“Is it legal for my boss to take product fees from my paycheck?”
In the vast majority of states, arbitrary deductions from paychecks (even if you’ve authorized them by written agreement) are NOT permissible.
Most states have “wage theft protections,” statutes that prohibit wage deductions entirely, aside from “mandatory deductions” (taxes, for example) and rare circumstances (loan repayments to the employer, reimbursement for property damage, etc).
The clients who enjoy the services should be covering the product costs; not the employees who perform them.
If a salon owner isn’t able to cover the product costs, they need to do the math to properly calculate their service prices. Had those calculations been run at any point, they wouldn’t have to resort to wage deductions to cover their costs. Charging employees to work for you is completely unacceptable, unethical, and unprofessional. It is an amateur move.
Salon owners, before you start forming your counter-argument, answer this question: Can you think of any business in any industry that requires its employees to pay business expenses without reimbursement? Because I can’t. Just because you own the salon does not mean you can steal wages for your own benefit.
Your place of business is not some sovereign state, exempt from the laws that govern every other employer in America.
Whether you agree with the law or not, the IRS and DOL do enforce these violations and if you don’t figure out how to run your business and correct your mistakes before they find you, you’ll likely be looking at a really nasty (and tremendously expensive) situation. Don’t believe me? Read this.
To those of you who want to contact me and say, “Well my attorney said this,” or “My accountant said that,” I have this to say to you: I have had many salon owners email me the same lines. I have done Google searches and within mere minutes proven to them how wrong they were.
Do your own research.
Opening a salon or spa isn’t as simple as finding a building, decorating it, and filling it with staff members. As a salon owner, you alone are responsible for ensuring that you’re in compliance. Your business and your ass are on the line. Contact an IRS representative and contact your local labor board yourself. You are the business owner. Act like it.
I have composed a list of states that restrict or outright prohibit arbitrary wage deductions below and linked the relevant statues.
Please be aware, per federal law (the FLSA, applicable in all 50 states) the “commission-only” compensation method is typically only legal if the employer is diligently tracking hours and ensuring the hourly rate for each employee meet or exceeds the prevailing wage for each hour worked. If the employee’s commission earnings fall short of this, the employer must make up the difference.
“Commission” employees are not treated any differently than any other non-exempt employee.
The federal government classifies employees into two distinct groups: exempt (salaried) and non-exempt (everyone else). Employers are generally required to adhere to the Fair Labor Standards Act, which assures minimum wage, overtime pay, and many more protections. Our industry is not given special exemption from these laws.
Wage Deduction Legislation by State
If any of these links are broken, please leave a comment below and I’ll update them. Thanks!
ARIZONA (written agreement only)
COLORADO (written agreement only when deduction is for employee benefit, ie: employer loans, goods, meals, etc.)
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Hey Tina, great blog!
I have a question. I am a commissioned employee at a large salon in Colorado. Based on a client complaint I received last week, my salon is charging me the cost of replacing this client’s extensions. The cost is significant; hundreds of dollars.
Can they do this legally?
Absolutely not. Print this out and show it to her. It’s illegal, right there in black and white. No argument about it. =D
Under “Impermissible Deductions” it states
“Deductions as fines for employee behavior or actions
In general, employers may not apply fines to an employee’s earned wages or compensation based upon employee behavior or performance. For example, an employer may not typically deduct from the wages of a restaurant waitperson for the cost of a meal in the event that the customer does not pay the bill.”
That is technically the category your situation falls under. You are not responsible for those charges at all.
(for CT) What if the stylists salary is commission based and I end up refunding a client because a stylist screwed up the service, hence no remuniration from the client?
In Connecticut, you actually have to submit a form for review if you want to deduct anything other than insurance, loans, employee purchases, or charity contributions. Here’s some more info on that: http://www.ctemploymentlawblog.com/2012/07/articles/employer-deductions-allowed-in-connecticut-with-conditions/
I feel I should also say that you should NEVER refund services to a client. A good way to keep that from happening again is to have chemical clients (colors, perms, etc) sign a consultation form on which their expectations are clearly outlined. That way they can’t come back and claim they wanted something other than what they ended up with. It will also help keep clients happy overall since it will require your staff to conduct thorough consultations for each chemical service. On that sheet, make sure it clearly states that all service sales are final, no refunds under any circumstances. If they aren’t happy because the service turned out wrong, always fix it in house with another stylist. Too many scam artist clients out there will try and con free services around the holidays by asking for something bogus and then demanding a refund.
Also, you should make it clear to the staff that repeated “redo” clients will count against them and may bring their employment up for review. JCPenney salon had a similar program in place when I worked there and it was incredibly effective. The girls were forced to slow the hell down and actually LISTEN to the clients. They were required to go to continuing education on whatever complaint they received. If it was a problem with a cut, they had to sit through a cutting class. If it was color, they would have to go to a color class. If they screwed up more than so many times in any given month, they were in super big trouble and could be fired over it. Some even lost their bonus commission (which is earned by doing a certain dollar amount in services per pay period).
I apologize for having to keep this anonymous, but I am afraid of retaliation. I work in a salon in Washington state. We are commission based. In WA, they are required to pay us minimum wage for the hours worked. However, even while on minimum wage, if I do a color service, I am deducted almost $10 per tube of color used on the client. The client is not charged more or less per tube of color used. Meaning if a color charge for the client was *hypothetically* $100, even if I had to use 3 tubes of color, it would stay $100 for the client, but I would personally be charged almost $30 out of my minimum wage. Likewise, we are only allowed to use the product the salon provides, but we are required to purchase each product individually in order to have it at our stations and use it. This also comes out of our minimum wage.
In addition, if I did a terrible haircut and the client came back and wanted to see another stylist, I would be charged the cost of that stylist’s commission. So if I was paid $20 in commission for the service originally, but the other stylist that the redo is seeing would normally receive $40 of commission from a haircut, I would receive the initial $20 and then be charged $40 to cover the cost of commission for the redo. The client does not pay more to see a more senior stylist, even though I have to pay more for their commission. From what I understand, they do not do this to employees who make minimum wage, but it is done to those who have hit their commission mark in the pay period. Even if that commission mark is only $1 more than minimum wage would have been for hours worked.
Is any of this legal in Washington state? I wish I could print out a law to show them that it’s not. I really hope you can help. This blog is helpful! Thank you for the work you are doing!
Washington state does have laws in place to protect employees against wage theft, which is exactly what is happening here when your employer charges YOU for “cost of doing business expenses” like color and product. Those things are their responsibility to provide to you since they are necessary to complete the services they are offering at the business. Those expenses are the owner’s to absorb or to pass on to the client. They are absolutely not your responsibility.
The owner is most likely relying on the fact that even though they are deducting from your pay, you are still making minimum wage for each hour worked (after deductions). Even then, this is theft. Plain and simple.
Here is why this is illegal and improper: the owner is requiring you to use specific products (which you have to buy from her at her prices) but she is dictating the service prices. If you were setting the prices, you could begin to absorb some of that cost, but you can’t. It’s stupidity all around.
The statute of limitations in Washington for wage theft is 3 years in claims of unpaid wages upon an oral contract and 6 years in claims of unpaid wages upon a written contract (R.C.W. 4.16.040(1) & 4.14.080). This means that you have three years to make a case against her in civil court. You need to go through your pay stubs and total the amount of money she has taken from you in “fees.” Total separately the amount of money you have spent in product. That is the number you need to bring to your local labor board.
She is required by law to record all of those deductions as per WAC 296-126-028 which states: (5) The employer must identify and record all wage deductions openly and clearly in employee payroll records.
WAC 296-126-028 also outlines all incidents where wage deductions are lawful, none of which include punishment or reimbursement for a service rendered to an unsatisfied client.
Here are the laws in Washington State regarding wage theft:
What she’s doing is not legal. Show her those laws and ask her on what grounds does she believe what she is doing is proper or lawful? Call your local labor board and report her. Give her a letter explaining that you expect to be reimbursed for the money that is owed to you or you’ll sue her for it in civil court.
I believe I work at the same Salon described above even though the are anonymous. I contacted the board and they told me that the company can still hold me to these charges for redos and product because I signed to it ahead of time. The way I read the law, product and redo charges are not something they can deduct even if it is agreed upon. However I did sign an agreement. It is my understanding that even though I signed an agreement, what they are doing is still unlawful. Am I on the right track? Thank you so much I appreciate your work!
You are definitely on the right track. If the state law prohibits arbitrary deductions from wages, it’s illegal–which invalidates any signed agreement. Contracts that violate state or federal laws are unenforceable. So, whoever you were speaking with is very likely misinformed. A consultation with an employment law attorney should yield much more accurate answers.
This is SO helpful! Thank you!!
My next question is this: The entirety of my contract is a confidentiality agreement and non-compete clause. I read in another post of yours that non-compete’s have to be very specific. Mine only states that I can’t work for any company or do any activity “which is in direct competition with the salon or conflicts with the interests of the salon” within 25 miles for 2 years after employment. It goes on to say that I can’t take any clients with me who had services done at this salon, etc. But it never actually defines what “in direct competition with” or “conflicts with the interests of” means. It doesn’t say how big, or small, or what kind of business (salon retail, for instance). Nothing. Would this actually hold up in court? There are a million rumors about past employees getting taken to court and not getting taken to court, but no one has ever received a clear-cut definition of what the contract means by “competition.” And the only person I have actually known to have been sued for competition settled out of court. It’s all frightening but I’m getting the feeling it’s a lot of hot air.
Likewise, since sending my last comment, they have given us a new rule, that if we are late to our first client, we must comp the service, and after 3 times, we will be charged the price of a haircut, more than 6 times and we will be charged for the entire service. Basically we will pay the company for the client’s service if we are late. Not that being late is ok, but from what I gather above, that is also illegal.
This site is incredible. Thank you so much for the work you are doing!
You’ll probably be better off arranging a consultation with an attorney that specializes in contract law about that. In my opinion, that clause would absolutely not be held up. (I don’t know if you read this, but here is an article I wrote about NCAs: https://thisuglybeautybusiness.com/2012/12/employment-contracts-non-compete.html)
The reasons are: 25 miles is waaay too broad a radius. Salon non-competes generally only get enforced up to 3 miles. That’s why I advise owners to keep their agreements between 1 and 3. The date range borders on unreasonable as well. Another problem is that you did not perform “key managerial duties” and were not in a position where you could have gleaned confidential trade secrets that could be used by a competing employer to harm your current employer.
People that you expect to be bound by non-competes and non-disclosures are CEOs of Google, board directors at huge lending institutions, and basically…Super Important People. Super Important People know Super Important Company Secrets. Sharing of those Super Important Company Secrets by these Super Important People could potentially harm the original company they worked for by giving their competing company an advantage.
Somewhere along the line, salon owners found out about these contracts and somehow believed they apply to our profession.
It’s ridiculous to try to argue that a hairdresser, nail tech, or esthetician can somehow go to work for a competing salon and do significant, fundamental damage by doing so. Super stupid.
Anyways, you are right. The wage theft is illegal. Print out that information and confront her with it. Ask them if they want to continue violating Washington State’s clearly defined wage theft laws. If so, sue them in civil court and get your money back. Report them to the labor board. Seriously, don’t let this slide. Laws are written to protect people like you from people like that. Use them.
I am in Pennsylvania and we are being charged a 5% service charge on every service done in the salon to cover products and other salon costs. I am supposed to be making 50% commission, but they try to say that the service charge comes off of the top before commission and taxes are taken out. So they’ve said that 2.5% is the salons deduction and 2.5% is out deduction, but really it all goes to the salon no matter how you lay it out. So I guess in their opinion I am really only making 47.5% commission. Is this legal and where can I find information regarding this practice?
I find that “service charges” are used to disguise lower commissions. Either way, it’s not legal because what they’re doing is charging you for cost of doing business expenses. If your owner couldn’t handle the cost of doing business, she shouldn’t have opened to begin with, and that’s the truth. The tax laws regarding resale and claiming business deductions make it clear that charging staff for product required to perform their job is illegal. PA law also states: “If you have borrowed money from a third party, you can give the employer written permission to deduct payments from your earnings. If your employer has loaned you funds, it can deduct the amount from your earnings as long as you have given written authorization. Of course, normal tax deductions must be made. You must give written authorization to your employer to make such non-tax related deductions. It is not valid to sign a “blanket” authorization at the time of hire to cover any future deductions. Further, as a rule, deductions cannot reduce your gross pay below minimum wage, and the deductions must be for the employee’s benefit.” If she hired you with the understanding that you would make 50%, then you need to be making 50%. Period. No less than that. If she’s deducting money from your check to pay for salon costs, that is NOT what you agreed on, which makes it an unauthorized deduction.
PA Labor Laws: http://www.portal.state.pa.us/portal/server.pt?open=514&objID=563209&mode=2#12
So from all angles; an employer charging stylists a chemical usage service fee is illegal in PA? I have a very similar situation as the above stylist and am in dispute with my boss currently.
My chemical service fee has been taken from my entire service totals not just chemicals.
I was looking for answers to that situation when I came across this site. Now I’m realizing my problem is much bigger than I originally thought.
Yes. Check the link I posted above. Deductions like that are not legal in Pennsylvania.
I am in the same situation. I work for a chain salon, 8 to be exact. I get 35% commission. We have a $3.00 product charge deducted for every service we do, from kids hair cuts to high lights. They also made me sign a paper where they take a percentage of my tips (for tax purposes). I did $330 in service the other day, right off the top, $60 was deducted for product, then 35% commission, then my taxes off from that. I am almost just volunteering my services to this salon.
Patti, none of that is fair or appropriate. You shouldn’t have had to sign a paper to allow them to deduct a percentage of your tips, as tips are considered taxable income by the IRS and the tax deduction on them is permitted by law. What you likely signed allowed them to claim additional money on top of that, since the waiver is completely unnecessary for legal tax deductions. I recommend reading this article on your rights in the salon, and the articles that post links to.
