SSR 69-60: SECTION 210(j)(2). -- EMPLOYER-EMPLOYEE -- SERVICES PERFORMED BY A HANDICAPPED INDIVIDUAL IN A SHELTERED WORKSHOP

20 CFR 404.1004(c)

SSR 69-60

J performed services at a guidance center maintained by a State

association under a rehabilitation program for retarded and other

handicapped individuals. The center is supported by funds from Federal and

State appropriations, from voluntary organizations, and from work done by

participants in the program of the sheltered workshop. J's work included

food preparation, housework, assembly work and envelope stuffing.

J completed the rehabilitation program of the center which lasted for 42

weeks, divided as follows: (1) an 8-week diagnostic and evaluation period,

exploratory in nature, which enabled the supervisor to make a realistic

appraisal of J's capacity and gave J an opportunity to try out various

types of work within her abilities; (2) a 16-week personal adjustment

training period, which helped J develop proper work habits, and

interpersonal relationships, while improving her tolerance for work,

attention span and ability to carry out orders; and (3) an 18-week

vocational training period, which improved her ability to perform those

tasks in which she showed the greatest proficiency. Regular class hours

were followed and her work was done under close supervision of

instructors. She was paid a stipend of 11 cents an hour.

After completion of the above regimen the individuals enter regular

employment if they are able to perform a job available to them.

Individuals unable to secure regular employment because of the severity of

their impairments, or the unavailability of jobs, are known as "terminal

cases" and are retained in the sheltered workshop at the center

indefinitely or until placed in regular employment. Individuals performing

services are paid at the rate of approximately 10 percent of the statutory

minimum wage, based on a judgment that handicapped individuals work at

about 10 percent of the capacity of a worker in regular employment at the

minimum wage

own as "terminal

cases" and are retained in the sheltered workshop at the center

indefinitely or until placed in regular employment. Individuals performing

services are paid at the rate of approximately 10 percent of the statutory

minimum wage, based on a judgment that handicapped individuals work at

about 10 percent of the capacity of a worker in regular employment at the

minimum wage. The computation of payments on this basis is required by the

State Department of Labor. J remained in the center as a terminal case and

performed simple sewing tasks under close supervision. She continued to

receive instructions in her duties and had to follow a daily routine to

the extent her condition permitted. Her payments were based on her

productive capacity.

The issue to be resolved in this case is whether J's services at the

rehabilitation center were performed as an "employee" within the meaning

of section 210(j)(2) of the Social Security Act.

As defined in section 210(j)(2) of the Act the term "employee" means, as

pertinent here,

Whether an individual is an employee under these common law rules is

largely a question of fact to be determined from the facts and

circumstances in each individual case. The guides for determining when an

employer-employee relationship exists are set out in Social Security

Administration Regulations No. 4, § 404.1004( c ) (20 CR

404.1004(c)). Generally such a relationship exists when the person for

whom the services are performed has the right to control and direct the

individual who performs the services, not only as to the result to be

accomplished by the work, but also as to the detail and means by which

that result is accomplished

in Social Security

Administration Regulations No. 4, § 404.1004( c ) (20 CR

404.1004(c)). Generally such a relationship exists when the person for

whom the services are performed has the right to control and direct the

individual who performs the services, not only as to the result to be

accomplished by the work, but also as to the detail and means by which

that result is accomplished. Where, however, the intent of supervision and

control of the individual who performs services is to rehabilitate and

protect him, and to accustom him gradually to industrial working

conditions outside the sheltered workshop, there is not that degree or

kind of direction and control necessary to establish an employer-employee

relationship under these common law rules.

In the instant case the facts show that the services which J performed

during the 42-week guidance center program were purely those of a patient

or trainee, performed primarily for therapeutic and rehabilitative

purposes and the supervision and control exercised by the center was of a

protective nature as distinguished from the type of control envisioned in

section 210 of the Act. Although J did receive certain monetary allowances

in connection with her work, there was no agreement of any nature to form

an employment relationship under the usual common law rules. Once,

however, J had completed her rehabilitative training and was classified as

"terminal employee" by the center, an employment relationship was

intended. As a "terminal employee" J was expected to follow a daily

routine, within the limits of her impairment, and was instructed as to how

the work was to be done. In addition, the center exercised the right to

change the methods followed by J in the performance of her services. The

center set her hours of work and production schedules. She could quit just

like any regular employee, and she could be discharged.

loyee" J was expected to follow a daily

routine, within the limits of her impairment, and was instructed as to how

the work was to be done. In addition, the center exercised the right to

change the methods followed by J in the performance of her services. The

center set her hours of work and production schedules. She could quit just

like any regular employee, and she could be discharged.

Accordingly, it is held , no employer-employee relationship within

the meaning of section 210(j)(2) existed between J and the center during

the 8-week diagnostic and evaluation period, the 16-week personal

adjustment training period, or the 18-week vocational training period, all

of which were designed only for therapeutic and rehabilitation purposes.

Further, it is held , an employer-employee relationship did exist

once the rehabilitation program was completed and J performed services as

a "terminal employee."