Right from the HHS memorandum:
While the TANF work participation requirements are contained in section 407, section 402(a)(1)(A)(iii) requires that the state plan “[e]nsure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407.” Thus, HHS has authority to waive compliance with this 402 requirement and authorize a state to test approaches and methods other than those set forth in section 407, including definitions of work activities and engagement, specified limitations, verification procedures, and the calculation of participation rates.
Section 407 stipulate the work requirements as defined by Congress (with no with authority under the law to allow for HHS to waive - which is another convo).
Section 402 is the reporting requirement states need to provide to the Fed. gov't on their TANF programs. (that portion of the law is WAIVABLE which is ironic.)
If you read the statement by HHS - its basically saying, since we can waive the reporting requirement (and only temporarily at that as per the law), we can then re-stipulate work requirements from another section on criteria we have yet to determine. To include, and I say again for effect - "..definitions of work activities and engagement"
I can't spell it out any more than that. I guess this may be one of those "Don't believe your lying eyes" type of moments for the Dems on this board.