I’m considering taking a job that requires an employment agreement and non-compete non-solicitation. It is a 5-mile radius for 18 months. Also in discussion, they mentioned being charged for product like color–they deduct it from your commission. I’m so confused about this. This is a large, well-respected salon that has been in business for like 30 years. How are they getting away with it? I know they have very tight and thorough documentation practices. Other than these two points, I would love to work for this salon. Is it ok to ask them to change the non-compete to something more reasonable like 9 months? I would get invaluable education and experience at this salon but reading this article is making me nervous. Three other salons I interviewed with have non-competes and charge for color (one is an Aveda Concept Salon). PA is one of two states that does not allow renting–in this scenario I would understand the product charges but since you can’t rent here, I’m curious how they are getting away with it?
Hi again, after reading some other forums I think I now understand how the salon is doing this. Let’s say the service is $75. The salon takes the product charge off the service FIRST so let’s say its $5. Then if the commission is 50% you and the salon split the $70 and you get $35. When I look at it this way, it seems ok to me. Your thoughts?
If the salon discloses that the service prices are not reflective of your actual ticket sales–for example, the salon owner says, “The price you see on the board is not the number your commission is calculated from. That cost actually includes a $5 product charge on chemical services–” or whatever, that is entirely legal and permissible. The key factor here is that they have to let you know that you’re not earning commission on gross ticket sales–you’re earning commission on service charges, which are billed separately from product costs.
Personally, I think that even doing a line-item billing structure like that is more trouble than it’s worth. It’s a hassle, suspicious, and I wouldn’t advise implementing it in any of the salons I consult for. We’re not like an automobile repair shop. Our “parts” can’t be accurately quantified. When you charge more than the product cost, you enter a very questionable sales tax area, since you’re profiting on the product by “selling” it for more than you’ve paid. Too sticky. Salon owners just need to do their math and set their prices to more than adequately cover their expenses.
Well, that non-compete won’t hold up. It’s too wide a radius and too long a timeframe. Also, judges generally consider them inappropriate for our business. I’ve heard of judges holding up ones I considered unreasonable, so it depends, but I highly doubt that would be enforced.
The non-solicitation is enforceable and actually something I recommend my consulting clients implement in their businesses for several reasons, so I wouldn’t object to signing that if I were an employee. It’s reasonable for the owner to want to protect their clientele.
The way they’re getting away with it is the way you’ve described in your other comment–which I’ll respond to now. 😀
I work in a salon in Wisconsin and have similarly issues. I was hired with the understanding I would be paid a 50% commission. My employer also charges a “service charge” of 10% on our gross receipts. This charge is NOT on our payroll stubs nor is it stated on any of the salon brochures (so clients don’t know). I questioned it once and was told her accountant said “service charges” are allowed and are solely for the benefit of the employer. Where can I find information?
Here’s the thing, wage deductions of any kind aren’t permitted in most states unless they’re specifically NOT for the benefit of the employer. I think your employer may have been confusing the service charges she’s charging you, and “service charges” that are billed to the clients themselves. Those service charges (or “auto-gratuity”) are unlike tips, in that the employer can determine the amount, they’re not optional for the customer, and the employer can distribute them as they see fit. If you click the link to Wisconsin above, you will be directed to the statute.
I work in a spa in Colorado. We are employees (taxes taken out) and given an hourly only if it does not exceed our commission. They also take out an additional amount per massage. is this legal. I already looked up the CDLE labor laws yet they seemed unclear since it was a commissioned based employee-Thank you
Because they adhere to the FLSA, it’s legal as long as the amount taken does not drop you below the state or federal minimum wage (whichever is higher). However, it isn’t ethical and I wouldn’t put up with it.
Oh, I should mention that it IS illegal if it violates an employment contract that prohibits (or does not implicitly state) the fees. If you were hired under the assumption that you would be making a certain percentage or amount and they are removing fees without altering the contract, those deductions cannot be made without your express written consent.
Hi Tina, I am an employee at a med spa that was just told that my hours have been changed for 32 to 14 per week and my pay has gone from 16.00 to 8.00 per hour. They are now going to pay be 40 % commission on services and 15 % on products sold. I have always been an hourly employee and I have no idea if this is a good deal?
Well, that actually depends. Take a look back at your last two weeks of service sales and compare what you would have made on those services if you had received 40% commission on them. Then calculate your pay at $8/hr and add that to the commission total. Whether or not this is a good deal for you really depends on how busy you are. Generally, employers put this system into place to motivate staff to provide better customer service and to ensure the clients return. It’s actually the compensation system I recommend, for several reasons. For the most part, salon & spa staff will ALWAYS make more on commission than hourly if they have good people skills and are good at what they do.
Hi Tina, I have been working for a spa in Alabama for about years now. I make 50% commission. The owner now wants to start charging us the employes for product usage per a service on the guests. Is this right?? can they do this?
Unfortunately, Alabama is a really terrible state to be an employee in. They have no laws in place to protect employees from wage theft. This is directly from Alabama’s Wage Payment laws:
“Alabama does not have any laws regarding what deductions may or may not be taken from an employees paycheck or whether an employee must provide written consent prior to any deduction. The lack of a law prohibiting deductions likely means an employer can withhold or deduct wages from an employees pay check for:
breakage, damage, or loss of the employer’s property
dishonored or returned checks
other items necessary for employment
In accordance with federal law, an employer may not make deductions for any of the above-listed items if it would cause the employee to earn less than federal minimum wage for the period in which the deduction was made. Deductions to pay for an employee’s portion of any fringe benefit would be permissible.
Alabama does not have any laws prohibiting an employer from requiring an employee to purchase a uniform, tools, or other items necessary for employment.
Employers may reduce employee wages at any time, unless there is an employment agreement or contract that prohibits the reduction. Alabama does not have any laws addressing whether an employer must provide employees notice prior to instituting a wage reduction. However, a wage reduction can only be applied to hours worked after the decision to reduce wages has been made and cannot be applied to hours already worked.
Alabama does not have any laws requiring an employer to provide employees with a statement of wages or pay stub.
Alabama does not have any laws requiring an employer to keep any employment-related documents.
Alabama does not have any laws requiring employers to provide employees, whether at hire or at any other time, of notice of wage rates, dates of pay, employment policies, fringe benefits, or other terms and conditions of employment.”
That state is at the top of my list when it comes to enacting wage theft legislation and employee protection laws, not just because it comes first alphabetically but because it is the most lax state I’ve come across since getting involved in the wage theft legislation movement.
I am in Illinois, just finishing up my training as an intern and about to move to the salon floor. I work at a high end salon that deducts a product fee for every service provided. This fee comes out of the service total after the employee’s commission. For example, if a service costs $100 and my commission is 35% (pathetic, right?) with a $12.50 product fee (for color), I receive $22.50. I am not sure if my employer deducts these product fees from the business taxes. However, I have been told that employees cannot deduct the fees unless they equate to $16,000 or more per year. Not sure how true that is.
What I am asking is if it is legal for my employer to deduct these product charges in my state. The owner claims that many salons do this…particularly aveda salons (which we are). As if that would make it any more ethical! I would appreciate any help in this matter.
Illinois (particularly Chicago, which has enacted some really strict municipality laws to protect workers), is a very *bad* place to try and commit labor abuses. This is from their website:
“WHAT DEDUCTIONS CAN AN EMPLOYER LEGALLY MAKE FROM MY PAY?
An employer may make certain deductions from your pay, but the law mandates that each employee shall be furnished with an itemized statement of deductions for each pay period. Deductions may be made
when required by law (such as taxes),
to the benefit of the employee (such as health insurance premiums, union dues etc.),
a valid wage assignment or wage deduction order in effect, made
with the express written consent of the employee, given freely at the time the deduction is made.
The law allows other deductions for employees of the City of Chicago, METRA, CTA, CHA, Chicago Park District, Chicago Board of Education and Chicago City Colleges.
An employer cannot deduct money from your pay for case or inventory shortages or damages to property or equipment, or for a uniform unless you sign an express written agreement allowing for the deduction at the time the deduction is made.
IDOL does not recognize blanket authorizations for deductions. In addition, an employer cannot withhold earned vacation or wages or any final compensation because you have failed to give notice of the termination of your employment, because your termination of employment was not voluntary or you have failed to return equipment, uniforms, telephones, pagers or other employer owned equipment you used during the course of your employment. Where an employee accepts a disputed paycheck with a deduction, acceptance will not be considered evidence that the employee has accepted the deduction.”
Here’s the problem with this arrangement: they’re taking it out *after* your commission is calculated, which means *you* are paying for it. It isn’t added to the client’s total and deducted before your commission. So what they’re doing is disguising a lower commission by implementing service fees. If I’m reading your state’s policy on wage deductions, what they’re doing is not legal.
They also lied. You are entitled to deduct unreimbursed employment expenses in ANY amount by filing a Form 2106-EZ with the IRS.
Also, a *lot* of salons (even chains, franchises, and corporations) regularly break federal tax and labor laws in our industry. That doesn’t make it right. Because state law varies so widely, I’d get a free consultation from an attorney in your area that specializes in employment law to be sure…but to me, it seems pretty clear that what they’re doing is exploiting their staff.
A friend of mine is a “New Stylist”, she passed her boards in January. Her employer has her on what she calls “The Redken Plan.” Based on that, her employer has withheld her tips from the day she started. That’s illegal, correct? And at the end of the year my friend will be held liable for paying taxes on that income that she didn’t receive as well, right? That’s my understanding. She’s very shy and doesn’t want to rock the boat at work. I told her to speak with her boss, I printed out an article you wrote about how the DOL says that employers have to abide by the Fair Labor Standards Act. She thinks that if she starts receiving tips from here on out that that’s fair. I disagree. Do you have any advice on how to approach an employer that is doing this for someone that feels the way she does? I would have no problem going to my boss with it, but she’s not me.
Your understanding on tip withholding is absolutely correct. It’s against federal law. If I were her, I’d print out the information from the Department of Labor website (and any relevant state statutes, which I’m sure your state has) and bring them to the owner’s attention along with a letter from an attorney (if possible) demanding the return of the tips in full within 7 days.
Thank you Tina for all your wonderful insight. I have worked in a commission pay salon in Michigan for 2 1/2 years. I had been working at the salon about 3 months when I noticed a ‘standard deduction’ eating $200 out of my paycheck. (Taxes and social security separate). I asked my boss and she said it was a product fee. “A couple dollars for this, a couple more for that’. I had just moved to Michigan and thought it was standard. My co-workers just shrugged and rolled their eyes. Any time I would ask the boss for a print out or breakdown of said deductions, she gave me every excuse why she couldn’t. The computer, the printer, needed updating. The product fee has jumped so high that its more than 15% of my sales some checks. the last check was $603 product fee on 3,100 in sales! She mentioned a few months ago how back bar prices have gone up so I guess it doubled our fee?!?! She said that since she deducts it before k commission is figured that’s its legal cuz the client pays for it. I tried to investigate the laws on deductions but they are difficult to interpret. Since I’ve worker for her she has deducted over $20,000 in her version of ‘product fee’!?!. She is guilty of a few other shady wage offences but I’d like your insight on this first. Oh, I should mention that I have never signed a contract of any type and it was not discussed upon hiring.
Whether or not it’s legal or illegal depends on which attorney you ask and how strong their grasp of employment law is. As far as I’ve been able to tell, there’s no precident for it because no other industry tries to pull this ridiculous shit, lol. What IS clear is that the states that outline permissible deductions do not list these deductions as being allowable–and if your employer hired you under the assumption that you would be making a set percentage of gross sales without mentioning a “product fee” that’s exactly what it is–a deduction. As far as I’m concerned, when it’s calculated doesn’t make a damn bit of difference. The owner is doing something extremely shady and putting herself in a really bad position. At best, it demonstrates how inexperienced and clueless she is regarding proper business operations. If she wants “the client to pay for it,” the client needs to be paying for it in the form of higher service charges or added fees for chemical services. Charging for the service and product usage separately would make it entirely legal, but those product fees would have to be listed separately and charged as a separate item on top of the service fee. Honestly, she’d be better off doing some goddamn math and properly calculating her service pricing instead of undercutting her staff. Total moron move, in my opinion.
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This is what I can find for Michigan: http://www.michigan.gov/lara/0,4601,7-154-61256_11407_59886_27856-39062–,00.html
I’ll have to sift through some case law to see if I can find anything more specific. Whether or not it’s considered a deduction might be questionable because of when she’s choosing to deduct it, but as far as I know, if you were hired under the presumption that you would be making a set percentage of gross sales and no mention of product charges were discussed at the time of hiring, it IS considered a deduction no matter when she calculates it. Start with the labor board and see if they can help you. If they can’t, find an employment attorney for a better answer.
I work at a salon in Wisconsin and my employer has been charging us a “chemical fee” ranging from $5-$8 per chemical service (colors/perms). We are a commissioned based salon. What exactly are the laws on this? Also I should mention I am at a commission of 45% and it states in our current handbook that fees will be deducted for employees at 47% and higher. I have brought it to my employers attention, however she stated we all verbal agreed to the fee. I stated back I have never agreed to the fee in writing nor verbally. And my paycheck has continued to have the fee removed. What are the Wisconsin laws on this? What is my next move? Thank you!
Here’s what I could find for Wisconsin: http://dwd.wisconsin.gov/er/labor_standards_bureau/publication_erd_8784_p.htm
Your state has great protections in place for employees, and I recommend that you utilize them by contacting the Equal Rights Division about your situation. From what I’m reading here, your employer’s current arrangement doesn’t seem to be in compliance with Wisconsin’s wage payment laws.
