Self-Employment

Self-employment is working for oneself with direct control over the work and services undertaken or provided.

Generally, the self-employed individual would pay their own Social Security and income taxes and would not be covered by Workers Compensation (including daycare providers).

Exception: An insurance and real estate salesperson is not considered self-employed, since they work only under a broker. A broker could be considered self-employed.

Refer to Chewable Byte 24-111: How to Complete Employment Detail Page for CalSAWS entries.

Determination of Self-Employment

The following criteria offer guidelines for defining self-employment, but are not all-inclusive or inflexible.

The self-employed person:

Filed taxes as self-employed the previous year and is in the same type of self-employment at the time of application. (This could include the person who works for their own business and the business files as such.)

Did not file taxes as self-employed the previous year because they are newly self-employed, or for some other reason did not meet the above criteria, may still be considered self-employed.

Commonly offers their services or merchandise to ANYONE who may be in the market for them; AND
Commonly provides their own supplies, materials, or merchandise; AND
Is responsible for expenses normally paid by an employer.

Note: A self-employed person may meet the definition of U-parent for CalWORKs application purposes. For example, a self-employed gardener who was only able to find 50 hours a month employment could be classified as “unemployed.”

Examples of self-employment determinations are below:

Daycare ProviderDaycare Provider
A client may be self-employed as a provider of child care. It does not matter whether or not the individual is licensed. Examples of this are as follows:
- A woman advertises (on bulletin boards, in newspapers, by word of mouth, etc.) that she will keep children in her home for pay. She provides snacks and toys, as well as care and supervision. She is self-employed.
- A woman babysits in the child's home for pay. She does not provide anything except her services. She may be “on call” for several persons. She is an employee with wages, possibly several employers, but is not self-employed.
HousekeeperHousekeeper

Individuals are self-employed if they offer housekeeping services to the general public, performing specific jobs for specific pay, and providing their own supplies and equipment.

If the housekeeper routinely works in the employer's home, using the employer's equipment and supplies, that individual is an employee with wages.
Room and BoardRoom and Board

All income from room and board or room rental is considered self-employed income. The actual amount received minus any allowable business expenses is counted as earned income to the Assistance Unit (AU). Refer to Income from Property.
SalespersonSalesperson

A person who buys products for resale (including buying raw materials for the manufacture of products for sale), or accepts products on consignment for sale, is self-employed.

A person who sells products or services for another, or for a business, is an employee, regardless of whether a salary, commission, or some combination is received.
Independent ProductionIndependent Production

Independent production is making merchandise independently from the constraints of another regarding work conditions, hours worked, etc. Such production usually consists of craft-type articles, such as pottery, leather goods, artwork, sewing, etc., and will usually, but not always, be done in the person's home.

If an individual buys raw materials and retains the sales profit, this person is self-employed, whether the product is sold to the general public or a person or a company.

If an individual produces a product from materials provided by others and is paid a fixed amount (piece work rates, salary, etc.), this person is an employee.
Independent ContractorsIndependent Contractors
An independent contractor is a business or individual who provides goods or services to another entity under a specific or implied contract or agreement and who is not subject to the other’s control, or right to control, the manner and means of performing the services. Earned income generated by an independent contractor is treated as self-employment income.

Examples of various types of independent contractor jobs include, but are not limited to, the following:
- Recyclers,
- Tutors,
- Exotic dancers,
- Music teachers,
- Hair stylists who pay space rent,
- Tattoo artists who pay space rent, and
- Rideshare drivers (i.e., Uber, Lyft, HopSkipDrive, etc.).
Odd JobsOdd Jobs
A person may do one or several odd jobs, on a regular or irregular basis, and may or may not offer services to the general public. Personal tools or equipment (as opposed to supplies and materials) may or may not be used.
- Individuals who provide their own supplies or materials are self-employed.
- If the individual is specifically reimbursed for the cost of supplies or materials in addition to pay, or if supplies and materials are provided, then that individual is an employee.
GardenersGardeners

A gardener who operates independently, uses their own tools and equipment, provides plant sprays, plant food, etc., and takes the profits or losses is self-employed.

An employee is a gardener who uses the homeowner's tools, equipment, plant sprays, or plant food and only provides the physical work and gardening knowledge.

Deprivation

If the principal earner is self-employed and works less than 100 hours monthly, “U” parent deprivation may be available based on the number of hours worked. For example, they may meet a deprivation basis of unemployed if they work less than 100 hours a month. Once U-Parent deprivation is determined, deprivation is not affected if the recipient increases their hours of self-employment.

The EW must explore the client's ability to work more hours and the need for the type of work that the client performs.

This may often be based upon:

An examination of the client's past business records.
The expectation of future business.
The client's sworn statement, using the Sworn Statement (GEN 853).

Work Registration

In determining the work registration requirement for a self-employed person, the EW must use the same criteria as for any other employed person.

Work Participation Requirements

All mandatory self-employed clients must have weekly net earnings that equal at least the federal minimum wage multiplied by the number of hours required (example: 35 hours per week for a two-parent AU) in order to meet the CWES participation requirements.

Example Example The Principle Earner, in a 2-parent AU, is a self-employed mortgage broker. The client must have net earnings (after the 40% standard deduction or actual expense deduction) of at least $229.25/week (35hrs x $6.55), in order for the client to meet the work participation requirements.

Exempt Clients

Clients who are self-employed but exempt from the work participation requirements are not required to meet the minimum earnings requirement; however, effective 10/1/09, once the exemption is removed, the client must then meet the new requirements.

Timeline

Currently, self-employed clients will be allowed one year from October 2008.
Continuing clients who become self-employed will be allowed one year from the date they become self-employed to meet the work participation requirements.
Intake clients who are self-employed will be allowed one year from the date of application to meet the work participation requirements.

Note: Failure to meet the CWES participation requirements will result in the client being required to participate in other WTW activities.

Informing Notice

The Employment Participation Requirements Informational Notice (SCD 2169) must be given to all self-employed clients:

at intake, and
when the client reports a change to self-employment.

Refer to CalWORKs Employment Services Program, Employment Services Referrals, and CalWORKs Employment Services (CWES) Sanctions for further information regarding the Employment Services program.

Documentation

Actions taken on these cases must be clearly documented, and all necessary forms completed. It is important that the EW provide sufficient documentation to allow another person to clearly understand the actions taken and the reason to support those actions. Often these cases require that the EW exercise considerable independent judgment concerning the income, expenses, and/or resources of these persons.