised its pay plan and will use the 10th
percentile floor in the future.
Another jurisdiction did not use the 10th percentile as its wage floor, arguing that a piece work
operation may use the Federal or State minimum wage (whichever is higher) as a floor, as is the
case for similar community-based operations. BJA agreed with the Certificate Holder.
d.

Overtime Is Being Administered Correctly

Overtime in every case was paid at time-and-a-half and piece work rates were at or above the
minimum wage.
e.

Other Observations

All jurisdictions now have converted to the use of SOC codes to describe the work being
performed. As was the case in the previous assessment round, a few states had not included
SOC codes for all inmate workers on the payroll, necessitating an additional request from the
assessors to provide that information, without which it is impossible to determine whether a
given inmate worker is receiving the appropriate wage. All jurisdictions have agreed to include
SOC codes for all workers on the payroll in the future.
Thirteen of the fifteen jurisdictions assessed use the 10th percentile as the floor of their wage
scale. One jurisdiction operates piece work shops and uses the Federal minimum wage as a
floor; one other jurisdiction is in the process of amending its wage plan to include the 10th
percentile as its post-training wage floor. Several assessors noted that training times seem to
vary widely for the same work and expressed concern that they may not be comparable to
civilian training times for similar work in the community.
3.
Displacement
The PIECP statute requires that a PIECP project not "result in the displacement of employed
workers, or be applied in skills, crafts, or trades where there is a surplus of available gainful

8

labor in the locality, or impair existing contracts for services." The 1999 Guideline repeats this
same language, stating that the State Department of Economic Security should verify that the
proposed PIECP project will not displace employed workers. In addition, the private sector
company involved is required to provide a written statement that it will not displace its own
workers in favor of PIECP inmates. A definition of displacement is provided in the Guideline
that includes all the prohibited activities noted above, as well as the “inappropriate transfer of
private sector job functions to PIECP inmates.”
Findings:
This element was reviewed and verified for all Certificate Holders at NCIA headquarters as part
of NCIA’s designation process. Displacement documents for all CACs were compiled and
reviewed and all CACs were found to be in full compliance at the time of designation. As a
secondary check, annual wage re-verifications also must take displacement into consideration.
As was the case in the previous assessment round, in a few jurisdictions the State DES expressed
strong discomfort in making non-displacement determinations, particularly in the current
economic downturn. In the end, determinations were made, but PIECP managers in those and
other states expressed increased concern that in the future such determinations will be refused.
NCIA will address this issue with BJA as part of its Guideline revision process.
4.

Benefits

Federal law requires that PIECP workers "have not solely by their status as offenders been
deprived of the right to participate in benefits made available by the Federal and State
government to other individuals on the basis of their employment, such as Workmen's
Compensation." BJA's 1999 Guideline states that workers' compensation, and under certain
circumstances (that is, for employer model projects where the inmate works directly for the
private sector company), Social Security (FICA), must be provided to PIECP inmate workers.
Findings:
a.
Workers' Compensation:
All jurisdictions assessed were providing Workers’
Compensation coverage or its equivalent. One jurisdiction raised a Workers’ Compensation
issue when the assessor found the amounts of the coverage for inmates (for partial disability and
death) in a customer model CAC were not comparable to the amounts of coverage for state
employees, though the types of coverage were. The matter was referred to BJA for a decision
and BJA determined that Workers’ Compensation benefits must be comparable in types of
coverage, but not identical in amounts. BJA further advised that the burden is on the Certificate
Holder to show that the benefits are comparable to those in the private sector.
b.
FICA: All employer model projects were found to be covering their PIECP workers
under FICA, as is required by the PIECP Guideline.

9

5.

Deductions

Federal law provides that "wages may be subject to deductions which shall not, in the aggregate,
exceed 80 per centum of gross wages, and shall be limited as follows: (a) taxes; (b) reasonable
charges for room and board as determined by regulations which shall be issued by the chief State
correctional officer; (c) allocations for support of family pursuant to State statute, court order, or
agreement by the offender; (d) contributions to any fund established by law to compensate the
victims of crime of not more than 20 per centum but not less than 5 per centum of gross wages."
BJA's 1999 administrative Guideline makes it clear that participating CACs are not required to
take deductions from PIECP inmate wages. However, some deductions may be required under
other Federal statutes, such as the Internal Revenue Code.
Findings:
An issue arose in a few jurisdictions as to whether court ordered family support could be
deducted both from gross wages (where specific provision is made for it) and from net wages
(because it is a legal fine). BJA acknowledged that it may have issued conflicting advice on this
question in the past. In response to questions arising during this assessment round, BJA has
determined that court ordered family support may be deducted from both gross and net wages.
Voluntary family support should be deducted only from gross wages, unless the inmate chooses
to send additional monies out of his account (voluntary contributions are not considered as
deductions).
6.

Voluntary Participation

Federal law requires that inmates "have participated in such employment voluntarily and have
agreed in advance to the specific deductions made from gross wages pursuant to this section, and
all other financial arrangements as a result of participation in such employment."
Findings:
All Certificate Holders were found to have signed voluntary forms on file for all CACs. In two
cases Certificate Holders were advised to revise their voluntary participation forms to include
clear assurances that no more than 80% of gross wages could be deducted from the PIECP
inmate worker’s pay (with the exception of legal fines).
7.

