Employment and Training Administration
Washington, D. C. 20213






August 13, 1979




June 30, 1980











Acting Administrator
Field Operations




Application of the Between-Terms Denial Provisions Required and/or Allowed by 3304(a)(6)(A), FUTA, to Headstart Program Personnel


  1. Purpose To transmit a modification of a previously published Federal position on personnel involved in the Headstart Program.

  2. Reference P.L. 94-566, P.L. 95-19, Draft Language an Commentary to Implement the Unemployment Compensation Amendments of 1976--P.L. 9 -566 and Supplement 4, 1976 Draft Legislation, dated August 26, 1977.

  3. Background Under a previous published position, services performed in Headstart programs were not considered services for an educational institution in applying between-terms denial provisions in section 3304(a)(6)(A), FUTA, to employees participating in these programs.  This has been modified to include certain situations in which-the between-terms denial may apply to Headstart employees.

    Supplement 4, 1976 Draft Legislation;  page 5, states that Headstart programs are not educational institutions within the meaning of section 3304(a)(6)(A), FUTA.  This conclusion was reached by applying the definition of educational institution on page 39 of the Draft Language and Commentary to Implement the Unemployment Compensation Amendments of 1976 to program standards for the Department of Health, Education and Welfare (HEW) Headstart Program.

    About 80% of Headstart programs are operated by Community Action Groups.  Headstart programs operated by Community Action Groups do not meet the criteria of educational institutions.  This means that the services are covered, assuming the Community Action Group, is a nonprofit organization as described in section 501(c)(3) of the Internal Revenue Code of 1954, is exempt from income tax under section 501(a) of that code, and employs four or more workers in 20 weeks, but that the work performed are not services for an educational institution and therefore, not subject to the between-terms denial provisions.  That conclusion, as it applies to Community Action Groups operated Headstart programs, remains unchanged.

    In other cases, HEW Headstart funds are paid to governmental entities.  Under this arrangement, a board of education may administer the program as a side activity, in a sponsorship role because no other agency is available locally to run the program. Such administration is separate from the board's educational role.  In such a case, Headstart workers are not employees of an educational institution, since they are not employed by schools administered by the Board of Education; therefore, they are not subject to the Federal between-terms denial provisions.

    Headstart programs in certain localities are not handled in this manner but are operated by individual boards of education as integral parts of schools, with programs conducted in school buildings. In these instances, Headstart employees are under the supervision and control of the board, and are employees of the schools; they are subject to the same employment conditions as other professional and nonprofessional school employees of the educational institution operated by the board. Under these circumstances, the Headstart employees are subject to the conditions of between-terms denial provisions applicable to other employees of educational institutions.

  4. Interpretation. In light of the above, our original position as been modified to permit application of between-terms denial provisions when a local board of education operates a Headstart program as an integral part of the school system in facilities of an educational institution, with Headstart workers as employees of the board and the schools in every respect; i.e., subject to all employing policies, such as hiring, firing, working conditions, as other employees performing services for the educational institution. Under these circumstances, such workers are considered to be employed by an educational institution and as such, subject to the same between-terms denial provisions of the State law as are all other educational institution employees.

  5. Action Required SESAs are requested to:

    1. Provide the above information to appropriate staff,

    2. Instruct local office personnel to investigate conditions under which the Headstart program operates,

    3. Determine if, in fact, employees of the program are performing their services for an educational institution and that they are employees of the school and the school board that operates that school.

  6. Inquiries Direct questions to your regional office.