Customary Exploitation: “But this is the way it’s always been done!”

As unfair as it is, ignorance of the law is not a valid defense. There are good reasons for that, the primary one being that if ignorance were a valid defense every person accused of a crime would use it, whether or not that claim were true.

Should an investigation into your labor practices be initiated, you cannot point at the salon owners around you and say, “Well, they did it that way! This is the way it has always been done!”

Exploitation of workers should not be customary in any industry.

In my favorite blog post of the month, “It Must Be OK – Everybody Does It!” John E. Thompson of the law firm Fisher & Phillips reinforces this lesson. He writes:

It is tempting to take comfort in platitudes like, “The whole industry pays employees that way,” “Everybody I know of treats those positions as exempt,” “All of my competitors classify these kinds of workers as independent contractors,” “Nobody includes bonuses in figuring overtime,” and so on.

It is legally perilous to pay employees based upon what are thought to be commonly-held views, instead of looking into what the legal requirements and limitations actually are.

Ultimately, the burden is on the employer to educate themselves and ensure they’re in compliance. Laws change frequently, so it’s in your best interest to keep an eye on them. You won’t receive memos about these kinds of things, and you’re expected to comply not just with federal legislation, but state and even city/county laws also.

FLSA litigation is on the rise, and Thompson notes that this is a relatively recent phenomenon. However, just because claims of exploitation are on the rise doesn’t mean that these violations were always permissible. Claims are just receiving more visibility. For that, we have very vocal unions, activists, protesters, and bloggers to thank–and the aggressive efforts of state and federal governments to curb exploitation.

Exacerbating our industry’s issues are accountants, salon “business consulting firms,” and attorneys who operate outside their scope, providing employers with faulty, misleading, or poorly clarified advice. I consult with salon owners often who tell me they’ve been led astray by these professionals. Educators within our own industry continue to perpetuate false information, adding legitimacy to longstanding, illegal practices.

Stop hiding behind the excuse that “everybody does it.” Everybody certainly does not.

Look to corporate salons–businesses which have teams of attorneys structuring their compensation and guiding their HR departments. Regis Corp and JCP salons, for example. Are any of them operating on a “commission-only” all-or-nothing structure? Are they classifying their employees as independent contractors? Are they not tracking hours or failing to provide detailed wage statements? Are they refusing to compensate employees for attending mandatory meetings or training? Are they deducting arbitrary fees from wages? Are they “fining” their employees for tardiness or re-dos? Are they encouraging their employees not to report their tips or requiring them to purchase their own products?

Nope. They’re not. Maybe they know something you don’t know–like the laws that govern American employers.

Do yourself a favor and please go read this article and add the Wage-Hour feed to your subscriptions.

I’ve updated the About page to include all of the law blogs and podcasts I subscribe to, but I encourage you to also seek out ones specific to your area. Attorneys are posting extremely valuable information that costs you nothing to access. Take advantage of it.

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8 Responses

  1. Thank you for all of your great articles. I haven’t found such of a common-sense approach that is so understandable for this business anywhere. So glad Google led me to your site! I wrote a comment and message to you yesterday, but after further thought, I want to explain the situation we are in as salon owners. My wife was a booth renter at 3 other salons prior to opening our own. The first one was run by a crazy woman, who charged all kinds of extra fees, tried to treat renters as employees and exert control, and ran everybody off… she was out of business in two years, 6 months after my wife left. The second salon was a 20-station booth rental salon, and they operated as one. No complaints… everybody managed their own books, payments, etc…, and they had a receptionist who simply sold product and distributed walkins/callins to the renters according to a rotation list.

    My issue is with the 3rd salon. We have a glut of booth rental salons in this small-ish town. Two of them are monster 20-station salons, and my worked for both of them. The last one my wife worked for is very upscale with high overhead. They promised us when my wife started that she could work whenever she wanted to, even long crazy hours. They have a receptionist who uses Salon Iris and manages the appointment book for 95% of the stylists! My wife was not comfortable in sharing her book of clients with them, nor letting somebody else manage her schedule, so they told us it was fine. They charge stylists an extra “Salon Iris” fee. They charge stylists other extra fees for advertising, and for special events. (Each stylist had to pay $100 for a dud of an open house they had, that provided no business and for which no one showed up, for example). They have mandatory meetings. They have a sign “Employees Only” on the breakroom door. Renters can’t use the key, and never had keys. In the beginning they shared a hidden-key at the back door, but then that was taken away.