Thank you, I need help. I was hired at my Medical Spa as an hourly employee. I am a aesthetician. After a month of being employed, management came to me with a opportunity to work hourly vs commission. Hourly being 8.00 per h. And commission of. 40-45% all skincare treatments sold including packages. Except retail. As we do most of money through large packages. I was very skeptical about this. As I’ve never done this before. Management also said they would take 30% of all gross skincare for backbar . I thought this was extremely ridiculous, 1 because I am not independent, and she would have to provide this for her clients and staff anyway. It also seemed like allot the charge for backbar, considering they haven’t replaced backbar in God knows. Anyway, I asked her if this was normal practice, of course she said yes. After a couple of months of me complaining about my pay, I noticed things on my paystub that were off. Like my hours. And that she was only paying me 30 % . I know I was there for 40 hours or more being as though I was pushing for sales. I never received an itemized sales printout so I can calculate my commission, its extremely hard for me to see how much my clients are paying on large packages. I have to reset my room and get ready for my next client. Also consultations would come in and pay for packages. Even though I haven’t done a treatment on them yet I still am suppose to get my commission. So I got wise to the game and in 1 payperiod logged into the POS. Before my boss came in and printed out the closing report with receipts of sales. When she came in she said we grossed one amount. And on the POS it said exactly that. But when I totalled the receipt it said more, like allot more. When I approached her on it she said, oh remember the house gets 50% gross and then she also said that she doesn’t pay me for peels as they cost too much for the business to pay me out of that. I began to argue and say that wasn’t what we originally agreed and she claims different. Heres the thing I asked her how much it costs us wholesale for the medium peels she claims are so expensive. She tells me 200.00 . So I went behind her back and grabbed the wholesale book. It turns out it only costs us 65.00 wholesale. And we sell each one for 300-600 range. The numbers don’t match, I’m getting lied to. The gross sales are getting split by 50% . We couldn’t find a resolution and shes unaware I have the receipts. When she saw me the next day trying to print my hours and get more infor from previous weeks. She locked me out of those features. Also I still mopped floors, took out trash and cleaned filed, answered phones. She Then offered to put me back at my original payrate at 12 per hour when I first got hired. I feel like shes just trying to make me content cause I was on to something. I am frustrated and hurt. I am a single mother and walk 2 miles to and from work, yet Im almost always on time and she is always late, yet my hours aren’t what they should be. And in some of the paystubs they aren’t paying federal taxes, in some they are. There is Nothing in writing, and when looking at my paystubs some are hourly, some are commission, and some Salary. I can’t pay my bills and am in a financial hardship due to the iinconsistent craziness. What do I do? Who do I contact? And is this legal?
The whole thing is extremely shady. I can see several issues here that are highly questionable in terms of legality, but overall this is a huge lesson on why it’s critically important to get everything in writing, track your own sales and hours, and demand detailed pay stubs. My advice to you would be to insist on a proper employment arrangement, cemented in writing. You would be a W-2 employee, which means she would provide product, put you on a set schedule, and pay her portion of your employment tax. No changes to compensation would be made without your approval (again, in writing). Theoretically, you could consult with an attorney and consider bringing this to court, but it will be difficult to win and your gains may not make it worth the effort.
I am a W-2 employee paid commission only. Seemingly, all appropriate taxes are being withheld. My commission is 45%, but the salon takes an additional back bar/ product fee of 15%, leaving me realistically in the vicinity of 38.5%. All before taxes of course!
Is this “deduction” legal in MA? I have to use all the provided products and only those.
“She works hard for the money”
Deductions outside of those required for withholding (for taxes or as the result of a court order) are not permitted in Mass. http://www.mass.gov/lwd/labor-standards/minimum-wage/statutes-and-regs/minimum-wage-regulations-455-cmr-200.html
Your advice is reckless. The link you provided is for Minimum Wage employees, not commissioned based. There are two laws specifying deductions and the one for commissioned employees is legal if their is an agreement between the commissioned employee and the management. Especially if it is in writing and signed by the employee.
Kerry, you’re misinformed. Every employee that isn’t salaried is a “minimum wage” (non-exempt) employee. The FLSA is the legislation that governs all employees in every industry in the United States. Employers are required to adhere to the prevailing wage laws, which means that “commission only” is only legal if the employer is diligently tracking hours and ensuring that the commission total meets or exceeds the prevailing wage in their jurisdiction for the hours worked in that pay period. As far as the federal government is concerned, as long as the employee is making minimum wage for the hours worked (and the deduction doesn’t drop the employee below the prevailing wage), deductions are permissible as long as they’re disclosed in advance. However, a good deal of states have legislation in place to protect employees from arbitrary wage deductions (they’re called “wage theft laws”). Mass is one of them.
If you read in the link that you’re referencing, you’ll see this spelled out quite plainly.
“Regular Hourly Rate. The amount that an employee is regularly paid for each hour of work. When an employee, other than an employee exempt from overtime under M.G.L. c. 151, §1A, is paid on a piece work basis, salary, or any basis other than an hourly rate, the regularly hourly rate shall be determined by dividing the total hours worked during the week into the employee’s total weekly earnings. Regardless of the basis used, whether time rate, commission basis or piece rate, an employee shall be paid not less than the applicable minimum wage each week. The regular hourly rate shall include all remuneration for employment paid to, or on behalf of, the employee, but shall not include:
(a) sums paid as commissions, drawing accounts, bonuses, or other incentive pay based on sales or production; or
(b) sums excluded under 29 U.S.C. §207(e).”
The same wage deduction protections apply to these employees. They are non-exempt and are not treated any different than any other employee in the US.
As for your assertion that there are separate laws in Mass governing employees that aren’t “minimum wage,” and that a written agreement will somehow allow an employer to break a state labor law, please provide proof of that. I can tell you that no contract stipulation will allow or permit anyone to break a law. Contracts that contain clauses that violate the law are completely unenforceable, so you can see why I have my doubts.
Here is more evidence to support my claim. (Scroll to the portion about lawful deductions. “The Court further explained that lawful set-offs are limited ‘to circumstances where there exists a clear and established debt owed to the employer by the employee,’ and held that an employer cannot circumvent this requirement by having an employee authorize deductions.”
Thank you for this info! I am in a similar situation in MA. I clicked on this link you have here, but it says there is an error with uploading the page. Looks like that site is no longer updated and I don’t know how to search for the info. Could you re – research this for us MA stylists getting charged for product. Thank you!
Here you go Kate! I updated the link above also.
Similar situation in Hawaii…hired at 40%, but they take 10.5% in service charges. I signed a non-compete, but they handed me the paper with the commission scale and service charges-no where did I sign anything agreeing to that. The salon also regularly runs specials pricing promotions and that comes off the top before the splits. I feel like I was promised something, then I’m nickle & dimed right out of my paycheck!
Another PS for my earlier comment about deductions in MA….
The salon takes the 15% back bar deduction from my 45%; they of course have the full 55%. If it IS legal; can I take that full 15% as a tax deduction?
I don’t believe (based on the statutes I read) that this is permissible. Depending on the prices, it may even violate the FLSA, since those deductions may bring you below Massachusetts’s minimum wage of $9 per hour, depending on the service. I would certainly demand the detailed statement of deductions and claim them, in any case.
I work in a salon in Maryland. We are charged a shampoo fee, color fee, new client fee, etc. On top of that, when I started working there oct- dec they were not deducting my “fees” and when they caught it back charged me the 1200$ I “owed” them for their mistake. is that legal? another girl owed them over 4000$. I can not find anywhere anything to back me up that this is wrong, but I am sick of it. please get back to me asap as I am planning a meeting to lay it all out next week. I really need help.
Not legal! Here’s the relevant statute direct from your state authority: http://www.dllr.state.md.us/labor/wagepay/wpdeductions.shtml
I was just wondering if I forgot to charge a customer a service, is it legal for my boss to ask me to pay 50% to 100% of that service or dock my pay for that paycheck? I currently Employed in NYC, Thank you!
Absolutely not legal. http://labor.ny.gov/workerprotection/laborstandards/faq.shtm#18
I work for an Aveda salon and we get charged a 5% backbar fee. My last paycheck would have been 584$ but I was charged 51$ for the fee leaving my final pay 526$. After doing some simple math 5% of 584 is 29, which means he took an extra 20$ out of my check. I’m so tired of trying to make money in this industry I feel as though I put so much energy and passion into my work with little in return. What should I do? Love this Article, would love some advice!
I always find it surprising when an Aveda salon is taking advantage of employees because in my experience, they tend to be the best managed salons out there, but assholes exist all over the place. My advice is to show him the math and ask him to make sure the next check contains the shortage. I don’t know what state you’re in or how many hours you worked in the last pay period, but I’m willing to bet that they’re not adhering to prevailing wage laws and that your state may not be allowing those deductions, but that’s a whole other mess to deal with. My immediate concern, if I were you, would be letting him know that I’m watching my paychecks and that any shortages will be noticed–and that I’ll expect them to be immediately rectified. Be casual about it, not accusatory. Just act like it may have been an oversight or miscalculation on his part. See where it goes from there. If he gets hostile, it’s likely that it was intentional and you should probably start looking for another salon. If he seems apologetic, it’s likely just a mathematical error.
Don’t let this owner get you down. Start looking for another position and have a lot of questions for them, ask to speak to your future co-workers, remembering your interviewing them too (I have a stylist who has been with me 6 years, during her interview she asked me more questions then I asked her, I liked it, I knew she was serious.) And just DON’T GIVE UP, there is great money for both the employee and owner if the salon is run correctly.
I was wondering your opinion on 5$- 10$ per service “towel charges” I’m a commissioned employee in Nevada, I’ve never worked in a salon with towel charges on top of my commission before so its not clear.
WHAT?! A $5-10 per service “towel charge?!” That is INSANITY. Oh my god, lol. I can’t even handle that.
First of all, that is an arbitrary number that in no way reflects the actual cost of laundering or even providing the towels. Even if it did accurately reflect that expense, you’re an EMPLOYEE. That charge is not yours to bear. You’re in Nevada, which doesn’t permit this. The statute specifically states:
NAC 608.160 Withholding of amounts from wages due. (NRS 607.160, 608.110)
1. Without the written authorization of an employee, an employer may withhold from the wages due the employee:
(a) Any amount required by law; and
(b) Any employee contribution to a benefit program, such as health insurance or a pension plan, as permitted pursuant to NRS 608.110.
2. Except as otherwise provided in subsection 1, an employer may not deduct any amount from the wages due an employee unless:
(a) The employer has a reasonable basis to believe that the employee is responsible for the amount being deducted by the employer;
(b) The deduction is for a specific purpose, pay period and amount; and
(c) The employee voluntarily authorizes the employer, in writing, to deduct the amount from the wages.
3. An employer may not use a blanket authorization that was made in advance by the employee to withhold any amount from the wages due the employee.
(Added to NAC by Labor Comm’r by R115-04, eff. 8-25-2004)
I work in Florida and get charged an overall 20% “product fee” My state is not listed. What are the laws applying to me?
I am in Florida too. We are one of the 2 or 3 states with NO legislative protections against wage theft. You could bring it up with the labor board and see what they say. I’ve sent an email but I don’t expect a response until after the new year.
Any follow up with this information for the state of Florida?
Our state doesn’t have any employee protections whatsoever. We defer to federal legislation. As far as I know, only Miami and Pinellas have wage theft ordinances.
Do you know a recommend formula for salons to use to determine service price to charge customers vs. product cost? While at the same time, clearing to make a profit and paying your employee?
Hi Marie! For that, you’d need to hire a consultant to run your numbers. There is no one-size-fits-all formula for a salon–or for any service business, really. Your target demographic, local economy, and overhead all need to be taken into consideration. Additionally, a competitive analysis would need to be done (evaluating competing businesses to determine ways to set yourself apart and widen your margins by filling any demands they might not be meeting). Adjustments would need to be made to meet perceived service values in your specific area. This is what I do for a living, but I’m wrapped up in projects for the next several months. I don’t know of anyone to refer you to, but I highly recommend that you stick with a firm that has direct beauty industry experience–as in actual, hands-on experience as a professional AND as management.
I have worked on a strait commission basis for many years and always made a decent living. I now find myself with up to 200 dollars being taken out in service fees after commission on a weekly basis.I work in Ohio. Many salons in our area are doing a service charge. 1. Is it legal? 2.Are there any specific labor laws I can check? There is nothing on my checks to show this deduction. Our salon manual states that service fees will be charged to “defer product cost”
The link to the entirety of the Ohio employment laws are linked above, but the portion you’re looking for says:
4113.19 Payment in scrip prohibited at higher prices – deductions from wages prohibited.
No person shall sell goods or supplies to his employee, or pay such employee wages or a part thereof in goods or supplies, directly or through the intervention of scrip, orders, or other evidence of indebtedness, at higher prices than the reasonable or current market value in cash of such goods or supplies, or, without an express contract with his employee, deduct or retain the wages of such employee, or a part thereof, for wares, tools, or machinery destroyed or damaged.
1.) How is it permissible to charge the service providers a service charge? That makes no sense. You have to pay to…work? Lol.
2.) The product costs, according to Ohio law, must be accurately quantified and charged NO MORE than fair market value. Without them being detailed in the checks, you have no way of knowing whether or not these arbitrary fees are being applied in accordance with the law. Additionally, your owner was required to have secured your permission for the deductions in writing.
My wife and I are opening a salon in NJ, We spoke to someone at the labor board and she said the charging an employee backbar in nj (ie: $5.00 for a color service) was legal. But when I read your link for NJ, I don’t read it that way. Your thoughts? I want to do this right, where everybody is happy and making a good living
The only legal way to do it is not to take it from the employee’s commission, but to take it off the service total before commission, billing the product expense as a separate line item. However, I believe this puts the salon owner into a questionable sales tax area since product can’t be accurately quantified in most cases–so you’re “selling” the “parts” for more than you paid for them and profiting from that sale. Nobody at any agency (IRS or state level) can give me an answer regarding whether or not this is permissible, so I advise against it. While this method is legal (as long as the amounts the commissions are calculated on are disclosed before hiring staff–I’d post them in the back room too), I personally find it to be a pain in the ass. It’s far easier to calculate your pricing based on your overhead–including average monthly product costs–and not worry about it at all.
