R takes care of a child, C, whose mother, M, works during the day. M brings C to R's home at 8:00 a.m. and picks her up at 5:00 p.m., Monday through Friday. M furnishes C's milk, but R furnishes and prepares C's noon meal. For her services and for providing a noon meal for C each day, R is paid x dollars per day. Under the arrangement with M, R cares for the child personally, but is given no instructions as to how to do so, except when special medicines are required for C. R uses her own judgment as to how to care for C and what kind of meals to prepare. R is also free to do her own housework when C does not require her attention, such as when C is taking her afternoon nap. R does not hold herself out to the public as being available to do such work and she had not done this type of work for anyone else.
The question is whether R is an employee or a self-employed person.
Section 210(j) of the Social Security Act provides that the term "employed" means any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of employee. The guides for determining when an employer-employee relationship exists are set out in Regulations No. 4, § 404.1004(c). Generally such a relationship exists when the person for whom 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 details and means by which that result is accomplished. Whether an individual is an employee under the common-law rules is largely a question of fact to be determined from the facts and circumstances in each case.
Under circumstances such as those in the present case, where a parent leaves her child at another person's home each day to be cared for and the parent does not give the person any instructions how to care for the child, except with regard to such special matters as diet, health, rest, and occasionally special medicines or special foods, such facts, by themselves, do not show a right to control and direct the person in the performance of her services to the extent that is necessary under the usual common-law rules to establish the relationship of employer and employee. Accordingly, it is held that R is not an employee of M.
Section 211(c) provides, with certain exceptions, that the term "trade or business," when used with reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 of the Internal Revenue Code of 1954.
Whether or not a person is engaged in a trade or business is dependent upon all the facts and circumstances in the particular case. As a general rule, when a person is regularly engaged in an occupation or profession for profit, and is not an employee as to such occupation or profession nor otherwise excluded from the self-employment provisions of the Social Security Act, such person is engaged in a trade or business within the meaning of section 211(c) and the income from such trade or business is includible in computing his net earnings from self-employment.
In the present case, it is held that R, in caring for a child in her own home under the above circumstances, is engaged in a trade or business and the income derived therefrom is includible in computing her net earnings from self-employment.
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