Incumbent Worker Training (IWT) is designed to ensure that employees of a company are able to gain the skills necessary to retain employment and advance within the company or to provide the skills necessary to avert a layoff. Such training must increase both a participant’s and a company’s competitiveness.

Incumbent workers are currently-employed workers whose employers have determined that the worker requires training to increase the competitiveness of the employee or the employer. The worker must have an established employment history with the employer for six (6) or more months and employed in a situation that meets the Fair Labor Standards Act requirements for an employer-employee relationship. Such training will upgrade workers' skills, increase wages earned by employees and/or keep workers skills competitive.

There is one exception to the six month requirement: in the event that incumbent worker training is being provided to a cohort of employees, not every employee in the cohort must have an established employment history with the employer for six months or more as long as a majority of those employees being trained meet the employment history requirement.

Incumbent worker training considerations:

• The local area may use up to 20 percent of their local adult and dislocated worker funds for incumbent worker training.  
• The training should, wherever possible, allow the participant to gain industry-recognized training experience. It ultimately should lead to an increase in wages.
• An incumbent worker is employed with the company when the incumbent worker training starts.
• Contract funds are paid to the employer for training provided to the incumbent worker either to avert a lay-off or otherwise retain employment.
• An ideal incumbent worker training would be one where a participant acquires new skills allowing him or her to move into a higher skilled and higher paid job within the company. In turn this would allow the company to hire a job seeker to backfill the incumbent worker’s position.  
• The employer or group of employers must pay for a portion of the cost of providing the training to incumbent workers.  
• Statewide activities funds or Rapid Response (RR) funds may be available for statewide incumbent worker training activities.

Determining Incumbent Worker Training Funding

When determining use of funding for incumbent worker training with a particular employer, the Local Workforce Development Board (WDB) must include in their local plan a description of the strategies and services that will be used in the local area to identify and document participant characteristics, the relationship of the training to the competitiveness of the participant and employer, and other factors that the Local WDB determines appropriate.

Additional factors for determining use of funding for incumbent worker training may include:

• The number of employees in training  
• Wages and benefits (including post-training increases)
• The existence of other training opportunities provided by the employer
• Credentials and skills gained as a result of the training  
• Layoffs averted as a result of the training
• Utilization as part of a larger sector and/or career pathway strategy; or  
• Employer size

The cost sharing requirement for employers participating in incumbent worker training is to pay for the non-federal share of the cost of providing training to incumbent workers of the employers.

The non-federal share shall not be less than:

• 10 percent of the cost for employers with not more than 50 employees  
• 25 percent of the cost for employers with more than 50 employees but not more than 100 employees; or
• 50 percent of the cost for employers with more than 100 employees

The non-federal share provided by an employer participating in the program may include the amount of the wages paid by the employer to a worker while the worker is attending an incumbent worker training program. The employer share may be in cash or in kind.

An incumbent worker does not have to meet the eligibility requirements for career and training services for adults and dislocated workers under WIOA, unless they are also enrolled as a participant in the WIOA Title I adult or dislocated worker program.

IWT can also be used for underemployed workers—e.g. workers who would prefer full-time work but are working part-time for economic reasons. While these workers are employed, they may have accepted reduced hours to gain or maintain employment or a previous dislocation has led them to accept reduced employment and often lower wages that may have a permanent effect on their careers.