SSR 67-24: SECTIONS 210(j) and 211(a) and (c). -- EMPLOYMENT -- TRADE OR BUSINESS -- FAMILY CARE HOME

20 CFR 404.1507

SSR 67-24

D has an arrangement with the State Department of Mental Hygiene to

provide family care for five or six adult patients in her own home. She

provides them with home care and meals and is paid approximately $125 per

patient per month by the Department of Mental Hygiene. She is given no

instructions as to the patients' care and the meals she provides. A State

social worker brings D new patients and visits once or twice monthly to

check the facilities, including the menus and preparation of meals. D's

home is not licensed and she has no contract with the State but she is

issued a certificate by the Department of Mental Hygiene showing that her

home meets certain required standards of hearing, ventilation, room size,

and the like. D does not advertise or actually hold herself out to the

general public as available to care for patients. She considers that she

is performing an act of charity and a service to the community by

providing care for these patients, and states that she does not wish to

make a profit. She does rely, however, on at least some of the money

received from the DMH in order to get along.

To be covered under the Social Security Act, a person must either be

receiving wages as an employee in covered employment, or earnings from a

trade or business covered by the law as a self-employed individual. The

question is therefore whether D is an employee or a self-employed person

for purposes of crediting earnings to her social security account.

d from the DMH in order to get along.

To be covered under the Social Security Act, a person must either be

receiving wages as an employee in covered employment, or earnings from a

trade or business covered by the law as a self-employed individual. The

question is therefore whether D is an employee or a self-employed person

for purposes of crediting earnings to her social security account.

Section 210(j) of the Social Security Act provides that the term

"employee" means any individual who, under the usual common- law rules

applicable in determining employee-employer relationship, has the status

of an employee. Such a relationship exists under common-law rules when an

individual is subject to the will and control of the person or entity for

whom he performs services, not only as to the result to be accomplished by

the work but also as to exactly how the work will be done. Whether an

individual is an employee under the above rules is largely a question of

fact to be determined from the facts and circumstances in each case. The

State does not control the services performed by D nor does it have the

right to direct her in the ways and means of conducting the home. Her

services then are not being performed as an employee of the Department of

Mental Hygiene.

The question remaining is therefore whether D's activities in providing

family home are for the patients sent to her by the Department of Mental

Hygiene constitute carrying on a "trade or business" within the meaning of

section 211(c) of the Social Security Act and consequently whether the

remuneration received by her for those services may be included in

computing her net earnings from self-employment for social security

purposes.

Section 211 of the Social Security Act provides in pertinent part:

* * * * * * *

rtment of Mental

Hygiene constitute carrying on a "trade or business" within the meaning of

section 211(c) of the Social Security Act and consequently whether the

remuneration received by her for those services may be included in

computing her net earnings from self-employment for social security

purposes.

Section 211 of the Social Security Act provides in pertinent part:

* * * * * * *

Section 404.1057 of Regulations No. 4 of the Social Security

Administration (20 CFR 404.1057) provides that a determination as to

whether a person is "engaged in an included trade or business will be

dependent upon all the facts and circumstances in the particular case." A

reasonable basis exists for a finding that a particular activity

constitutes a trade or business when a person is regularly engaged in an

occupation or profession for a livelihood or profit, he holds himself out

to others as being engaged in the selling of goods and/or services, and he

is not otherwise excluded from the self-employment provisions of the

Act.

No single factor is controlling and each individual case must be decided

on its own merits with due consideration being given to the entire factual

situation. The presence of the profit motive, however, is usually a

significant factor in determining that a trade or business is being

conducted. As in this case, the individual often states that there is no

profit motive, but the facts establish that in reality such motive does

exist. While D has stated that she does not wish to make a profit from her

family care services for the patients in her home, the evidence shows that

she relies on the money received from the DMH to help her get along. This

fact provides a reasonable basis for finding that a profit motive exists

in this case. Moreover, the facts show that substantially all the other

elements cited above for determining whether a trade or business is being

carried on have also been met

care services for the patients in her home, the evidence shows that

she relies on the money received from the DMH to help her get along. This

fact provides a reasonable basis for finding that a profit motive exists

in this case. Moreover, the facts show that substantially all the other

elements cited above for determining whether a trade or business is being

carried on have also been met. D is engaged in an income-producing

activity which operates on a regular, continuing basis. While D does not

advertise, it is known to the Department of Mental Hygiene that she has

regularly cared for this type of patient and the agency continues to refer

new patients to her. She is in effect holding herself out as providing a

specific type of service.

It is held , therefore, that D's activities in operating a family

care home for adult patients in her own home under the above circumstances

constitute the conduct of a trade or business and that the income derived

therefrom is includible in computing her net earnings from

self-employment.