Hi Tina, thank you for your dedication to answering so many questions. I have another for you :
I work in a commission salon in Houston, Texas. I set my own prices, but cannot charge more than what our head stylist/2nd owner charge. When I accepted my job, I was told I would receive 50% commission. After I worked there for a month, a fellow stylist informed me that they also take a 10% product charge, sometimes more if we are doing a higher expense service. I have two questions: 1: since I set my own prices ( to a degree, I don’t have free reign) are they legally allowed to take the extra 10% and 2) how do I gently explain this to my employer without pudding her off? Thank you again.
This depends on how you’re classified. First of all, you should have been tracking your income to begin with to ensure you’re not being stolen from. That needs to start happening immediately. From now on, you record all sales and compare that to your checks. You need to monitor your income. Owners make mistakes when calculating payroll. I have–and I’m the most organized, mathematically gifted person in the salon 9 times out of 10. Read those two articles I linked in the comment. You NEED to be tracking. Period.
Anyways, the answer to your question is that no. It is likely not legal. You were hired under the promise of 50% commission, but the 10% product charge clearly wasn’t disclosed to you when you accepted the position. You were hired under false pretenses.
Thank you. We’ve definitely been keeping track of my income. I get a printout with every pay check listing all my appointments, services, charges, etc. they definitely are taking ten percent off my bottom dollar. I’m just unsure how to broach the subject without accusing. Thank you for your educational advice.
Yeah, definitely don’t trust the owner’s numbers. There are too many places where mistakes can be made. I actually have an article on how to bring up making changes too!
I am in Pennsylvania and in the salon I’m working in I should be making 50% commission. However, there is a 2.50 service charge for every haircut and when working with color the service charge goes up. We also have a referral program for a free haircut during a clients first visit. We are still charged the service fee even though we make nothing on the haircut. There’s another policy with product that states if you aren’t selling a certain amount per how many customers you have he charges 1.00 for every person you had during that pay period. On every pay check I receive it says miscellaneous deduction. It has reached 200.00 on some of my checks. If we are scheduled to redo someone’s hair from another stylist it’s complimentary for them and we are charged every service fee. Is all of this legal?
No. Read the link to the Pennsylvania statutes listed in the post. The law makes it very clear that those deductions aren’t authorized.
I currently work in the state of CT as an esthetician in a high end luxury salon in a very wealthy area. When I was hired they agreed to pay me $20 hr and commission wasn’t decided because they weren’t sure yet. During the interview I wasn’t informed that I wasn’t allowed to receive tips. I realized they had a no tipping policy when a client tried to tip me and they said no we don’t allow that and then saying that they compensate us for the tip, which they don’t. After 2 weeks and hiring another employee they changed my pay to $10 hr with 20% commission on services and product. I also realized that they pay the other girl a dollar more, when we have the same experience, school, and preforming all the same services. When their friends are there they discount the services and I then receive my commission at the deducted price. This happens on almost all services that are preformed. And some are complimentary so I then make nothing on the service. Also they are now implementing that when they are there and they are conversing with their friend during the service and their friend decides they would like to purchase products my 20% commission goes to 5% because they were part of the sale. It is hard to preform a service when during the service they are conversing with the client and then when the service is completed I am not given the time or opportunity to explain to the client what exactly i just did or advise and sell products because of them catching up with my boss or at times the way the schedule the next client. As well as now when we sell packages we don’t receive commission on the sale of the package, only when they decide to use a service from their package.
To me a lot of this seems unfair and unethical. I feel the area that i work in, the well price points that are presented i should be making more than i am and the fact that I’m not allowed to accept tips on a service is not fair. I want to approach this in the most respectful way and earn what i deserve as well. What is your advice/suggestions.
Yeah, that whole arrangement sounds ass backwards to me. Employers can choose how they compensate each staff member at their own discretion and as long as they notify you before any work is performed for that pay period, it’s legal–however, it’s stupid (and confusing) to constantly change the rate at which you’re paid. Your worth doesn’t fluctuate.
I would ask them for a private meeting to discuss your compensation. During that meeting, I would explain to them that terms for compensation need to be agreed upon and put in writing. As part of that agreement, the terms should state that the rate of pay will not change unless the contract is altered (both parties must agree). I would also refuse to work at a discounted rate, regardless of the circumstances. Marketing their business, regardless of the means they choose (but especially through incentive discounts) is an expense they need to be absorbing, not their staff.
I would absolutely make this written agreement a condition of my continued employment. I would tell them to either work with me to come up with a mutually agreeable solution or they can consider that meeting my two week notice of resignation.
Your bills don’t change. Your living expenses don’t change. You agreed to take that position under their initial promise of $20 an hour. They need to pick a structure and stick to it.
EDIT: As far as tips, I do understand and agree with doing away with tips, but if you’re going to do so, you should be charging appropriately for the services to make up the difference for the staff. Obviously, they’re not doing that. To me, it really doesn’t sound like they have any clue what they’re doing. The whole situation screams “inexperienced management.”
Hi Tina~ Does this article apply to booth rental salon owners? Can I legally charge a booth renter a “per service” fee, on top their booth rental fee. They are technically not an employee, do you have any articles on this, or suggestions?
I actually do! You shouldn’t be supplying product at all–I’m guessing this is why you’re charging them the per-service fee on top of the rental fee. If you are, stop immediately. They need to accept responsibility for their own business expenses. You’re putting yourself at risk by providing those products to them. (It indicates an unacceptable degree of control where the IRS is concerned.)
These posts should help you:
Charge those renters for walk-ins and call-ins with no preference.
If they want to “be their own boss,” then they need to be their own damn boss.
Approach booth rental differently by offering support services to your renters.
Hi Tina! I work at a salon in Washington state. I am a commission based employee making more than minimum wage. My salon pays me 36% commission and charges me for all of my color and products on top of that. These deductions are listed as color and product line items on my paycheck. They add up to about $120 per paycheck (biweekly). The price of services does not change based on how much product I use. A color costs the client $75 and if she has really long hair and I have to buy 4 tubes of color @ $9 + tax per tube, I end up paying the company to do that service. I signed a contract before I was on the floor that stated I would be charged for it. Does that contract dismiss them from lawful wage deductions?
Any contract that violates a law (whether state or federal) is unenforceable. You’d have to bring the contract to an employment attorney in your area to be absolutely sure the law is clear that the deductions aren’t permitted even when you are making above the state’s minimum wage each pay period. Some states have stipulations that allow deductions you consent to as long as they don’t reduce your rate of pay below the applicable minimum wage.
Thank you so much for your advice. I guess the reason I am so adiment about finding something illegal is because I cannot quit unless I pay back about $9,500 for my education and I feel trapped. I need something that will let me leave without repercussions! If I leave right now will they be able to sue me because I signed a contract stating I was responsible for my $9,500 for my education if I quit within the first 2 years? I know I never should have signed it I was just so excited because it was my first job out if school. I was definitely taken advanTage of. Thank you agian Tina!
Any contract that violates a state or federal law (in this case, the US Constitution) is not enforceable. However, you NEED to have an attorney review the contracts. I can’t give an opinion on this because it’s outside my pay grade and to do so would put me in a questionable position, since people who are not attorneys cannot dispense legal advice. I can give you generic legal information, but when we cross into discussing the potential outcome of your particular situation, that’s where that line is crossed between “information” and “advice” (or as I like to call it, “massive liability talk”).
So, find an attorney who specializes in employment law. Have them check over the contracts. They’ll be able to best advise you on this–I know too little of the situation and even if I knew more, I’m not qualified to do so.
Ok thank you very much for all you do. I will contact a lawyer!
Are these laws also valid for ontario canada??
I’d love to be able to help Canadians, but your provinces don’t make it particularly easy to research their legislation. If I find anything in the future, I’ll list it and link it, though!
Hello! I recently started a new job as an Esthetician in NY state. I had signed a contract stating I would receive “35% commission on all Adjusted Service Sales (excluding Shop Costs)” I unfortunately misunderstood what “excluding shop costs” was actually referring. This spa is deducting a percentage of my pay to cover use of back bar products which I am required to use during services (i.e. cleanser, toner, mask, etc.). I called NY state department of labor and explained this situation. I was told by state that this was perfectly legal for them to deduct these charges from my pay. After reading the link you have posted regarding deductions from pay, I am now confused on if this is a legal deduction or not? The percentage they base these deductions on is not stated in the contract.
Also, this spa has charged me for their required uniform, and there is a clause stating if an employee leaves the spa before 1 year of service, they will be charged a $350 fee for “cost of training”. Is this all really legal?
Thank you in advance for your help, and for this website 🙂
The person you spoke to likely didn’t have enough information about your situation to make an informed decision, and therefore shouldn’t have doled out the advice. State agencies are sometimes staffed by people who don’t give a crap about their job, lol. You may be better off bringing your contract, your pay stubs, and the actual statutes to an attorney with a specialization in employment law and discussing the issue there.
working @ a spa in Louisiana since the new year some changes have been made. “back bar” has been raised to flat 10%(unless it was already higher than that)comes off the top and note that not many menu items went up in price. losing a few $$$ everyday! most of us are commission between 45%-50% some w-2 and some 1099. AND NVR In MY LiFe have been charged a 5%fee on credit card tips. illegal? I was hired at 45% commission 1099 and back bar for massage use to be $2 on all massage services. with the new 10% Backbar, on a $120 massage that’s $12 off right there, when i’ve brought up that its too high ive been told back bar doesn’t just replenish products and laundry ,:it helps pay for the girls at the front desk. mind blown at this point.
Oh my, I don’t even know where to start here. First, I’ll say that the practices your employer utilizes are common, and illegal. You’re misclassified (definitely NOT an “independent contractor”). Your employer is looking for ways to cover overhead, and she’s doing it wrong. Her prices and compensation need adjustment, and I’m willing to bet her overhead needs to come down significantly also. Search this website for articles regarding “independent contractor” and “wage theft” for more information.
If you work at a salon In Michigan and you are working 50/50% commission… Is it legal to review a check from salon but no taxes ect are taken out and you receive a 1099 for taxes?
No. I recommend that you search “independent contractor” on this site and read the articles I’ve written regarding misclassification. Your employer likely has you misclassified. Often, this is done out of ignorance of the federal tax and labor laws, but sometimes it’s done intentionally. I recommend having a discussion with your employer about it and working together to either change the status or utilize it properly (with you paying rent and running your own business within the salon itself like a proper self-employed person).
Thanks for all your researching! Reading through others comments and your replies I wanted to confirm that THE WAY owners are taking the charge could be legal (colorado)? I alike am charged for product, whether it is for color, shampoo, styling, etc. and must use what they “provide”. Extra color used is upcharged to the client. This charge is taken before my commission is paid to me, so because it is taken off the top (and technically not my money yet) this is completely legal for a salon owner to do? When filing my taxes this year my accountant explained it this way and am also not eligible to use that as a deduction.
Technically, that is the “right” way to deduct product from service fees, although I recommend that owners who choose to employ this practice clarify the exact amounts charged and list it separately on the receipt, and separately from the service price. For example, the salon menu would read: Root Retouch: $50+. The receipt would read: Root Retouch [Labor] $50, Root Retouch [Product] $4.00. Additionally, my employment contracts would have these fees and labor prices clearly outlined so that employees weren’t under the false impression that the price on the board is the amount their commission would be calculated from. Personally though, I find the entire practice stupid and inefficient. It’s far easier to set your prices appropriately and save yourself the aggravation.
hi, I am currently working at a chain salon in Kentucky and am paid on a hourly rate with commission . We are required to buy our own products for our stations. The thing is the salon buys the products to sell in the salon to clients but what we use on our clients we have to buy from them. Granted they sell it to us at 75 percent off but is this legal?? Also if we purchase it at the 75 percent off we are NOT aloud to take it home with us. We are too leave it there in the salon.
Ugh. While there are no laws I know of addressing this, I do not believe any judge would see this practice as being acceptable. First of all, the cost of doing business is an expense the salon owner needs to bear, not you. Secondly, if they are going to require you to purchase products, they cannot tell you what to buy or where to buy it. They certainly can’t tell you what to do with it once you purchase it. I wouldn’t comply with these ridiculous rules and would request that the owner consider alternatives. If they refused, I’d find another job.
Hi, I just stumbled upon your website while looking up Connecticut labor laws for salons. I have a question. I am a commission based employee at a salon in CT. Recently, my employer has implemented a policy that for every chemical service I perform, I am charged a flat $2.50 fee. At the end of the week my total sales are calculated and then 47% of that is what I earn. From that percentage, the total amount of service fees are taken out. Is this the correct way to do this? If I’m an employee, should I be obligated to pay to do a service? If not, where in CT state labor laws do I find this information? I unfortunately have a hard time understanding all of it. Thanks in advance.
The practice of charging service costs is prohibited under CT state law right here (my comments are in bold):
Sec. 31-71e. Withholding of part of wages.
No employer may withhold or divert any portion of an employee’s wages unless (1) the employer is required or empowered to do so by state or federal law (for taxes), or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner (Key words there: “approved by the commissioner”), or (3) the deductions are authorized by the employee, in writing, for medical, surgical or hospital care or service, without financial benefit to the employer and recorded in the employer’s wage record book (Obviously, product fees are not benefiting you medically), or (4) the deductions are for contributions attributable to automatic enrollment, as defined in section 2 of this act, in a retirement plan described in Section 401(k),
403(b), 408, 408A, or 457 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time, established by the employer, or (5) the employer is required under the law of another state to withhold income tax of such other state with respect to (A) employees performing services of the employer in such other state, or (B) employees residing in such other state. (Neither of those provisions apply either.
So yeah, not legal. I hope that helps! 😀
i work at a salon in wi-and we have 5-10 dollars taken out of each service per client. these “taps” are taken out before our commission is taken into account. does this make this legal?
our pay structure is a mix of commission and hourly-so its a bit complicated. i’m not sure if this changes things or not. thank you so much.
It depends on whether or not those charges were discussed prior to your acceptance of the employment arrangement. (For example, if you were told you’d make 40% commission on gross sales, then no–that’s not legal. You were hired under false pretenses. But, if you were told you would make 40% commission on adjusted sales after the service fees, then yes, it’s legal–although I don’t agree with it.) In any scenario, as long as you’re making at least the prevailing minimum wage and your owner is adhering to the compensation agreement you accepted prior to performing any work during that pay period, they’re in compliance.
