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Committee directs staff to clarify when stipends and loan repayments reported on 1099s count as qualifying supervised‑experience compensation
Summary
The committee voted unanimously to direct staff to draft statutory amendments clarifying that stipends or educational loan repayments qualify as non‑employer awards only when issued by governmental or non‑profit program administrators and are not employer‑funded compensation, and to require applicants to bear the burden of proof on audit.
The Policy & Advocacy Committee of the California Board of Behavioral Sciences on June 16 voted to direct staff to draft legislative language clarifying how stipends and educational loan‑repayment awards reported on IRS Form 1099 will be treated for supervised‑experience documentation.
Sarita Russo, the board’s special projects and research analyst, told the committee that current practice acts require applicants to submit W‑2 forms when experience was earned as an employee or a letter when the experience was volunteer work, and that "submission of a 1099 tax form usually indicates to the board that the applicant served as an independent contractor when gaining hours of supervised experience, which is not permitted." She said staff has seen applicants misinterpret an existing statutory clause and sometimes submit 1099s that reflect stipends or loan repayments rather than compensation for services.
Staff’s draft amendment would: (1) define qualifying stipends or educational loan‑repayment awards as those issued by governmental or non‑profit program administrators (not employer‑funded compensation); (2) clarify that employer compensation does not qualify regardless of the tax form used; and (3) place on the applicant the burden, upon audit, of demonstrating that a 1099 reflects an awarded stipend or loan repayment that meets the statutory criteria.
Committee members expressed support for closing the apparent loophole and asked staff to draft parallel amendments for the LMFT, LCSW and LPCC practice acts. Jean Tierney of the California Association of Marriage and Family Therapists (CAMFT) thanked staff and said CAMFT’s feedback had been reflected in the materials.
The committee unanimously approved the motion to "direct staff to draft the discussed amendments for LPCC and LCSW, make any discussed or non‑substantive changes, and bring the proposal to the board for consideration as legislation." Christina Kitamura called the roll: Christopher Jones, John Sovac and Rebecca Thies voted yes.
Next steps: staff will prepare statutory language for consideration by the full board and return with draft amendments and recommended legislative text.
