The key is still whether there is an employer-employee relationship.  The administrative exclusion provided for by the IRS back in the 60's, which is still effective today, only applies to participants in short-term rehabilitation/training programs.  Presumably, your client is within this class of workers and was issued a 1099-MISC.

Participants who remain with sheltered workshops in long-term roles after such programs would still be classified as employees in general and their wages would still be subject to reporting on W-2 and employment taxes as usual.