My first job out of nail school I was jacked pay. When I got my first paycheck I noticed a big chunk deducted for “product charge”, I was also deducted “credit card fees” (when a client paid by credit card the fee was passed on to me and taken out of my tips!) I confronted her about this and she made changes for me but others where still charged and we never recouped the lost wages. I am still mad about this. Unfortunately, she went belly up after 20 years in business. (Mishandling of money and IRS tax issues, Karma….) I thought of sueing for theft of wages if it is not to late but I figure I will not get a dime at this point. Schools need to really have a better course for the business side of the industry. I have been learning the hard way since this is my first time in this type of industry. I used to work in a cubicle 9-5 and salary. I had no clue what to expect negotiating pay etc.
It’s unfortunate that this is such a common issue in our industry. Depending on the statute of limitations in your specific case, you may be able to sue–but if she’s been railroaded by the IRS, a judgement in your favor isn’t likely to yield you anything.
I work at a commissioned based salon in Lousisana. We are 50/50. On top of the 50% coming out of my paycheck I am required to purchase all of my color and products needed to complete my job. On top of buying all that $2 is taken from every client to cover backbar expenses. There is talk of the salon buying color but we will have 2% of total color cost for week taken from our check. Is this legal?
Louisiana doesn’t have any laws prohibiting employers from deducting wages for “tools or uniforms” but I’m willing to bet that doesn’t extend to every cost of doing business expense. You’ll have to contact your state labor board to get an answer more specific. At that rate, you’re better off renting. It’s a foolish move for the owner to put their employees in a situation where they’re basically renters earning less income.
I work in a salon in Minnesota. We are hourly or commission, whichevers greater. Been there for 5 years and my commission has been great. My boss charges us $3 per ounce of color tube and $5 for highlighting systems(liquid) we use scruples. I have always found this odd and thought why am I paying this when my client should be.
Is this illegal for my boss to do to us?
If you’re being charged–no. If the chargers are coming out before commission is calculated–yes. I completely agree that clients should be the ones paying for it. Personally, I think services with variable overhead (like color) should have product charged separately. For example, the service starts at $X (for which you receive your commission), but a per-ounce charge is added to the price cover product costs.
Is it legal for my salon owner to not give us any percentage of the retail we are selling?
Unless the owner agreed to it in your employment contract, yes, it’s legal. If the owner previously promised you a commission on retail and then revoked it, they’d have to alert you to that prior to the start of that pay period.
I am a salon owner in ND, I have a salon and spa and employee 18 stylist, 5 receptionist, 3 massage therapist and I rent out to a laser hair removal technician the back part of my spa.
I pay commission to all stylist 50%-60%, and a sliding scale on all retail sold. While the cost if running a large salon amd spa has gotten so high I do not charge a fee to my employees and they keep all tips but the must report them on there taxes. I had thought of charging a product charge fee at one time but decided that I was better off making my prices reflect it to the customers. The only thing is that as an owner some stylist waste a lot of color and it goes down the drian. I am constantly at them to be careful about the amount of product they are using as it comes out of my pocket. All of my employees make very good money and I give them detailed reports on all paychecks so they see all charges, vacation pay, payment for all classes and meetings they attend. As an owner you have to be dulagent to maintain they product waste as you cam not price gouge your customers to cover the cost. So my advice to all employees watch your product waste your employers will appreciate it. For employers that are doing things correctly and not taking advantage of their employees we do not make a ton of money in this business so any help from employees makes a huge difference on the success of the salon. I would advise everyone that is working for somebody that is doing unhealthy practices of up charging and taking away from your commissions to find another salon that will take care of you as a equal. Without good stylist nail technicians massage therapist and estheticians our salons would be nothing so find the bus that will take care of you.
To avoid product waste, I recommend having dispensary protocols that limit the amount a professional can mix in a single batch. (For example, a stylist doing a root retouch can only mix two ounces.) If they need more, they can return and mix more, but once it’s out of the tube and mixed up, there’s no way to un-mix it and squeeze it back in. I’ve seen professionals come out of the dispensary with the bowl filled to the brim. It’s shameful. Just thinking about it makes my gut twist.
Seems questions/answers are related to commission or hourly employee’s. Does the same apply to booth renters? Are the owners allowed to let them borrow product or give them product and just allow them to replace it or buy it if they run out for a client once in awhile?
The article is related to employees because booth renters are their own employers, and are required to supply their own products. Owners of booth rental establishments can sell product to their renters if they like (it’s actually something I recommend in this article). However, they’re not allowed to require renters to purchase their products through them, nor can they dictate which products the renter uses or buys.
[…] my boss require me to provide my own product?” No. As an employee, providing product is their responsibility. If there are products you prefer to use, you will have to get permission from your boss and pay for […]
[…] Shady Business Practices: Salon Owners Charging Staff for Product […]
[…] Wage Deductions: Salon Owners Charging Employees Product Fees […]
I previously worked in a spa in Florida and have always been confused about the legality of how it was running. I was called an Independant Contractor, but these things didn’t make sense:
We were to wear a uniform of all black
We charged the prices that the spa told us to charge
The front desk made our appointments
The front desk checked our clients out and collected all monies, including tips that were added to our paychecks
We paid a product deduction per service
We were paid a commission on the percentage of sales
We were 1099
We had no access to our clients information
Was it legal for them to take the product deductions off the top before the total was split for commission if we were considered Independant contractors? Even though we really weren’t Independant Contractors?
Hi Tammy! None of that was legal or appropriate. I recommend reading this article I posted which outlines your rights in the salon, and the articles linked within it.
Hi.. Similar question. I work in a Spa in MN… My scenario. I get paid 50% commission, I do a full color which cost $60 so you think I should make $30 right?? Wrong… On top of the $60 she takes a $10 product cost off and pays me on $50. I am 100% an employee and get taxes taking out and revive a w-2. Can she take a Product cost out of my work that she is buying for us to do the job?? Please help me!
So long as the product fees were disclosed prior to you accepting employment, it’s likely legal, so long as the amounts don’t drop you below the prevailing minimum wage. You’ll have to check with your state to be sure, though. The legality of this comes into question when employers use high commissions as a way to disguise low wages. That’s deceptive hiring practices, and certainly something that isn’t legal or ethical.
Such a great article!
I recently just resigned at a spa where I was working on a 40% commission and the employer was deducting what they claimed was a 10% product cost deduction from my 40% wages. So let’s say my service sales were 5500 for two weeks (which they often were) my wages would be $2200 and they would deduct close to $900 in product cost fees making my paycheck 1300. How is it possible that they can do this and get away with it. And how do I go about reporting them. It’s completely and utterly disgusting at the amount they charged me for the entire year (nearly 20,000) in product costs. (There’s no way I used that much in product considering the main services I provide are massage therapy and waxing) They are making money off of their employees and must be held accountable.
Okay, so this doesn’t make any sense to me. If the fees were 10%, you should only have had $220 deducted from a $2,200 paycheck–not $900.
To me, it seems like you were hired under false pretenses. You can’t tell an employee they’ll be paid 40% when you’re deducting 10% of that for “product costs.” That makes your real pay rate 30%…and if this math is any indication of what your wage deductions look like, you’re getting charged a LOT more than 10%.
You will have to check with your state labor board or consult with an employee rights attorney to determine how to proceed. It sounds as if you have kept great records since you know how much they’ve deducted from your checks overall. With those kinds of shortages, your best bet may be to go straight to an attorney and pursue them in civil court.
My salon owner charges Us $15 a month per stylist (13 stylist) for an App to Salon Iris. He also deducts 5% of our paycheck when we don’t make our Monthly $500 retail sales quota. My last deduction was $100 of my HARD EARNED MONEY. This can’t be fair!!! How does he get to write off Cost of Goods and pockets the hundres he gets from me and my co-workers?! Where’s our Write-Off at the end of the year that he takes from our income????
Not only is it not fair, it’s also likely not legal. In most states, that would be considered wage theft. Check your state statutes and consider contacting your state’s labor board.
[…] are abdicating their responsibilities, forcing their employees into the position of part-owner, expecting more of them than is reasonable, or […]
[…] wages, she refused. After finding your site and doing more research, it seems to me that she’s not permitted to deduct fees from our wages in our state and is required to comply with reporting […]
Hey Tina. Great blog! Your list for Wage Deduction Legislation by State doesn’t list Florida. Is Florida exempted from these laws?
Florida isn’t exempted on a federal level, but doesn’t have any state-level protections for employees of ANY kind (aside from our paltry $8.05 an hour minimum wage). We’re one of the worst states for employee rights in that respect. Any issues you have with an employer will have to be taken up with federal agencies, or in civil court. It SUCKS here.
Thank so much for this info. I worked at a salon in Tx where I have to buy everything for service that I am giving out at the salon. i am not just buying the hair products also color, foil, bleach…,ect
it’s commission salon but I have provide everything out of my pocket like booth rental. The salon didn’t tell me this until the day of my first day start:( of course I ended up quoting. Is this legal? Can I still ask for rereimbuse last past 6mons i work at the salon?
In general, almost all costs that an employer might incur in providing a workplace for and meeting various needs of its employees, in complying with workplace regulations that impose a duty on the employer (such as supplying employees with safety equipment required under OSHA regulations), and in paying for the expenses of an ongoing business operation, will be regarded as part of the normal cost of doing business that may not be deducted from an employee’s wages to the extent that it would take the employee’s pay below minimum wage, or result in payment of less than one and one half times the regular rate of pay for any overtime hours. The general rule is found in DOL wage and hour regulation 29 C.F.R. 531.32(c). That provision notes that expenses for things that are primarily for the benefit and convenience of the employer are not considered “other facilities” and thus may not be credited toward payment of the minimum wage. Regarding overtime pay, 29 C.F.R. 531.37(b) states “[w]here deductions are made from the stipulated wage of an employee, the regular rate of pay is arrived at on the basis of the stipulated wage before any deductions have been made.” Subsection (a) of the same regulation provides that the deduction for expenses may “not exceed the amount which could be deducted if the employee had only worked the maximum number of straight-time hours during the workweek.” Together, those two provisions mean that even if the employee is paid more than minimum wage, deductions for expenses incurred for the employer’s benefit and convenience may be made down to minimum wage only for the non-overtime hours; overtime hours must be compensated at one and one half times the full regular rate of pay. The general rule is outlined in several provisions of DOL’s Field Operations Handbook (FOH) in Chapter 30 (Minimum Wage):
DOL Field Operations Handbook (excerpts)
30c03 Primarily for the benefit of the employee.
(a) The crediting by an employer of facilities furnished to employees as wages will depend upon whether such facilities are furnished primarily for the benefit or convenience of the employee, as determined by WH. Where the primary benefit of such facilities is to the employer’s business interest, credit will be denied. The following are commonly viewed as furnished primarily for the benefit or convenience of employees:
a. … transportation which is an incident of or necessary to the employment is not an “other facility”.
30c04 Primarily for the benefit of the employer.
The following are examples of items not considered bona fide “other facilities” under Section 203(m) and Part 531 [of the regulations], because they are provided primarily for the benefit or convenience of the employer:
Electric power used for commercial production in the interest of the employer.
Telephones used for business purposes.
Taxes and insurance on the employer’s building which is not used as lodging furnished to the employees.
Medical services and hospitalization which the employer is obligated to furnish under workers’ compensation law or similar Federal, State, or local laws.
Rental of uniforms where the wearing of a uniform is required by law, the employer, or by the nature of the work.
Business-related travel expenses. (See 29 C.F.R. 778.217.)
Necessary tools or uniforms used in the employee’s work.
Under Texas law, the Texas Payday Law Rule 821.28(b) requires written authorizations for deductions to be as specific as possible as to the amount and purpose of the deduction and to make it clear that the deductions will be made from the employee’s wages. Rule 821.28(d) requires deductions to be applied to their intended purposes.
If you check out this template for a Wage Deduction Authorization agreement from the state’s website, it’s clear that cost of doing business supplies aren’t listed, and are therefore, likely NOT legal to deduct from employee pay.
You should definitely contact a state labor department to see what your options are.
So, my boss takes a service charge, minimum or $3 per service (root color, foil, tone means $9). This charge comes off the top of the service before commissions are paid. I’m unsure whether or not that is legal in MA. It seems that since it’s before I’m paid commission then it would be legal, but there is no section covering that in my contract. I signed thinking I would be getting commission on the full value of the service.
I’m not a lawyer, so I can’t tell you with certainty, but it seems as if that constitutes a deceptive hiring practice, which means those deductions (since they weren’t disclosed prior to the pay period in which they were applied, and you were hired under the promise of a percentage of your gross sales) constitute wage theft. Talk to an employee rights attorney for more clarification, though.
I used to work at a salon that originally provided hair color products to perform color services with. But about a year ago the salon owner decided that the employees were to be the ones to purchase the color without reimbursement or change in commission. Is that legal? She didn’t technically “charge” us product fees but she made us buy the color ourselves. At the time I felt it was unfair but I didn’t realize it could possibly be illegal. My friends still work at that salon and are still buying the color products out of pocket.
Depends on the state. Some have specific legislation prohibiting that (California does, for example, and I believe NJ does too).
By any chance, do you know whether or not it’s legal in Texas to require salon employees – not independent contractors – to pay for all of their own products out of pocket? They’re not being deducted as “product fees,” or deducted in any other way from their pay or tips. It just seems odd to me that a regular employee who gets paid on commission would also have to provide their own product. I thought only booth renters had to do that.
The Texas Payday Law outlines which deductions can be made legally. Cost of doing business expenses (like product charges) aren’t listed in their permissible deductions.
Just to be clear – if it’s not a deduction, it’s fine?
