Self-Employment (FAM)

Self-employment is classified as a core activity when the individual is engaged in self-employment for profit.

General Activity Requirements

When a self-employed individual remains eligible for financial assistance:

• the NHEP team continues to work with the individual to provide case management and support services, with the goal of assisting the participant in reaching financial independence;

• NHEP services continue until the participant becomes independent from financial assistance;

• the team member must maintain monthly contact as specified on the Employment Plan (EP), and depending upon the number of hours the participant is self-employed per week, assess what services are most appropriate to support the individual’s career and personal goals; and

• the individual must participate in approved NHEP activities and related support services as specified on the EP.

Apply sanctions for failure or refusal to follow through with or comply with general activity requirements.

Documentation and Verification

To determine if self-employed participants are meeting work participation requirements, take the monthly "Net Profit" from self-employment. Divide by the federal minimum wage and then divide by 4.33. The result is the weekly hours that count towards participation for each week in a month.

Verify income using the recipient’s Schedule C and/or profit and loss statement. If a schedule C is not available or it is a newly established business, the participant must document current income as proof of participation. This will be reviewed every six months at redetermination. Participants must notify their worker of any changes in self-employment information within 10 days.

NHEP participants enrolled in the activity of Self-employment who are unable to provide the documentation described above, may verify NHEP compliance by providing non-self reported documentation that establishes:

• that self-employment work is currently being performed for income;

• a description of the self-employment responsibilities;

• the amount of expected income; and

• that the income will be paid and received within 30 days of this submission of this documentation.

When evaluating whether income will be paid and received within 30 days, special consideration should be given to individuals who are currently awaiting enrollment as a licensed-exempt child care provider with the DHHS Child Development Bureau (CDB) and associated CDB reimbursement checks, as enrollment and reimbursement can sometimes take up to 60 days.

Time Limits

There are no set time limits on the self-employment activity. However, the team member must evaluate the effectiveness of the self-employment activity or activities in moving the individual towards financial independence while considering the time the individual has already participated in the activity and/or the remaining months on the individual’s FANF lifetime limit clock.

Support Services

Self-employed individuals who remain eligible for financial assistance may be reimbursed for:

• transportation assistance, auto repairs, including mileage reimbursement to and from the child care provider and the self-employment site;

• fees and supplies; and

• child care.

Monitoring and Evaluating the Self-Employment Activity

Consider the following when monitoring and evaluating the self-employment activity’s effectiveness in moving the individual towards financial independence:

• months on the *FANF 60-month lifetime limit clock;

• hours worked in the activity;

• net profits;

• length of time involved in the activity (hours per week, months in the year, years engaged in the activity without reaching financial independence);

• measurable progress over time toward the goal of transitioning off *FANF financial assistance; and

• other participant or family issues.

If it is determined that an individual is not making satisfactory progress in the self-employment activity:

• the hours are no longer countable towards meeting the participation requirement;

• the individual must participate in other approved NHEP activities to meet participation requirements; and

• the EP must be revised accordingly.

See Section 808.17, Service Determination Appointment and Ongoing Assessments, for more information about monitoring and evaluating satisfactory progress in an NHEP activity.

Example: An NHEP recipient has been self-employed as a house painter and dry wall installer since 2002. A participant action step on his EP referred him to an agency specializing in self-employment to develop a business plan, but he has failed to complete this step. The recipient’s Schedule C from his 2003 tax return shows a monthly net profit of $99.42. When $99.42 is divided by the federal minimum wage, it is determined that the individual is participating for 19 hours. He did not provide a copy of his 2004 tax return. The recipient is unwilling to increase his hours as dictated by his EP. He is at month 48 of his *FANF clock.

The NHEP recipient has failed to:

• provide current information from his 2004 tax return to evaluate his most recent year of self-employment;

• increase his hours from 19, and is therefore not meeting the full participation requirement of 20 or 30 hours; and

• follow through with obtaining a viable business plan as directed by his EP.

The recipient is non-compliant with his EP in several areas and must be issued a notice of non-compliance followed by a sanction, if all noncompliance factors are not remedied timely. Since the recipient has been engaged in this self-employment business activity for 3 years and his monthly net profit in 2003 is $99.42, an amount that cannot sustain his family, it is clear that he is not making satisfactory progress in his self-employment activity. Since he is at month 48, he now has only 12 months to work with the NHEP Team to find employment that will help him become self-sufficient. The team member must review and update the EP. Although the recipient can certainly continue the self-employment activity, the activity needs to be supplemented with other NHEP activities for the individual to meet NHEP hourly work participation requirements. To meet the 20 or 30-hour participation requirement, the team member should explore other activities with the recipient, such as an AWEP or other paid employment.