11 January 2005
Self-Employment—Newspaper Carriers and Other
|| Self-Employment—Newspaper Carriers and Other
|| All Regional Directors
Food Stamp Program
It has come to our attention that a State agency changed its regulations
to specifically prohibit newspaper carriers from being considered
self-employed. This change appears to have stemmed from the fact that a food
stamp client had filed a fair hearing request because the State agency would
not treat his income as self-employment, nor allow his self-employment
expenses. The results of the fair hearing were that the administrative law
judge ruled in the client’s favor.
The State initially determined the client was self-employed and then
reversed its decision because the client did not have “full responsibility
for success or failure of the business operation,” meaning that the
newspaper’s success or failure did not depend on the individual’s one paper
route, so therefore the client was not self-employed.
Although we have stated in the past that States may use some discretion
in determining whether an individual is self-employed, this does not mean
that the State agency can create rules that would be more restrictive than
what is allowed under Federal regulations. The reason that self-employment
has not been strictly defined is so States may not be limited to the variety
of self-employment scenarios that may exist.
First, there is no federal rule barring newspaper carriers from being
considered self-employed. There is no authority in the regulations that
would allow a State agency to deny the exclusion of the cost of producing
self-employment income to households based solely on membership in a
designated class. The regulations contemplate that the State agency will
make such a decision based on the facts of the case.
Second, there is no federal rule that the self-employed individual must
have full responsibility for the success or failure of the business
operation. This particular client’s self-employment is similar to that of
other independent contractors such as individuals working for Mary Kay or
those who sell Avon. It is also comparable to individuals that own a
franchise. The self-employed individual need not be responsible for the
entire company’s success or failure to be considered self-employed.
We are requesting that the State agency revise its policy of not allowing
newspaper carriers to be considered self-employed and restore the
household’s benefits from the last certification review, if owed. Other
State agencies should review their self-employment policies as well to
ensure they are not unlawfully restricting a particular type of employment
from being considered self-employment or using language in their State rules
that would restrict program access to eligible households with a
self-employed household member.
If the client states he or she is an independent contractor and the State
agency finds this questionable, then the State agency should check with the
parent company to see if it considers the client to be self-employed or an
employee. If the business says that it considers the client to be an
independent contractor, then the client is self-employed, barring any other
evidence to the contrary.
If FNS staff have any questions regarding this memo, they should contact
Vicky Robinson of my staff at (703) 305-2476. If State agency officials have
questions, they should contact the FNS regional office for their area.
Certification Policy Branch
Program Development Division