CalWORKs WTW counting of self-employment time

On October 1, 2022, the Welfare-To-Work (WTW) changes adopted by Assembly Bill (AB) 461 (Chapter 582, Statutes of 2021) came into effect.  AB 461 changes how self-employed hours are calculated for a CalWORKs WTW member. Starting October 1, 2022, self-employment participation hours are calculated based on the number of hours the participant self-reported as being self-employed. These hours may be reported verbally, through a written self-assessment, timesheet, estimated hours for previous months, a business plan, or other means.

Counties can no longer requires participants to report their income to determine hours of participation in self-employment, and WTW participants may self-report any hours spent on activities related to their business to meet hourly requirements. In the case of non-subsidized employment, the participant may be self-employed if they have the income to support the hours, otherwise, they will follow the regular WTW stream to participate in self-employment. WTW participants who are self-employed as salespeople count all hours spent promoting their business or trying or contacting potential or actual customers as hours worked.

If the participant’s business is not generating income, the County should discuss what the business needs to be successful so that the member can support their family and reduce the need for support. Clients interested in becoming self-employed can explore the CalGOLD website to learn more about required licenses, permits, forms, and fees.

WTW participants must comply with all of the same applicable business licensing, permits, and tax reporting requirements as any other business operating in their locality. For more information, they should visit the California Department of Revenue website.

The county does not need to verify that WTW participants have received all legally required business documents or documents to conduct their business. Self-employment and support services are available to as needed for self-employed participants. Counties are encouraged to provide case management for self-employed members.

The CalWORKs County Plan and regional market rates govern transportation. Members may use their own vehicles if public transportation is not available, but the county cannot set a limit on monthly reimbursement.

Counties may provide the tools, clothing, fees, etc. that the participant needs to run their business as supportive services.  Licensing, permitting, and other fees and expenses necessary for self-employed participants to comply with local operating requirements are allowable as an ancillary supportive service. However, counties are not required to pay all of the participant’s expenses when starting the business. Counties may consider renting or leasing equipment to meet member needs if purchasing equipment is too expensive.

Self-employed participants may deduct 40 percent of their gross self-employment income, or reasonably anticipated self-employment expenses, from their gross income when determining eligibility and at each re-determination.

While limiting necessary support services is prohibited, counties may require a secondary review by a supervisor prior to issuing a supportive services payment.

MPP Section 42-750.42 requires county to inform members of changes to transportation arrangements and additional ancillary services at least ten calendar days in advance of the proposed change, except in emergencies or exceptional situations.

CalWORKs calculates work participation rates based on self-employment income divided by the federal minimum wage. Additional activities outside regular business hours are reported accordingly, depending on the type of activity.

For income reporting, CalWORKs recipients must report income during the semi-annual reporting period, annual redetermination, or any time their income exceeds the income reporting threshold.  (ACL 22-80, October 14, 2022.)