WorkFirst HandBook

Paid & Unpaid Employment

8.2 Self-employment

Legal References:

The Self-employment section includes:

8.2.1 What is self-employment?

Self-employment occurs when a parent is working as a business owner or independent contractor. Parents working at least 32 hours or more per week at minimum wage, with an approved self-employment plan, may use self-employment as their primary path to independence.

Parents can be deferred from employment services activities for self-employment, if they meet all of the following conditions:

If the parent does not meet all these conditions, she or he can still be self-employed, but will also need to participate in employment services activities, possibly followed by other WorkFirst activities.

8.2.2 What are self-employment plans?

If a parent wants to pursue self-employment, refer her or him to a local business assistance center (see below - Other Resources). Add the referral to the parent's IRP and give the parent a reasonable amount of time to complete needed actions with the business assistance center. The business assistance center will help the parent pull together the information required for plan approval:

The business assistance center will also provide the parent with ongoing technical support, such as help to:

The self-employment plan will come back to you so you can decide whether to add self-employment to the parent's IRP and approve any needed support services (like paying for small business training courses) or child care. Developing the self-employment plan with a local business assistance center and accessing ongoing technical support are not countable activities.

8.2.3 What is the self-employment formula?

As shown on the chart below, there is a set formula to use when determining how much income a parent's business is generating, and how this translates into the number of self-employment hours per week. The parent must have at least 32 self-employment hours per week (earning 32 hours a week at minimum wage) to be deferred from job search.

Effective July 16, 2007, ACES will use self-employment data to calculate the average weekly hours of self-employment and display that information in eJAS.

ACES will apply the $100 self-employment standard deduction, as appropriate, to determine the amount of the cash grant without any action on your part.  Only enter verified business expenses on the ACES EARN screen.  You can use the expense type SE to record verified business expenses. However, if a verified expense is exactly $100, use the OT expense code instead.

Self-employment formula to calculate coutnable WorkFirst PT or FT participation hours
  1. ACES will subtract the parent's allowable, verified business expenses (but not the $100 standard deduction) from her or his gross monthly business receipts.
  2. Divide the result by the federal minimum wage.
  3. The result is the number of self-employment hours per month.
  4. Divide the number of hours per month by 4.33.
  5. The result is the number of hours per week.

Definition of Employment: Any legal income generating activity which is taxable under the United States Tax Code or non-taxable under treaty between an Indian Nation and the United States.

8.2.4 eJAS codes

When a parent is self-employed, use the eJAS codes:

8.2.5 Self-employment - Step-by-step guide
  1. The WorkFirst Program Specialist or WorkFirst Social Service Specialist:
    1. Locates the average weekly self-employment hours that are displayed in eJAS.
    2. If the parent is earning an amount equal to 32 hours of minimum wage or more and wants to pursue self-employment, defer from employment services activities for three months.
    3. Send the parent to the local business assistance center for self-employment plan assessment.
  2. The business assistance center will:
    1. Decide whether to approve the parent's self-employment plan
    2. Provide ongoing technical support to parents with viable self-employment.
  3. Upon receipt of self-employment plan decision, the WFPS or WFSSS:
    1. If approved, adds self-employment to the parent's IRP, showing the number of self-employment hours calculated, and pays any necessary support services and child care
    2. If denied, the WFPS or WFSSS refers the parent to employment services activities, with the appropriate number of hours allowing for the part-time self-employment activities.
    3. If the business assistance center will not approve or deny the plan, uses best judgment to decide whether to add self-employment to the parent's IRP for the next 6-12 months, based on the likelihood of the parent becoming self-sufficient through self-employment. Consider:
      1. Family size,
      2. Amount of income generated by the business, and
      3. How long the parent has been on WorkFirst.

Resources

Related WorkFirst Handbook Sections
Other Resources