Your Favorite Salon Has No Employees...Really?

Jan. 11, 2018

We all frequent our hairdresser to get cuts, color, and other services.  Depending upon the structure of the salon, you may be surprised to know the salon may not actually have any employees.  According to the Professional Beauty Association, 90% of salons do not have any employees.  Hairstylists are typically classified as independent contractors and whether the classification is accurate depends upon the amount of control the salon owner exerts over the stylist. 

 

While the IRS does not have a set list of factors that must be used in every circumstance, it does provide a general set of factors a business can utilize to determine if it has improperly classified an employee as an independent contractor.  These factors can be evaluated by asking some of the following questions:

 

  1. Who establishes when the salon is open?

  2. Who decides who works specific shifts?

  3. Does the stylist purchase his or her own supplies with his or her own money?

  4. Who determines the price to charge the customers?

  5. Do the stylists set their own appointments?

  6. Who is responsible for expenses such as insurance, advertising, etc.?

     

    The more control the salon owner exerts over the above factors, the more likely it is the stylist is an employee and not an independent contractor.  Even if the stylist has signed an independent contractor agreement, it may not be worth the paper it is written on if the salon owner exercises too much control over the business of the stylist.  The Minnesota Department of Revenue also provides similar guidance to business owners in evaluating whether an individual is an employee or an independent contractor. 

     

    Salon owners should consult legal counsel to help navigate the waters of classification of employees versus independent contractors.  Failure to properly classify an individual can be very costly should a stylist bring a suit for improper classification where they are entitled to back pay and overtime.  Additionally, both the MN Department of Revenue and the IRS can seek back employment taxes if it is found the individual was improperly classified.  When you tally these expenses, the cost in hiring legal counsel to properly set up your business and classify your employees is a wise investment. 

     


Written By:
Bill Egan

Bill Egan is a Seasoned Employment Law Attorney backed by over 33 years of proven, veteran experience. He specializes in navigating businesses through conflict resolution in the workplace.

John Saunders is an experienced real estate and business attorney. He focuses his practice on advising business owners and licensed professionals with succession planning and transitions as well as their general corporate matters.

Rachell Henning is a second-year student in Mitchell Hamline School of Law’s innovative Hybrid program. Rachell is an Avisen Fellow who enjoys spending time with her husband and two young daughters when she is not working or studying.

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