California Employers Paying Barbers, Cosmetologists, Estheticians Commission Now Subject To Unique Minimum Wage Law

Any questions or concerns, call us 855-662-2500 or Email us.

If you own a hair salon or spa that employs barbers, cosmetologists or estheticians, you no doubt are aware of AB 1513 (now Labor Code section 226.2).

Prior to AB 1513, many salons paid their stylists as a percentage of revenues generated by the stylist. For example, if a stylist generated $4,000 in revenue during a two week pay period, a salon might pay the stylist 40% of the $4,000, or $1,600.

Some salon owners believed AB 1513, which applies to “employees . . . compensated on a piece rate basis,” applied to this compensation method. If paying a percentage of revenue is paying on a “piece rate basis,” then AB 1513 requires salons/spas in addition to the percentage of revenue to: 1) pay all “non-productive” time (i.e. time not providing a service to clients, such as wait time or clean up time) at minimum wage or greater; and 2) pay separately for rest/recovery periods at essentially a weighted average rate.

As a result, the author is informed and believes some within the salon industry sponsored and pushed SB 490 through the California Legislature. This law passed without opposition and was enrolled October 15, 2017. It allows use of a “commission” but with strings attached.

First, SB 490 defines “commission” in this context as “a percentage or a flat sum portion of the sums paid to the employer by the client recipient of such service.” It then says, employer can pay a “commission” in addition to a “base hourly rate.” The catch: the “base hourly rate” must be at least “two times the state minimum wage rate for all hours worked.” Hours worked means all hours under the employers control, and includes not only time when performing services, but also what AB 1513 calls “non-productive time,” and rest/recovery period time.

Bottom line: if you want to pay your barber, cosmetologist or esthetician a “commission” then the bidding starts at $22/hour (as of January 1, 2018, or $21 if you happen to have 25 or less employees) as a base for all hours worked.

We suggest you find some other way to pay them. Whatever you do, you shouldn’t pay on a “piece rate” basis (unless you want to comply with AB 1513) or a “commission” as defined by SB 490.

Or, raise your prices to cover the increased labor cost.

Any questions or concerns, call us 855-662-2500 or Email us.

 

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