Deductions are any withdrawals made from employee wages by the employer. They can be legal deductions (like those required for tax purposes or employee benefit programs), or illegal deductions (arbitrary wage theft). If the employer is deducting anything not specifically permitted on the list in the Texas Payday Law guidelines, it’s not a legal deduction. I’m not sure what you mean by your question. It sounds clear to me that deductions are being made.
Oh ffs, I was confusing your comment for one in another thread of comments (also about Texas laws). In your situation, the employer is making unreasonable demands. It might not be specifically outlawed by your state legislation, but it certainly isn’t acceptable. You’d have to talk to someone at your state labor authority about it.
What I mean is, employees are required to provide their own product. They have to pay, out-of-pocket, for things like hair dye. It’s not deducted from their wages as a “product fee.” They get paid, then they’re expected to go on their own time and buy whatever products they need with their own money and bring them to the salon to work with them.
Yeah, that’s ridiculous. I’m unsure about the legality of that, so you’ll have to talk to an attorney, but if I were you, there’s no way I’d ever agree to that.
Hi my name is Miguel I work at a salon in Sacramento California I am a commission only paid stylist so recently my boss started deducting from our pay product cost for any time we do a color service the amount that is being taken is depends on how much product we used , I have not brought it to her attention just yet because I am trying to research of she is able to do that or not.
Read the statues linked above for California. That link will take you directly to the laws and regulations regarding wage deductions in that state.
Hello Tina my girlfriend is currently working for an aveda shop in upstate New York and the owner of salon promised 40% commission when she was hired then after she started working for her she told my gf that she also takes a product fee off of that which I feel is illegal!! That would make her commission less than what she was led to believe.. Also she doesn’t receive pay statements.. The owner went paperless but will not show her how to retrieve them so my gf can’t see the deductions.. Also the owner will not let the stylists take a break and sit.. When they aren’t doing hair the owner makes them clean the shop thoroughly.. I was just wondering if you could send me info on how to take care of this issue.. Please help lol.. Look forward to your response.. Thanks In advance
It’s deceptive hiring practices, extremely common to the industry. If she’s working in NY, the owner is required by state law to provide detailed wage statements. I’d recommend confronting her with the state wage reporting laws and the state labor laws. (NY now has a really great poster specifically for salon employees after the NYC immigrant nail salon scandal.) I’d demand that she provide the wage statements immediately, correct the underpayment caused by her failure to disclose her “fees” (which aren’t legal in NY, btw), and find a new salon to work at immediately.
[…] profits, whether intentionally or as a result of innocent ignorance, some private salon owners steal wages, underreport income, and find all kinds of fun, illegal ways to widen their […]
The salon I am employeed by was deducting product fees for every customer after payroll taxes. When questioned, the mistake was rectified. Now, the product fees are coming out before taxes, after commision, but I have no record of the fees for tax deduction purposes. It was suggested I keep my own tally of fees, but would this personal record be enough for the IRS?
Probably not, and it wouldn’t be a wise decision to report deductions in excess of what’s “expected” by the IRS. They have tables and compare deductions to what’s average in a particular industry. If you’re deducting more than normal, they’ll audit you. If you can’t verify the purchases, they won’t allow you to deduct the expenses.
Also, it doesn’t sound rectified. The fees should be coming out before commission is calculated, then taxes should be deducted.
Dinging for product is sometimes a last resort for salon owners. When you repeatedly ask your staff to be more efficient and less wasteful and still see gobs of color in the dispensary sink or a bowl full of suds after shampoos and so on, it gets extremely frustrating. Switching to less pricey product is an option but is often met with little enthusiasm if not outright objection. Payroll costs are probably the biggest chunk of a salon’s operating expense especially in small salons. Larger salons and chains probably have more options to offset that expense but the smaller salons struggle constantly. Stylists income can usually include some pretty generous tips that fly pretty much under the radar even though they are supposed to be taken into consideration as wages.
Yeah, and that’s why I recommend having a person work the dispensary instead of allowing pros to wantonly mix whatever they please. Usually, it’s one of the assistants who manages product dispensing, following guidelines set by management. (At the last hair salon I managed, we didn’t permit more than three total ounces to be mixed for color retouches, for example–anything more would be charged directly to the client).
First off I want to tell you how much I enjoy your blog. My husband and I just purchased a salon in Kansas and are finding out the hard way that the previous owner deceived us. In our salon we have a mixture of booth renters and commission. When the previous owner was running the salon she charged everybody a back bar fee and a beverage fee. The previous owner justified the back bar fee if the stylist didn’t sell $150 a week in retail product. We are still wondering why exactly she was charging a beverage fee since businesses are supposed to absorb that cost…? My question is this, is it legal to charge booth renters a back bar fee for the product they use on their clients? (My thinking is that it is not legal.) I’ve searched high and low for that particular answer and I have not been able to find it. She also lied to us about the commission staff not being our employees. She said the only people that were on payroll were the front desk employees. I now know that we have been doing the commission staff’s pay checks all wrong and my husband and I have to figure out how to fix this problem. FYI, my husband and I abolished ALL backbar and beverage fees and the previous owner is pissed that we did this. This has been a nightmare and the IRS, DOL, and FSLA are not once to jack around with. Any advice would help!!!!
It’s not legal in some states, but on a federal level, you want to avoid mixing your business with the tenants’ businesses as much as possible. Require them to purchase their own backbar and manage their own product overhead to ensure there’s never a time you can be accused of overstepping your boundaries as a landlord. You definitely did the right thing.
For pay structures, you can really do anything you want so long as you’re keeping records (requiring employees to clock in and clock out) and complying with the prevailing wage obligations. For more information on compensation structures, you can search for “compensation” in the site’s search bar, but start with this article.
Thank you so much for this plethora of information! I am in an apprenticeship program in Las Vegas NV. I am about to be released out onto the floor. There are several red flags about the way my boss does business with her stylists that have me considering quitting. I know most of the girls there from the beauty school I attended. As a matter of fact, one of the girls that was in my class, it’s her mother who owns the salon. I went to an Aveda Institute and I am currently employed by an Aveda salon. I have heard some of the girls talking about the “product charge” and I think it’s a rip off. One girl said she gets charged 5% off of her check every week (we are paid by paper check every Friday) and yet another girl says she has had $300 taken out for product charge. I don’t know if everyone’s charges are the same, or consistent with the amount they make, who she likes better, etc.,etc. We start off at 42% commission + tips, minus product charge which I have not confronted her about personally. Another thing is that she makes us volunteer to work for free! We have things like fundraisers and such where we all have to show up for so many hours and provide mini services ( usually free or at a very discounted cost) to these guests while she doesn’t pay us. Our next event coming up is Employee Appreciation Day. It is usually held on a Thursday night but this year she is actually “closing”the salon on a Sunday and having this event from 3 p.m. to 7 p.m. on Sunday. This is a “party” for our guests where we will be providing snacks, etc. We have to be there at 1:30 p.m. until after clean up for not one dime. I asked her if we were getting paid for that day and she said no. I said, ok so then we don’t have to come right? She said yes we do. She then told me I didn’t have to if I didn’t want to. I said ok well I’m probably not going to come if I’m not getting paid. She said ok. 10 minutes later she had her daughter come get me and tell me to go to her office. She said I cairns her of guard and that not once in 15 years has anyone ever asked her that. She then told me that this is something this salon does and I need to either be a part of it or dont. So she pretty mug told me that if I wanted to work there, I needed to come and work for free that day. This is the third time I have worked for free at this establishment. I told her I would come. I also signed a non-compete and a 3 year contract. I have heard that she has given bad recommendations for people when they choose to leave. Getting time of is like pulling teeth, and at this pigs I am scared to leave for fear of what she may do to me. I am scared she will take me to court or ruin the beginning of my reputation as a stylist. Please help! I don’t know what to do!
Yeah, none of that is legal. If you’re being engaged to work, you need to be paid. There’s an article about that here.
As far as handling it, you should read this post. You can’t control how she’ll act or what she’ll do, but I’m willing to bet that she’s established a pretty shitty reputation herself over the last fifteen years. Some of the salon owners in the area might be ex-employees of hers who know exactly how she runs her business and won’t consider her a credible reference anyway. (At the very least, you can be sure some of the other stylists in the area at the other salons will know exactly who she is and what she does, so the owner will at least have that knowledge from them.)
You absolutely need to stand up for yourself on this. Let her say what she will. I’d consider it a favor if she informed every salon owner everywhere that I wasn’t an employee who would allow myself to be treated like a slave.
[…] It is my sincere belief that salon owners need to take ownership of their salons and manage them appropriately. That means paying your workers a wage they can actually survive on, compensating them for their time (not just their services), classifying them appropriately, providing them with benefits, and doing your job as an employer by marketing the salon, staffing it strategically, and owning your responsibilities. […]
Does this article apply to salons in Florida as well?
Florida doesn’t have any protections for employees, so we default to federal law. Federal law prohibits deductions that reduce your pay below the prevailing minimum wage. It also prohibits undisclosed deductions (so if you were hired with the promise that you’d be paid 50% of gross sales, but the owner deducts 10% of that–it’s considered deceptive hiring. You aren’t being paid what you were promised, which is against the law).
I work at at spa in NY as an esthetician. I am paid a small commission as well as a small hourly rate. My employer deducuts “shop costs” from the service before figuring what my commission on that service should be. I was wondering if this is legal? The spa also offers a percentage off for pre-booking and purchasing products at the time of checkout which are also deducted before calculating my commission. Is this legal? Finally, when I sell product I am not giving a flat commission on the products sold. My commission is based on a sales to service ratio so if I have 5 facials in a day and only fell 1 product I will not get commission on it. I’m sure that is legal to do but I wanted to check just in case. Thank you so much for your help!
You’re right! All of that is legal, so long as your wages equal or exceed the prevailing minimum wage in your area. Commissions on retail sales are left up to the employer’s discretion. It sounds like you’re working for someone who understands the costs of running the business and is doing what they can to keep in compliance and get the bills paid. You won’t get handed a big chunk of gross sales like you would at a poorly managed salon, but the business is more likely to stay open longer than a few years and they should be covering your taxes, too.
Thank you for such a quick response! I just want to make sure I am fully understanding this. So, because the shop costs are being deducted from the service amount before my commission is calculated and not deducted directly from my paycheck, that makes it legal?
Yes, exactly. So long as you were hired with the understanding that your pay wouldn’t be a percentage of *gross* sales but a percentage of *net* sales, after the product overhead was accounted for, it’s legal. If they were pulling it from your half or from your paycheck, (or if they hadn’t disclosed it at all) then it would be illegal.
I work in a commission based salon and I’ve been crunching the numbers of my total service sales and deductions for my 45% here’s the situation before we are even paid the salon owner is deducting 10% off the top for product fees which is not a deduction that shows on our paychecks then our cut is calculated. Now the owner has advised if we are not meeting our RPST she will only pay 35% commission is this even legal ? Its astonishing how much money she is already taken I feel like this is wage theft
The product costs aren’t coming out of your cut, so it is legal (so long as you were hired with the understanding that you were not going to be paid a percentage of gross sales, but of net sales). It’s not showing up on your paycheck because it’s independent of your pay. You don’t get to claim that on your taxes because it’s not a cost you had to bear. If it were coming out of your end of the split, it would be wage theft.
The owner, so long as she has you classified as employees (NOT “independent contractors”), is contributing to your taxes, and is ensuring to comply with the prevailing wage laws in your area, can change the terms of your employment (including compensation) at will, so long as she alerts you in advance of the pay period in which the reduced rate would be enacted.
Hi Tina. Sorry if this is a repeated question but I am confused. I work in a NJ salon. We are paid 50/50. However we are charged $10 – 15 product fee on the total service fee then commission is calculated. Is this legal in NJ? There is no written arrangement, employment contract, signage, etc. explaining this. This was just conveyed to each stylist one on one. Thank you for your awesome help.
Well, deducting the product fees prior to the calculation of the commission is normal and legal, however, it depends on when you were told of the pay adjustment. It’s *not* legal to announce it in the middle of a pay period and apply it for that pay period. Any changes to your wages have to be announced in advance of any work being performed in the pay period in which the changes are to be made. (So, for example, they can announce it during one pay period, but they cannot enact the change until the next pay period.)
Hi. I work in a salon in Florida. The salon owner wants to charges us $8.00 for every chemical service performed. Doesn’t matter is it’s 1/2 oz or 10 oz for product. 90% of my clientele is colored treated. I want to know is this legal in the state of Florida. Thank you.
In this craptastic state of Florida, we have few protections for workers, so we typically have to rely on federal statutes. However, several of our counties have enacted wage theft protection laws, so you’ll have to research yours to see if any apply to you.
Hi. My wife works at a nail salon and splits 60/40 with the store. The owner is trying to get the employee to pay for some of the supplies in order to complete their job for their customers, but at the end the store will still split 60/40 even if the employee bought their own supply in order to complete the store job. The salon won’t reimburse the money for the supply. Is this legal in Maryland? And what’s the law on that?
Hi John! You’ll need to check the MD statutes regarding wage theft by clicking the link for MD. (It should take you right to the information you need.) Then, you need to contact someone at your state labor authority and/or an attorney to consult with about your wife’s specific arrangement. I’m not an attorney and even if I were, I lack the many details I would need to even begin to formulate a reasonable guess about the legality of that situation. Whether or not it’s legal will depend on whether or not there’s a contractual arrangement, how your wife is classified, if that classification is appropriate, and whether or not her wages exceed the prevailing minimum and if the jurisdiction she falls under allows employees to pay cost of doing business expenses when prevailing wage compliance is guaranteed.
Hello. I work at a salon in Pennsylvania, I get paid 45% commission. We are then getting 8% product cost taken out of our paychecks. I can’t totally remember but I think I may have signed something saying they could do this to my pay check. Is this legal? And if not what proof can I show the owner? There is nothing on my paycheck stub that shows the 8% being taken out. If they are taking it out, can’t I at least claim the 8% product cost on my tax return?
