WE NO LONGER ALLOW 12 MONTHS FOR A CLIENT TO MEET THE MINIMUM WAGE RULE FOR CHILD CARE BENEFITS. THE CLIENTS SELF-EMPLOYMENT INCOME MUST EQUAL MINIMUM WAGE OR CHILD CARE IS NOT APPROVED.

The Child Care Subsidy program requires parents and caretakers who are legally and financially responsible for a child to be working and earning federal minimum wage. This rule applies after all applicable business expenses have been deducted from their gross income. To determine if a self-employed individual meets this requirement, the following must be considered:

1. Is the individual considered self-employed?

If the answer to the question is yes, the individual must be earning federal minimum wage. Divide the net income (after expenses) by number of hours the person is engaged in the self-employed activity.

For example, John Tyler is a self-employed painter. His monthly net income is $800. John’s schedule varies but he states he works approximately 30 hours each week. 30 hours/week x 4.3 = 129 hours per month. $800 divided by 129 hours = $6.20 per hour. John will not qualify for child care benefits for his self-employment because he does not meet the minimum wage requirement.

2. Is the self-employed individual paid a set wage by the employer which does not equal minimum wage?

In this circumstance, the individual must ask the employer to increase the wages so the income equals minimum wage. If the employer refuses to do so, the child care application is denied.

For example, Sam Evans works for a construction company. He is paid under the table at a flat rate of $8 per hour. Sam has work related expenses such as purchasing tools and gasoline to travel to each construction site. These expenses mean Sam is eligible for a 50% deduction. Once this deduction is given, Sam’s hourly rate will only be $4 per hour which is below the federal minimum wage.

Sam’s situation was verified by phone with the employer. Sam’s employer stated that because he does not have the required license for his work field, Sam will not be eligible for a raise.

3. Is the self-employed individual paid by commission only which does not equal minimum wage?

If the answer to the question is yes, the individual must be earning federal minimum wage. Divide the net income (after expenses) by number of hours the person is engaged in the self-employed activity.

For example, Tim is a real estate agent working for Keller-Williams and is considered self-employed. Tim has been doing this self-employment for 4 months and has sold 2 houses during this time. His total gross income from his commissions is $3,000. Tim states he does this job full-time, 40 hours/week from 9 a.m. – 6 p.m. Tim has expenses such as gas, car maintenance, and cost of staging the homes he is selling.

The worker must divide $3000 by Tim’s 4 months of employment = $750/month. Then divide the monthly amount of $750 by 50% (expenses) = $375/month. Tim is not meeting minimum wage for the hours he works, therefore, he is not eligible for child care and his application must be denied.