7.4.1.9 CSJ Placements as Employment

The U.S. Department of Labor requires that all federal employment laws apply to individuals in welfare-based employment and training participants, even if the participant is not an “employee” in other contexts.

To ensure CSJ activities qualify as training and not employment for the purpose of wage withholding requirements, including Federal Insurance Contributions Act (FICA), the Earned Income Tax Credit (EITC), and unemployment compensation taxes, the W-2 agency must confirm:

The training is similar to that provided in a vocational school;

The training is for the benefit of the CSJ participant;

Participants do not displace regular employees;

Employers do not receive an immediate benefit from the participant’s training;

Participants are not entitled to a job after the training is completed; and

Employers and the participant understand that the participant is not paid.

The W-2 agency must use its best efforts to ensure that CSJ activities comply with the criteria listed above.

If a CSJ placement is determined to be employment under federal law, the State of Wisconsin, not the W-2 agency, is considered the employer for wage and tax purposes.