Can You Work and Still Get TDIU? Marginal Employment Explained
Posted by Gregory M. Rada | March 21, 2026 | Disability Compensation
One of the most common reasons veterans don’t file for TDIU is because they think they can’t work at all and still qualify. That’s wrong. You can work and still get TDIU — as long as your employment is considered “marginal” under VA’s rules. The real question VA is asking is not whether you’re completely unable to perform any work whatsoever, but whether your service-connected disabilities prevent you from maintaining substantially gainful employment. That’s a specific legal standard, and the line between qualifying and not qualifying often comes down to how your work situation is documented and presented. Understanding the difference between marginal employment and substantially gainful employment can mean the difference between receiving over $3,900 per month in VA disability compensation or getting nothing.
Table of Contents
- What Is Substantially Gainful Employment?
- Marginal Employment: The Poverty Threshold Test
- Protected Work Environments
- Common Scenarios Veterans Get Wrong
- What to Do If You Were Denied TDIU Because You Work
- Why an Attorney Matters for Marginal Employment Cases
What Is Substantially Gainful Employment?
Under 38 C.F.R. § 4.16, a veteran qualifies for TDIU when service-connected disabilities prevent them from securing or following a substantially gainful occupation. VA defines substantially gainful employment as work at which non-disabled individuals earn their livelihood, with earnings comparable to the particular occupation in the community where the veteran resides.
The key phrase is “substantially gainful.” If you’re doing odd jobs for a few hundred dollars a month, or working part-time at reduced capacity because your PTSD makes it impossible to maintain a full-time schedule, that may not be substantially gainful employment. And if it isn’t, you can still qualify for TDIU.
VA’s regulation explicitly states that “marginal employment shall not be considered substantially gainful employment.” That single sentence is the foundation for the entire working-with-TDIU framework. The regulation then defines marginal employment two ways: by income, and by the nature of the work environment.
Marginal Employment: The Poverty Threshold Test
The first and most straightforward test for marginal employment is income. Under § 4.16(a), employment is generally considered marginal when the veteran’s earned annual income does not exceed the poverty threshold established by the U.S. Department of Commerce, Bureau of the Census.
For 2026, the federal poverty guideline for a single person in the continental United States is $15,960 per year. If your annual earned income is below that figure, your employment is presumptively marginal — and marginal employment does not disqualify you from TDIU.
A few important details veterans often miss. VA looks at your earned income — wages, self-employment income, gig work. It does not count VA disability compensation, Social Security benefits, investment income, or your spouse’s earnings. Only the money you earn from working counts toward the threshold.
The poverty threshold VA uses is for a single individual, regardless of your actual family size. Even if you’re supporting a spouse and three children, VA applies the single-person threshold to determine whether your employment is marginal. This catches some veterans off guard because it means the bar is lower than they expect.
Also, VA looks at annualized income. If you worked for three months and earned $6,000, VA may extrapolate that to $24,000 per year — which would exceed the poverty threshold. This is where the facts of your specific work history matter. If you worked three months and then couldn’t continue because of your disabilities, the annualization argument doesn’t hold. But if you’re working steadily at a rate that would produce above-threshold income over twelve months, VA will look at it differently.
Protected Work Environments
The second way employment can be considered marginal is if it takes place in a “protected work environment” — even if the veteran earns more than the poverty threshold. Under § 4.16(a), a protected environment includes situations like working for a family business or in a sheltered workshop. But for years, VA refused to define what “protected work environment” actually means, leading to inconsistent decisions and routine denials for veterans who were clearly receiving special accommodations.
That changed in January 2024 when the CAVC issued its decision in LaBruzza v. McDonough, 37 Vet. App. 111 (2024). The court, consolidating LaBruzza with McBride v. McDonough, provided the first real definition: a protected work environment is a lower-income position that, due to the veteran’s service-connected disability or disabilities, is shielded in some respect from competition in the employment market.
Two things stand out from that definition. First, income matters. The court signaled that protected work environment status applies to veterans in lower-income positions — not veterans earning six-figure salaries in executive roles. Second, the shielding must be connected to the veteran’s service-connected disabilities. The veteran needs to show that the accommodations they receive go beyond what the competitive job market — or the ADA — would require, and that those accommodations exist because of service-connected conditions.