Please click the link that says “Pennsylvania” above. It should take you directly to the PA statutes regarding wage deductions. (I believe there’s also a comment here about it.) Whether it’s legal in your situation is debatable, so you’ll have to a.) check the statute, and b.) contact someone at your labor authority for clarification. I’m not an attorney and I’m not your attorney, lol, so all I can do is point you to the information and help you understand it.
My wife is a commissioned stylist in the state of Georgia. Last week her employer charged her a 10% product service charge that ended up being $200 taken directly out of her paycheck without any explanation. This was charge was not listed in her contract, nor was she told about it in advance.
Then owner of the salon said it’s standard practice for salons, which is obviously not true. My wife is currently 7 months pregnant and I think she is being taken advantage of because the owner knows it will be difficult for her to get a job anywhere else.
What is your take on this and what would you advise in this situation?
She is being taken advantage of. To me, this seems like clear wage theft, and it’s something that Georgia does enforce (I recently heard of them enforcing another salon wage theft victim with a vengeance that shocked me for a red state). My advice is to give her a letter telling her the following:
a.) the deduction from the wages was improper, unannounced, and a violation of (insert the statute number from Georgia that prohibits the deduction)
b.) you expect the unlawfully deducted funds to be returned by (date)
c.) if the funds are not returned, you will (file a wage complaint, engage legal counsel, etc.)
I’m not a lawyer, so I can’t help you with this, but a letter like that should suffice. If it does not, follow through with whatever threat you make. Call the labor authorities, get an attorney, or take her to small claims court.
Hello- i hate to keep this anonymous but i cannot risk my real name being revealed. I live in Florida and as we know unfortunately it is a right work state. So, we dont get a lot of the same protections that most of the other states do receive. We are a commissioned base salon; i have a small salary bc i have a higher position in the salon with will not be included in the questions bc i know that is subject to more than my commission and tips.
Per pay period (which is every 2 weeks) my employer takes 4% of our credit card tips to pay for credit card fees….is this legal? I thought that all tips were fully paid to the employees who earned them? We are also charged a 10% backbar charge before our commission is calculated. So say i did $4,000 in 2 weeeks h e would take $400 from that than pay out your percent in commission. My question with that is since we are employees and receive a W2, shouldn’t we be ale to use that money in our taxes as deductions? Wouldn’t that mean he gets to use the deductions from purchasing said products And then makes more money off of them? I’m not sure i am asking that right but i hope that you understand what im asking/implying.
We are also required to show up 15 min early to work to “set up our work stations or to do our morning duties”. Since we are not being paid for that 15min, is it lawful for him to fire someone or punish them if they show up after that 15 min. Therefore him seeing you as”late” if you show up 10-5 min prior to your first client. We are also “supposed” to show up to monthly meetings that start at 10am usually, but now we must show up at 9:45 to get there “Early” so we are ready for it. We are also not paid for that time, so i know that legally he cannot make them mandatory since they are not paid. He says that we should WANT to be there…..but who wants to come in at 945 for free when our first clients are at 12 or some of us dont work those days than work until 8 pm. He cant really reprimand or punish anyone correct? Since again, this time we are there is not paid. But, we go since we fear retaliation or being fired.
Thank you so much for your time and i hope that you are able to answer my questions as i wrote them. I love your blog and i would love to have more information about my working circumstances.
In some states, employers are permitted to take the processing fee out of the tip, but ONLY the amount of the EXACT processing fee, and only on the TIP (not the entire transaction). The backbar charge, so long as it was disclosed prior to you accepting the position, is legally deducted the appropriate way (prior to cutting commission). Had you not been informed of the charge when you accepted the job, or if it had been implemented without being disclosed to you, then it would likely not be legal. In that case, the deduction would not be something you could claim since the deduction isn’t coming from your wages (it’s coming out before your wages are calculated, directly from the service price). If they were charging YOU for the product (by removing it from your cut after the commission is divided), then yes, it should be yours to claim (but if that’s the case it’s wage theft, so really, who deducts it doesn’t matter since the deductions aren’t lawful).
He can fire people for any reason if they’re employed for him–that’s how “at will” employment works. You’re free to quit whenever you please, and he’s free to terminate anyone for any reason or no reason at all (just so long as the reason isn’t discriminatory or retaliatory). However, you NEED to be clocked-in and getting paid for ALL of that time. You’re being engaged to work, so the owner is required to pay you and track those hours as part of working time.
Also, he’s an asshole. You can “want” to be there, but you need to be fucking paid. You’re not a volunteer. It’s his business. If he wants people to work for him and attend his meetings, he has to pay those people. You don’t owe him a goddamn thing if he’s not paying you.
Okay, so to recap:
* the deductions sound legal, so long as they are not reducing your wages below the prevailing minimum AND you were aware that you were being compensated based on *net* sales; not *gross* sales,
* the credit card deductions are only legal if the credit card processing fees are *exactly* 4%–if they are lower than that, it’s not legal,
* you can’t claim deductions for products you aren’t paying for, and since the deductions are coming before the wages are calculated, you *aren’t* paying for them; the client technically is,
* your boss is a dick who needs to get his head dislodged from his asshole and understand that NONE OF YOU OWE HIM ANYTHING–not your loyalty, not your time, and not your enthusiasm,
* you need to be getting paid any time you’re engaged to work, period.
If you file a complaint, do so in writing and make sure there’s a paper trail. Emails are good. Should you be fired for making valid complaints regarding your rights, it could be considered retaliatory termination.
Thank you so much for your response ! That’s what I thought about the backbar products so thank you for clarifying that ☺️
So, even if we aren’t technically working bc we aren’t clocked in or paid for the time we “have to” come in early for shift and work (do duties and set up) , he is able to fire someone?
I believe ( but will double check) on what percentage of credit card tips he takes out for paying for transactions. Everyone gets the same, whether or not they had more or less transactions….is that legal? And if it’s calculated based on say I got $500 in cc tips he would take the % just off the top? How would I know what amount he SHOULD be taking? I’m not sure how to ask this correctly. If it’s more than 4% what then?
Also, you nailed the ” he needs to get his head out of his ass” comment and I FULLY agree.
Again- thank you!!
He can fire you for anything he wants, but you can claim the termination was unjust on the grounds that you were terminated for refusing to work off-the-clock. So, he could, but it wouldn’t be a smart move. (Then again, neither is having you work without pay and acting as if it’s something you owe him, lol.)
It likely doesn’t matter how many tip transactions the employee had or what the value of those transactions were, since the rate for processing those transactions doesn’t change. (For instance, Paypal doesn’t care if I do $1,000 a week in sales or $100,000, they’re charging me 2.75% plus $0.30 per transaction.) I find his 4% rate extremely unlikely. It’s really high for a typical merchant services company. Usually, they’re half that–1.95%-2%. If he knows what rate the merchant services company charges on transactions, he’ll know exactly what amount to charge for them–and that percentage would come off the top.
I know to professionals those fees sound like bullshit, but this is one of those areas where I agree with the owner. (My salon doesn’t accept tips, and processing fees are one of the reasons.) First, tips can’t be touched by the owner in any way. They can’t be used to offset expenses and salon owners have no control over how much a client tips. This is problematic, because tips cause two different expenses for owners. The first is employment tax. Tips are taxable income, which means we have to account for it and contribute to the employee’s taxes on that income. The second is processing costs, which can get really expensive, especially during holiday season, or when you have a shit ton of employees.
Quick math–you have 10 employees who generate $400 or so per day, each. That’s 2,000 per week, per employee–so $20,000 per week in gross sales. It’s holiday season and clients are feeling generous, so they’re tipping 30% or so on average. That’s $6,000 a week in tip transactions. As the owner, you have to match taxes on that (we’ll assume you’re just paying federal because your state doesn’t have state income taxes). Those taxes come to $474. You’re also paying 2% per transaction on that $6,000. That comes to $120. You’re paying almost $600 per week for income that is going directly to the employees. Then you have the occasional client who thinks they’re being “the best client ever” by tipping $500 or so, but really, what they’re doing is costing the business even more money. When you’re the type of owner who actually compensates their employees correctly (which is fucking expensive), it’s really frustrating to have to take on those additional costs.
So, I do support the processing fee deductions, but overall, I don’t think tipping is IN ANY WAY appropriate for our industry. I wrote about that here though.
Anyways, the 4% sounds a whole lot like a bullshit number.
Ah that makes sense- thank you so much for responding and breaking that down for me. 🙂 I wasn’t sure exactly how it worked and now I am glad that I know!
He takes out 5% I checked our handbook.
LOL, yeah, that doesn’t sound right AT ALL.
How do I figure out how ” wrong” it is? Do you think he is adding up all of the fees for each card carrier we accept and just charging us the fee instead of him paying it? Haha sorry for all of the questions and I extremely appreciate you answering all of Them.
The merchant services company processes all the cards you run (I doubt he uses different processors for different cards). The rate shouldn’t be different and it shouldn’t be compounded. I have no idea what hes doing, but 5% is far higher than any merchant services company I’ve ever come across.
Hello! Do you happen to have any info regarding this for Nebraska, I didn’t see it listed in the list of states. Thanks!
If your state isn’t listed, it either doesn’t have state-level wage laws or doesn’t have them available online. 🙂
Hi I’m in Tennessee and clicked the link above for Tennessee but it takes me to a page that says page not found. I just got my license in July and started at a salon in September 4th. They have an associate program for new stylists and they have a 3 year contract I have to sign this week if I want to stay in the program. The 3 years will start once the program is over at around 42 weeks so it’s almost a 4 year contract in reality. They say the program cost 12,000 so if I break the contact I would have to pay back the 12,000. The least amount I would pay if the contract is broke is 6,000 and that’s only if I break it half way through the program or on the last year of the contract. I just found out they also charge for color and back bar to the stylist. I had never heard of a commission salon doing this so I’m trying to find out as much as I can about this but I’m not getting much from google. Please help me! Is a 3 year contract normal in a salon? I just don’t know what to do. I really love the people I’m working with but I feel like I’m getting myself into a bad deal. This is the first salon I applied for and really haven’t looked into much else since starting.
What are you getting for $12,000 and four years of your life? Does the contract state EXACTLY what they’re providing, or are they expecting you to serve as their indentured cleaning person, receptionist, and assistant? For that price, they should be providing actual training. If the contract reads like a list of requirements for you but promises you nothing in return, do not sign it.
This is a super timely article for me, as my salon owner has started talking about implementing product fees since “everyone she talks to is doing it”.
I’m an employee at a salon in Virginia. I’d like to share the relevant info with her but the Virginia link above is broken and I’m not sure when I search if I’m getting the right law.
You’re looking for this link.
I’m updating the article now. 🙂
our salon got sold back in July of last year…I had been there 2 yrs and moved there starting all over again in a new town…I had got my pay up to $900.00 or more a week before the take over… since the takeover my last check was $200.00 and that’s bi-weekly pay…we are loosing clients…the new owner is new to the hair industry..we had 9 stylist before the switch and only me and another stylist stayed…we also have a chemical charge that is taken out and we have no written agreements at all. We now have 9 stylist and I find myself sitting alot! the owner has took it upon himself to work as the receptionist part time ..and the clients complain when he answers..he is of forighn decent and speaks broken english and does not know how to schedule clients appropriatly and causing over booking..which leads to mad clients..he also cut back our shampoo girls hours and the shop itself is not near as well kept. He buys all kinds of products and other things for the salon but does not want to pay us anything…he also has one that is booth rental when we are a commission based salon…it’s very confusing in our salon right now…he wants to give discounts to everyone! should I be entitled to hourly pay if my commission sales have dropped?
Yes. You are legally required to be classified as an employee (W-2) and to be compensated at least the prevailing wage or your commission, whichever is higher. He doesn’t get to pay nothing for labor. In America, nobody works for free. I recommend reading this post.
Hi Tina! Your blog is amazing. I am working in a commission based salon in Massachusetts. My boss wants me to add a product charge, that goes directly to her, on the bill, when I use more color. I told her, I only use more color when I am doing more physical work. Either I’m adding a glaze to the ends, vivids, or foils. I use the up charge amounts in the computer and adjust it based on the amounts I use. If I’m using a bunch of color the upcharge would be $80 instead of $50. She says for every tub I open, I need to charge my clients extra money for her inventory. Shouldn’t the prices in the computer reflect her compensation? Even if I’m using more product because a client has more hair, it takes me more time to apply, shouldn’t I receive part of the commission for that? Her account has made her believe she needs to have that on the client’s receipt. I’ve wirked in two commission based salons in the state, and none of them have requested product charge on top of my work.
Okay, so her accountant isn’t wrong. The product costs have to be paid for by the client, but they also need to be paying for additional labor (since arguably, that’s ranking among her highest costs–much higher than product). So, if she wants to add a line item for excess product, she should absolutely do that, but she needs to add another line item for additional labor (typically charged by the minute). Otherwise, the product charge won’t do much to offset her actual expenses.
Regardless of how she adds it, the client should be paying for the extra time/product–so it shouldn’t be coming out of your cut. It must be deducted from the gross sale before your commissions are calculated.
Hi Tina, I work for a salon in Wisconsin that charges us a 9% product cost fee for backbar usage. The 9% is first taken off of my total service dollars earned per week (this deduction is not listed on my pay stub anywhere but simply just disappears from my earnings) and then I receive 55% commissions on the new dollar amount. I have done much research on this topic and read many of your blogs because I do not think this is fair and want to bring it to my employers attention. I feel that this is a way of hiding the fact that she’s paying us a lower commission rate and the prices for services should be structured in such a way that the guests should be covering the cost of the products. If she feels she need the extra 9% to run her business at the very least she should either list it as a pre tax deduction on our stubs or just lower our commission rate. The wage theft laws in Wisconsin have to do with lost or stolen property or faulty workmanship, product cost fees don’t fall under that category so is this legal even though it’s unethical? I know that we are non exempt employees and are protected under FSLA laws but I’ve read about a white collar exemption that makes it permissible for employers to treat commission based employees as if they are exempt. Is this correct or am I misunderstanding? Under the Wisconsin wage theft laws it also states that an employer shall list all deductions on the employees pay stub. If they are taking out product cost fees shouldn’t this be listed somewhere on my stub? If you could shed some light on these topics so I can go to my employer being informed that would be greatly appreciated. Thank you for your great blog
If you were made aware of the pay rate (55% of NET sales; not GROSS sales), there’s nothing illegal or unethical about it. She’s deducted the product fee prior to calculating the commission rate, so long as that was disclosed to you prior to you performing the work, it doesn’t constitute a reduction of wages after the fact or deceptive hiring. I would argue that it should be displayed on your pay stub, though. (There’s no logical reason not to include it and since your wages are calculated based on sales, it makes sense to be transparent about those fees.)