    So they found out their overhead was super high, and eventually drastically reduced the working hours available to the renters to cut down on electricity/water costs. Some days they don’t open until 10 and close at 5, which was not what we agreed to when my wife started there, because many clients prefer to come in after work. (They have two “late hour” nights per week). AND, as you know, sometimes a color process doesn’t go as planned, and it takes an extra hour to fix it. My wife did that once, and the co-owner (husband) chewed her out, and said it was like a “slap in the face” to him for her working for an hour after closing. They then tried to force my wife to put her clients into Salon Iris, and said she wasn’t acting like “part of the team” and that she should trust them. (Although when any stylist leaves, the data remains on their computer!) They deleted her from the Facebook group page once, even though that’s how salon information was shared to everyone. In the meetings and on the FB page, they often solicit advertising advice and group brainstorming sessions, which seems more employee-ish instead of IC-ish.

    They asked for everybody to give $100 each to help pay $2000 for their website, and they would add it to the rent over a 2-month period to make it “easier” for everybody. In a 1.5 year period, she only got FIVE walkins/callins from the receptionist, who gave the bulk of the many walkins to younger stylists and those who kissed the butts of the owners. Sure, my wife is a very popular stylist in this town, but everybody needs new blood as people move, and her financial numbers were starting to drop, especially with the reduced hours. We finally had enough of the crap, and started working on our own salon. One week before she was going to turn in her notice, the owner’s husband found out (I kept it secret for 3 months, thank goodness), and fired her on the spot. Made us clean out all of her stuff that day, which really sucked. He even threatened to call the police on me if I didn’t get out of the dispensary, even though I was just putting my wife’s color supplies into a box. (He told me to help her get her things). Real asshole. 🙂

    I saw all of that, to lay the groundwork for this question. So after finding your site yesterday, I realized I need to re-classify our 2 part-time employees as employees instead of IC’s. I’m going to make it right, and told them TODAY that effective June 30th, everything will be set up to switch over. At that time, I will fill out the proper paperwork and pay the fines/penalties for 2015, which shouldn’t be much since we only had one part-time employee then.

    This large, asshole-owned “booth rental” salon is making it VERY hard on salons like ours who want to have employees and pay the employees well stay in business in our town. There are only so many good stylists in this town, and many of them work there. There is no incentive for them to come to work here, because they have a receptionist making their own appointments, and have all of their backbar shampoos/conditioners supplied. Even though the owners dont’ control the quality of work, or tell them how to do their job, would you not agree they are misclassified??? Even though they use their own credit card swipers and collect their own money, it seems if they salon makes their appointments, they are not true IC’s. They say that the receptionist is included in the rent, which is why the rent is higher than other area salons.

    We are keeping our head above water for now, but there is another nice salon in town getting ready to go under because they can’t find any renters to work there, which is their preferred model. And I would submit they can’t compete because this other salon has created an uneven playing field in this town! The owners live in a huge house and drive fancy cars, and it’s because they’re having their cake and eating it too. I almost want to report them for misclassifying after I’m compliant, just to break the dam open to let the stylists out to the rest of us! We can’t compete with that. What are your thoughts? And no…. I don’t believe I’m being a hypocrite. I didn’t realize I was misclassifying until after I found your site yesterday, and I’m going to make it right ASAP. Regardless, I pay our stylists pretty well considering we are a new salon and they are happy. Thank you for your 2 cents in this matter!

    1. You are SO awesome for correcting your mistakes through the proper channels. Seriously, so many owners contact me asking how I can help them cover up their errors instead of correcting them, so it’s nice to hear an owner who a.) admits they were errors and b.) doesn’t panic over them and c.) actually wants to fix them the right way.