In practice, the kinds of situations that qualify haven’t changed much: working for a family member who tolerates absences, reduced productivity, and behavioral issues that no outside employer would accept. Working a self-employed gig where you set your own hours because your PTSD or TBI makes a normal schedule impossible. Working in a role where your employer has essentially carved out a position that doesn’t require you to meet standard performance expectations. What LaBruzza did is give those situations a formal legal framework — and that framework is something veterans and their attorneys can now point to when VA tries to deny TDIU by arguing the veteran is gainfully employed.
If your employer — whether it’s a family member, a friend, or anyone else — is making accommodations that shield you from competition in the open labor market because of your service-connected disabilities, your employment may be protected. And protected employment is marginal employment, which means it doesn’t disqualify you from TDIU.
Common Scenarios Veterans Get Wrong
Many veterans either don’t file for TDIU or accept a denial without appealing because they misunderstand how the employment rules work. Here are the situations we see most often.
The veteran who does occasional gig work. A veteran with severe PTSD picks up DoorDash deliveries or does odd handyman jobs when symptoms allow. Annual earnings are $8,000 to $12,000 — well below the poverty threshold. This veteran likely qualifies for TDIU. The gig work is marginal employment.
The veteran who works part-time for a family business. A veteran with a service-connected back injury works 15 hours a week at a relative’s shop, earning $20,000 a year. That’s above the poverty threshold, but the relative lets the veteran sit whenever needed, skip days during flare-ups, and perform only light tasks. This may still be marginal employment under the protected-work-environment analysis, because the accommodations go far beyond what a competitive employer would offer.
The veteran who stopped working and thinks TDIU requires zero income. Many veterans believe you must be completely unemployed with no income at all. That’s not the standard. You can earn income and still qualify, as long as the employment is marginal. Refusing to file because you picked up a few hundred dollars doing yard work last month is leaving money on the table.
The veteran who was denied because VA focused on the wrong thing. VA frequently denies TDIU by noting that the veteran “is capable of sedentary employment” or “has transferable skills.” But under Cathell v. Brown, 8 Vet. App. 539 (1996), VA must consider the veteran’s actual educational and occupational history. If you’ve been a mechanic or construction worker your entire life, VA can’t simply assert that you could work a desk job. It has to explain how, given your specific background and limitations.
What to Do If You Were Denied TDIU Because You Work
If VA denied your TDIU claim because you’re employed, the denial isn’t necessarily correct. The question is whether VA properly analyzed your employment under the marginal employment standard.
Start by looking at the denial. Did VA address whether your employment is marginal? Did it consider your income relative to the poverty threshold? Did it evaluate whether you’re in a protected work environment? Did it account for your education, work history, and the specific functional limitations caused by your service-connected conditions? If VA simply noted that you’re employed and denied the claim without analyzing these factors, that’s an error — and it’s appealable.
You have options under the AMA appeals system. You can file a supplemental claim with new evidence — such as a vocational expert opinion explaining why your employment is marginal, or employer statements documenting the accommodations you receive. You can request a higher-level review if you believe VA misapplied the law. Or you can appeal directly to the Board of Veterans’ Appeals.
The key is moving quickly. Under the AMA, you generally have one year from the date of your denial to file an appeal and preserve your effective date. If you wait longer, you can still file, but your effective date may reset to the new filing date — and that means less retroactive pay if you win.
Why an Attorney Matters for Marginal Employment Cases
Marginal employment cases are won or lost on how the evidence is framed. The legal standard is veteran-friendly, but VA’s application of that standard often isn’t. Getting the right result requires building a record that clearly demonstrates why the veteran’s work doesn’t constitute substantially gainful employment — and that means assembling the right evidence before VA makes its decision.
At After Service, we approach TDIU claims by documenting the full picture of the veteran’s work situation. We gather employer statements, tax records, and job descriptions. We identify every accommodation the veteran receives. We work with vocational experts who can opine on whether the veteran’s employment reflects competitive labor market participation or a protected arrangement. And we make the legal arguments that tie the evidence to the regulatory framework under 38 C.F.R. § 4.16.
We also review the veteran’s entire claims file for evidence that TDIU may have been raised earlier than the current claim — which can result in significantly earlier effective dates and substantial retroactive compensation.
If you’re working but struggling because of your service-connected disabilities, don’t assume you can’t qualify for TDIU. And if VA denied your TDIU claim because you’re employed, don’t assume VA got it right. Contact After Service LLC for a free consultation. We represent veterans nationwide and can evaluate whether your employment qualifies as marginal under VA’s rules. Call us at 800-955-8596 or schedule a free consultation today.
