Employment & Retention Services - Self-Employment

Definition

Self-employment is working for oneself with direct control over the work and services undertaken or provided. Generally, the self-employed individual would pay his/her own Social Security and income taxes and would not be covered by Worker’s Compensation (this includes Day Care providers). The income tax return may include a profit and loss statement. The self-employed individual may also have his/her itemized list of income and expenses. The Associate Employment Counselor (AEC)/Employment Counselor (EC) EC may consult with the EW Social Services Benefits Specialist (SSBS) when discrepancies are discovered with respect to client’s self-employment.

Note: Insurance agents or real estate salespersons are not considered self-employed, since they work under a broker. The agent or salesperson may be considered “under-employed.” [Refer to "Employment & Retention Services - Under-Employment Policy" for additional information.] The broker could be considered self-employed. Other individuals considered self-employed include but are not limited to Uber, Lyft, and Door Dash drivers.

Calculated Hours

To meet the federal Work Participation Rate (WPR) WPR, a self-employed client must have weekly earnings, less business expense (actual or 40% deduction) that equal at least the federal minimum wage multiplied by the number of required participation hours. To determine the number of self-employment calculated hours that can count for federal WPR, take the individual’s gross income less business expense and divide by the federal minimum wage, and divide by 4.33. [Refer to CalWORKs Handbook, “Income Determination [44-113.212],” page 31-5 for additional information on self-employment.]

Example: Self-employment less business expense is $1,099/month. Calculated weekly hours are determined by dividing $1,099 by federal minimum wage ($7.25), divided by 4.33, which is 35.

Attendance Verification

Attendance Verification (SCD 1755 A)

CalSAWS entries for the two (2) conditions for applicable to self-employed individuals are as follows:

• Schedule Self-Employment activity using actual weekly hours during the one-year period requirement to increase earnings.
• After the one-year grace period, enter calculated hours when scheduling activity and enter calculated hours in the attendance window.

Note: Self-employed clients complete their monthly SCD 1755 A using actual participation hours. In CalSAWS and on the Welfare-to-Work Plan Activity Assignment (WTW 2), enter the hours based on either of the above two conditions.

Timeline

The goal is to help client obtain a meaningful job that will sustain the family's needs. A self-employed client, whose calculated hours are less than the required participation hours, has one year to meet this requirement. After one year, the client will be evaluated by the AEC/EC to determine if he/she is meeting participation requirements based on calculated hours.

Self-employed clients must sign the “Employment Participation Requirements Agreement” (SCD 2169 A) and meet the work participation requirement as follows:

• Intake clients who are self-employed at the point of benefits application will have one (1) year from the date of the CalWORKs benefits application. During CWES Intake orientation and appraisal, the begin date entered on the SCD 2169 A must be the date of the benefits application.
• Continuing clients planning to become self-employed at a future date, and clients who become self-employed after their benefits application, will be allowed one (1) year from the date they become self-employed.

At conclusion of one (1) year, if a client is not meeting participation requirements based on calculated hours, he/she will then be assigned to a new or concurrent Welfare-to-Work (WTW) activity to meet weekly participation hours.

Note: The timeline to meet calculated hours applies to all mandatory and exempt volunteers.

Federal WPR

When calculated self-employment calculated hours are do not meeting federal WPR, other concurrent activities must be assigned by the AEC/EC RRT to ensure the assist client meets federal WPR for their Assistance Unit (AU) for review month.

Informing Notice

The AEC/EC should document in the CalSAWS Journal Detail page when the SCD 2169 A is signed by client. This form serves as a contract for the client. A similar version of this form, which is used as an informing notice, “Employment Participation Requirements Informational Notice” (SCD 2169), is included in the benefits Intake Packets. [Refer to CalWORKs Handbook, “Work Participation Requirements, page 31-10".]

NONC Noncompliance/Sanction

If at the conclusion of one year, a self-employed client fails to increase his/her earnings or fails to sign a WTW Plan and participate in a concurrent activity, the noncompliance process must be initiated.

Journal Entry

When implementing a sanction related Self-Employment participation, or any related activity, the EC Employment Program Supervisor (EPS) or lLead must document in the Journal Detail page that the reason for the sanction was is related to Self-Employment, or a related activity.

Note: A WTW Curing Sanction Plan cannot be signed to include Self-Employment activity if the reason for the sanction was due to not meeting the calculated hours requirement, or due to not complying with the concurrent activity requirement after the one-year grace period.