      It does sound to me like that owner would have a hard time convincing the IRS that his renters are properly classified. He’s crossing several lines, and all are weighted differently by the IRS. I’m not an auditor, so I can’t say for certain, but I’m pretty positive he’d be ruled against.

      To compete with someone like that for talent, you have to be better people (which doesn’t seem hard considering what a Grade A Douchewad that guy sounds like). Many renters are only renters because they’ve been exploited by bad salon owners over and over again. They’ve lost faith that good owners exist, so they work for themselves where they’re less likely to be stolen from, overworked, or otherwise abused. Self-employment is incredibly expensive, and working as an employee for an owner who knows what they’re doing is almost always a better deal for a professional than working alone. If you can offer them fair compensation, full-time hours, strong salon management (including aggressive marketing), and continuing education, they’ll be yours for life. (I still have ex-employees begging me to open another salon so they can leave their studios behind. Trust me on this, nothing inspires loyalty more than an owner who actually gives a crap about the salon and the workers in it.)

      The alternative is to offer competitive rentals with a bunch of a la carte amenities for the renters, but in my experience, employee-based salons generate a lot more income and are 15% less of a headache to run.

  2. Thanks! Yes… I truly believe this team-based thing I’m working on building is much better than a renter situation. We only have 6 stations, and renting 5 would maybe bring in enough revenue to hire a receptionist and pay the bills, so what would be the point of that? My wife could just go back to being a renter and making a lot more doing that, with less headache, than being an owner. 🙂 I’m not terrified of the IRS, as I went through the ringer when I was self-employed in my other business about 12 years ago, BUT I’m also smart enough to turn myself in early rather than waiting. 😀 We are actually doing what you speak of, and not just promising it to them like others do.

    1. You’re in a good position for it. A lot of the owners who contact me for help have been non-compliant in excess of ten or fifteen years, so they’re terrified to do anything. I wrote a post about the IRS’s Voluntary Classification Settlement Program a while back that outlines the benefits of self-reporting (if I remember correctly, they only hold you responsible for two years of unpaid taxes or something–I could be wrong, though–but I know it’s far better than being discovered, lol).

  3. Hi Tina
    Do you know if it’s legal in Florida, or any other state to deduct wages from one employee to pay another employee. Example, I’m an employee, as everyone is at the salon. Assistants are also employees, hired by the owners. However, they are paid an hourly wage, also accept tips from clients, and fees are deducted from the stylists checks for every shampoo, color removal, perm, etc.

    We also have 10% of our weekly total deducted (“for products”) before being paid our commision. When I questioned why I was charged so much for a shampoo, I was told that it was long hair(One shampoo) no conditioner. I’m already having a deduction for products, that’s double dipping.
    Having the stylists tip the assistants is fair, but not deducted from our wages, we didn’t hire them, they are not our employees.
    Any thoughts?

    1. Florida is notorious for being shitty to employees. (I live here, so trust me, I know exactly how far behind the times we are when it comes to employee protection legislation.) However, on a federal level, I believe this would still be considered wage theft. Even in Florida, if you brought this before a judge, I don’t think any reasonable one would argue that this is a tremendous abuse. The 10% weekly deduction is certainly against federal law, and having stylists tip the assistants actually ISN’T fair. (Per federal law, your tips are yours entirely. The owner can’t dictate what you do with them or require you to pay fees to their employees–which is what they’re having you do.)

      I’d quit and report them immediately to the the department of labor, then I’d total up my lost income and bring her to court to have it reimbursed. That’s absolutely unacceptable.

  4. I own a compliant, commission salon however, I do have a question about education. I bring in classes each year (in-salon classes) to provide my employees the ability to earn enough CEU credits to maintain their licenses. Some classes are provided free of charge from vendors that I have purchased from, but some I pay for. I strongly encourage all of my stylist staff to attend these classes but I do not feel that I need to “pay them” to attend at an hourly rate. It’s not mandatory that they attend. I feel this is a nice perk that we offer so my stylists do not have to pay for CEU classes on their own. In your article, you seem to suggest that I pay them to attend these in salon classes?

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