Consultation with Organized Labor

Federal law requires that representatives of local union central bodies or similar labor union
organizations have been consulted prior to the initiation of any project qualifying for any
exemption created by this section. The 1999 Guideline expands the consultation requirement
slightly by asking the Certificate Holder to contact all relevant unions, not just a single union
which may or may not be the most directly involved in the production of items similar to those
produced in a PIECP CAC. In addition, if there is no local labor union, the State organization
must be informed in its stead.

10

Findings:
This mandatory criterion is among those reviewed by NCIA as part of its designation process.
Certificate Holders either sent letters to the relevant unions or had written records of advisory
board meetings where organized labor was represented.
8.

Consultation with Local Private Industry

BJA's 1999 administrative Guideline states that applicants must consult with representatives of
local businesses that may be economically impacted by CAC production prior to beginning
operations and lays out minimum criteria for that consultation.
Findings:
This mandatory criterion is among those reviewed by NCIA as part of its designation process.
All jurisdictions either sent letters to the local chamber of commerce or included representatives
of local private industry on a correctional industries advisory board. Some jurisdictions did both.
In a small number of cases, the department of corrections publishes its intentions to initiate a
new PIECP CAC in a local newspaper.

9.

National Environmental Policy Act (NEPA)

BJA's 1999 Guideline requires that all PIECP CACs must comply with NEPA and other related
Federal environmental review requirements. Certificate Holders submit a request for BJA
approval at the time they designate each CAC and BJA approves or disapproves the request at
that time.
Findings:
None of the jurisdictions assessed had any changes in NEPA conditions since the time of the last
assessment.

SUMMARY DISCUSSION

PIECP ELEMENT

NON-COMPLIANCE CURRENT STATUS

WAGES
DISPLACEMENT
BENEFITS
DEDUCTIONS
VOLUNTARY PARTICIPATION
NEPA (Changes)

5
none
1
1
none
none

Resolved (one not complete)
Resolved
Resolved

11

Fifteen jurisdictions were assessed on six separate PIECP required elements as part of the site
assessments: Wages, Displacement, Benefits, Deductions, Voluntary Participation, and changes
in NEPA (Eligibility, Consultation with Labor and with Business, and compliance with NEPA
are assessed at the time of Certification and Designation). Therefore there is potential for a
maximum of 102 separate instances of non-compliance. In fact, the non-compliance instances
found by the assessors totaled 7. All but one have been resolved as of this writing, and that issue
will be resolved in the near future.
Of the seven instances, four involved training wage problems, one involved a lack of
understanding of the PIECP 10th percentile requirement, one involved a disagreement over court
ordered family support, and one involved a disagreement about the amount of workers’
compensation benefits.
WAGES AS THE KEY ASSESSMENT ISSUE
Most PIECP workers continue to earn wages at or slightly above the 10th percentile, in part
because much of the work is entry level and in part because workers are untrained and
inexperienced. It appears that labor intensive work is the kind of work that companies are
willing to bring to the prison or jail setting, with few exceptions. PIECP managers also look for
labor intensive work, in the belief that the companies most likely to consider inmate labor are not
those with highly skilled labor needs.
BJA’s Guideline identifies the State DES agencies as the authorized decision-makers as to wage
ranges for PIECP inmate workers. BJA does not exercise independent judgment as to wage
determinations made by the State DES agencies since only the State DES agencies have the
knowledge to determine local labor conditions and practices, and thus “comparable” wages.
Wage findings that lie outside the ranges identified as comparable by a State DES agency are
considered to be out of compliance with BJA’s PIECP regulations.
PIECP managers take BJA’s compliance requirements seriously and make every effort to meet
those requirements. Despite the issues relating to 10th percentile and training practices described
above, wage procedures have markedly improved. Almost all jurisdictions now implement their
annual wage updates on or before the anniversary date of the last update. Most make a good
faith effort to accurately identify the appropriate SOC code for the work being performed. There
is a need to clarify the parameters of comparable training wages and time periods, and BJA will
consider this as part of its upcoming Guideline revision process. A clearly stated back wage
policy will also be part of that revision process.
OTHER ASSESSMENT ISSUES
Changes in policy resulting from this assessment cycle include an expansion in interpretation of
what constitutes “comparable” Workers’ Compensation coverage for PIECP inmate workers in
customer model CACs and a clarification as to court ordered family support. Certificate Holders
are put on notice by BJA that the burden of proof as to the comparability of Workers’
Compensation coverage, but also given some flexibility in making those calculations as long as
benefits are comparable to those available to private sector counterparts. On court ordered

12

family support, Certificate Holders may now deduct such payments from the 20% net wages
upon proof of the court’s demand.
CONCLUSION
As noted in previous reports, challenges to the PIECP Guideline continue to occur. The complex
nature of PIECP requirements, coupled with high turnover among PIECP managers, creates the
ongoing potential for non-compliance of PIECP CACs. Clearly, there is a need for regular
review of operations so that BJA can continue to evolve its policies to meet the changing needs
of its Certificate Holders. PIECP assessments are the logical vehicle to achieve that end. BJA
has made funding available to NCIA to site assess an additional set of jurisdictions during the
2011 Calendar Year.

13