In your situation, the clients are the ones paying for the product, since it comes out of the gross sales.
What about Nebraska?
Any states that were omitted when I originally wrote this article didn’t have any specific wage laws on record. Things may have changed since then, so I recommend checking to be sure–but generally, states like Nebraska (and Florida) tend to rely on federal legislation alone.
I’m working in Florida in a beauty salon and my boss decided to charge us 3% for each credit card paiement without to telling us this is legal or not
No. That constitutes a wage reduction after the fact. Any wage reductions have to be announced in advance of a single second of work being performed in the pay period. I recommend reading this post and this one.
Can the salon I work at (in the state of Florida) take out back bar fees if I’m a 1099? They take a back bar fee off of my commission
You shouldn’t be 1099 if they’re controlling your wages and have the ability to deduct anything from your pay. I recommend reading this post to learn more.
Hello, I work for a franchise location of a chain spa in NC.
I make 35% commission on all services, and have never had any discrepancies in that math. I get 35%of whatever the clients pays. We recently added a new upgrade service that we add onto facials. Cost to the client is 80$ for this upgrade on top of the facial. So I should make 28$ commission for the upgrade. Yet I’m paid 21$, I asked about it and boss said “the estheticians commission is offset by the price of the serum” meaning my commission is based on 20$ less than the client actually paid.
The cost of product is not factored into my commission for any other service, and I’m very confused on how this is acceptable for just one specific service.
I am a W2 employee, Not 1099, if that matters.
This would be legal if they informed you that your compensation would be based on NET (not gross) sales. It appears they have not, which could be construed as a deceptive practice (fraudulent inducement). Unfortunately, because they’re classifying you and likely compensating you legally, you may not have grounds to do much about it unless you have a written agreement that specifically states that your compensation will be based on gross sales.
I’m in Arizona, I read the info on AZ but I’m still confused.
I was told I would make 50% commission.
After a few month I realize the math on my pay stub didn’t add up, so I asked. I was then told they took out $5 for color under $100 and $10 for color services over $100. I’m paying around $100 + each pay period. They told me they take it out before the 50% and that was better then after. I was so dumb struck. Is this legal?
If they take it out prior to calculating your wages, it’s legal so long as
1.) the deductions never reduce your wages below the prevailing minimum wage, and
2.) you were informed of the deductions ahead of time–which you weren’t.
In your case, their failure to disclose these deductions constitutes deceptive hiring practices, and likely wage theft.
Thanks for clarifying
I honestly can’t recall if it was talked about during the interview. It’s not in our handbook, but honestly I don’t feel like they would intentionally miss lead anyone.
Hi Tina. Thank you so much for posting this article & sharing your expertise! I read through the California link and was still unclear on if spas can deduct a product charge from commission employees. Our medical esthetician’s are paid 25-30% commission. The spa has decided to raise our service prices. Once this happened we all thought we would be getting a raise…. instead we were informed that the new price increase will be going towards the house only to cover product fees. The services have increased between $10-$50. Our massage therapist will be making their full commission without any deductions. Something doesn’t seem right. Any advice would be greatly appreciated. Thank you!
Hello! The relevant information you’re looking for is here:
Some common payroll deductions often made by employers that are unlawful include:
e. Business Expenses. An employee is entitled to be reimbursed by his or her employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties. Labor Code Section 2802
Products are considered a business expense. These are expenses routinely incurred during the normal course of business, required for you to do your job.
I work at an Aveda Salon in Kansas City Missouri. My salon owner charges me 55% off the top, then another 8% for backbar charges (also off the top). So I receive 37% commission on all my total sales before taxes are deducted. So on $1,000 in services I only receive $370 BEFORE taxes are deducted. We also do not get any sort of education covered, insurance or hourly pay. I did find this commission rate stated in my hiring documentation, but the hiring manager told me differently when I was initially hired. Is this legal in Missouri or am I simply getting screwed over? Thanks for any input you have for me!
I think you’re misunderstanding how compensation in the salon works. You are not being “charged” 55%. The owner is compensating you 45% of NET sales (what remains after 8% of product/materials fees are deducted from the sale). You aren’t getting 37% commission. Here’s an example:
Total sales: $1,000
Total Compensation (before taxes): $414
Compensation (as a percentage of gross sales): 41.4%
You aren’t paying them anything. They’re paying you from the salon’s gross sales.
As for the hourly pay thing, so long as your wages exceed the prevailing minimum wage for each hour you’ve worked in the pay period, they’re compliant with prevailing wage laws. If the wages do not exceed the prevailing minimum wage (plus any applicable overtime), they are not and must make up the difference.
Unfortunately, what a person says and what you receive in writing are two different things. I fully believe you were told something different by the hiring manager (who likely didn’t thoroughly understand the compensation themselves), but you can only prove what you have documentation for. While you could go to the state and explain that you were hired with false promises, without proof, it will be hard to make a case.
Thanks for your response Tina. I realize “charged” is the wrong terminology, but that’s beside the point I was trying to get at (I realize I’m not paying the salon, the salon is paying me).
But I think your misunderstanding what I’m saying. In your example the 8% was applied to the $450 which isn’t how it is at our salon (go back and look at my example). In our salon, the 8% backbar is applied to the $1000, not the $450. So my compensation (as a percentage of gross sales) from $1000 as follows:
Total sales: $1000
-8% (applied to total sales): -80 (not -36)
Total compensation (before taxes): $370
Compensation (as a percentage of gross sales): 37%
I’m also getting taxed before the 8% backbar is even deducted. I more wanted to know if that backbar deduction was legal, which it seems like it is based on the fact she stated it in writing. 37% compensation just seems low compared to other salon industry compensations I’ve been reading about.
Regardless, thanks for getting back to me.
Oh, I see. Even then, the percentages are from gross–but the taxation thing is super bizarre. Why would you be taxed *before* the 8% is deducted? To me, this seems like an error more than wage theft. The employer has to match employment taxes on that amount, so it isn’t in their best interests to calculate that tax before taking the 8%. As for the legality–as long as it isn’t coming from your pay, it’s legal. (What she says in writing has no bearing on anything. I read illegal contracts all day long, lol.)
When it comes to whether your compensation is high or low relative to other salons, I can’t really provide any insight there because percentages are relative. You have to look at a lot more than the percentage rate. (I wrote about that here.)
Start asking questions. In my experience, 9 times out of 10, salon owners overcomplicate their payroll unintentionally. Sometimes, it’s to disguise wage theft, but this doesn’t seem to be the case in your situation.
Thanks you so much Tina! I appreciated all your input with this!
Just went through a Workforce Commission audit and they took no issue with the practice. We are in one of the states you list as it being illegal. The part you are wrong on is that it states arbitrary. Many industries deduct COGS (Cost of goods sold) prior to calculating commissions/compensation. Even more industries just pay on net margin which has a much broader base of expenses than just a tube of color. I must have missed your Law Degree credentials in your bio.
You should re-read that post there, bud. I never said it was “illegal.” If you refer back to what I wrote, it says, “I have composed a list of states that restrict or outright prohibit arbitrary wage deductions below and linked the relevant statues.”
If you search the page for “Texas” you’ll see there are already some comments about the issue there and how they handle it, but that’s all irrelevant because you apparently didn’t read or understand the first part of the article to begin with, which states, ““Is it legal for my boss to take product fees from my paycheck? In the vast majority of states, arbitrary deductions from paychecks (even if you’ve authorized them by written agreement) are NOT permissible.”
You’re talking about a legal compensation structure that takes COGS from the gross sale–not from the employee’s wages. You don’t need a “Law Degree” to understand the difference.
§ 531.33 “Reasonable cost”; “fair value.”
(a) Section 3(m) directs the Administrator to determine “the reasonable cost * * * to the employer of furnishing * * * facilities” to the employee, and in addition it authorizes him to determine “the fair value” of such facilities for defined classes of employees and in defined areas, which may be used in lieu of the actual measure of the cost of such facilities in ascertaining the “wages” paid to any employee. Subpart B contains three methods whereby an employer may ascertain whether any furnished facilities are a part of “wages” within the meaning of section 3(m): (1) An employer may calculate the “reasonable cost” of facilities in accordance with the requirements set forth in §531.3; (2) an employer may request that a determination of “reasonable cost” be made, including a determination having particular application; and (3) an employer may request that a determination of “fair value” of the furnished facilities be made to be used in lieu of the actual measure of the cost of the furnished facilities in assessing the “wages” paid to an employee.
(b) “Reasonable cost,” as determined in §531.3 “does not include a profit to the employer or to any affiliated person.” Although the question of affiliation is one of fact, where any of the following persons operate company stores or commissaries or furnish lodging or other facilities they will normally be deemed “affiliated persons” within the meaning of the regulations: (1) A spouse, child, parent, or other close relative of the employer; (2) a partner, officer, or employee in the employer company or firm; (3) a parent, subsidiary, or otherwise closely connected corporation; and (4) an agent of the employer.
Cool. Here’s what the Texas Workforce Commission website says:
Deductions from Wages
To understand what wages are due and unpaid requires knowing what deductions are allowable. Employers must get proper written authorization before making a payroll deduction.
The employer may not make deductions unless:
Ordered to do so by a court of competent jurisdiction, such as in court-ordered child support payments
Authorized to do so by state or federal law, such as IRS withholding
Authorized in writing by the employee, and then only for a lawful purpose (authorizations may not be too general or too broad)
Deductions for out-of-pocket loans to an employee, even with an oral agreement to repay, are allowed only if the deduction is authorized in writing.
An employer who has received an income withholding order is required to withhold from wages, including any severance pay, commissions, bonuses or amounts paid in lieu of vacation time that the employee may be due under company policy or agreement.
If an employee has quit while in possession of company property and is due a final paycheck, wages may be withheld only when the employer is authorized to do so by law, required to do so by a court or has written authorization from the employee for the deduction. Otherwise, the employer would need to attempt to recoup the property by some other means, such as civil remedies (e.g., lawsuit, small claims court or police report) or make arrangements with the employee outside of a wage deduction.
That’s what I meant by “restricted.” But again–irrelevant.
Also–NONE of what you copied and pasted reads as “arbitrary” to me, so I’m not sure how I was “wrong” in my assessment that arbitrary deductions are unlawful. Where’s your Law Degree™? Despite your “Texas” heading, you’re quoting federal law that pertains to specific classes of employees who receive things like board, lodging, and “other facilities” from their employers that may be considered income. I don’t have a fancy law degree, but I did pass my Enrolled Agent exam, so I know enough to know that this legislation has less than nothing to do with what we’re talking about. It’s neat that you thought I’d be dumb enough to mistake this for something legitimate and relevant though. You may want to continue reading that statute, specifically the part where it states:
“(c) It should also be noted that under §531.3(d)(1), the cost of furnishing “facilities” which are primarily for the benefit or convenience of the employer will not be recognized as reasonable and may not therefore be included in computing wages.”
I’d continue to share more about how “facilities” are defined in 531, but I’ll let you do that here. I’ve lost interest.
Tina removes any posts where she is proven incorrect. Class act.
I’m almost 100% sure this is spam, but because it’s a new variety of spam I’ve never encountered before, I’ll play along.
In all the years I’ve been writing this blog, I don’t think I’ve ever deleted a post. I’ve certainly edited a few articles once circumstances or my opinions have changed, but I don’t remove the prior content. I strike it through and write [UPDATE-2019] etc.
Deleting posts on a site like this doesn’t benefit me whatsoever (because SEO). That said, the hyperlink structures have changed, so some links may lead to broken pages. That doesn’t mean the content doesn’t exist, just that it’s not wherever that link points anymore.
Oh, I see. You left a bunch of uninformed, catty comments under a fake email address without comprehending how comment moderation systems work and then got pissy when you didn’t immediately see your comments. LOL, cool.
I don’t see the state of Montana????
Hey Monica! That’s probably because the state of Montana doesn’t restrict or prohibit wage deductions. (Or at least it didn’t when I last updated this post.) It appears to now, so I’ve updated the post with the link. Here it is.
Hi Tina, I feel like you get asked the same questions over again and I apologize if I missed this answer. In Ohio, and I could not find it anywhere from the link in any wage deductions, are product costs legal for commission and not booth renters? As I was reading your answers to some of the other questions, it seems like it was. I have worked both commission and booth rent and am currently commission. Product fees are being taken off each service before my percentage, BUT I just recently started getting itemized pay stubs showing exactly what was being paid out. Hundreds of dollars and when I asked about it, I was told that I don’t really realize how much goes into marketing and everyone else’s hourly jobs. There are 4 of us that work commission, and maybe 6 on hourly.
I then stated that’s a business expense, not mine, and was blown off. We are due for a staff meeting to discuss a new pay system, I stated I want a receipt for my product cost to deduct from my taxes, if I can even do that. I just need to make a stand. But I first need to know if I am right or wrong. I appreciate this blog so much. Every article is so helpful.
The way fees are being deducted from the gross sale before your commission is calculated would be considered legal so long as your employer classifies you properly (as an employee–which means they’re also deducting and paying employment taxes) and they’re meeting or exceeding the prevailing minimum wage in your area. If they are doing neither, the problem isn’t necessarily the costs they account for before calculating your pay, but the fact that they’re not in compliance with prevailing wage legislation and are therefore committing wage theft. Often, when I see that someone is “on commission,” that’s code for “commission-only,” which isn’t legal.