April 2009
The Professional Beauty Federation of California (PBFC) is a state-based, nonprofit trade association with the singular goal of raising professionalism in our industry. PBFC represents California’s beauty product manufacturers, distributors, students, schools, independent and chain salon owners, and individual licensees.
As Legal Counsel and registered Lobbyist for the PBFC for the last decade, I have had the privilege of speaking for all of you to those charged with governing our State and industry. I am proud to have been your voice through PBFC helping foment the dynamic change that has come to the beauty industry in Sacramento.
There is no doubt in my mind that beauty and barbering is the most grassroots, entrepreneurial industry in California, made up of the women and men who perform personal beauty services on trusting clientele; it is you, the beauty professional, who are the heart and soul of our industry.
In the hair salon world, most of our licensees work in a booth rental setting. Those in nails are primarily employer-employee or independent contractor based. Many salons have a mixture of commission, independent contractor, rental and employment arrangements. Regardless of the official category, we are all in the same industry boat. When a single licensee harms one of those trusting clients, the sinking tide of bad PR and negativity toward the beauty industry lowers us all. It is important we all strive to maintain the very highest ethical, professional and safety standards.
One of the first bills PBFC sponsored eight years ago, now law, requires all State Board licensees to identify themselves on their license renewal form as either an employer, employee, or booth renter/independent contractor. The intent of this law was to encourage all of our professional stylists to consider exactly who they were within their individual salons, so that all of us would be reminded of our individual business roles and health and safety responsibilities.
Booth rental has swept throughout the country like wildfire and has provided unparalleled opportunities for business ownership. This entrepreneurial spirit helps drive our industry, but as with any business venture, there are responsibilities that come with being your own boss. As a booth renter, the law considers you a sole proprietorship (self-employed), charged with all of the legal, tax and regulatory obligations of any stand-alone business; this is the law, even though you may be operating within a separately licensed establishment.
The IRS, Franchise Tax Board, State Legislature and State Board are grappling with various approaches to driving this point home and holding booth renters accountable for their legal and financial obligations, but this realization should really begin and end with each of you, as licensed professionals. Take a moment to consider:
These are all criteria used by regulators to determine whether you are, in fact and by law, an independent sole proprietor operating within a licensed establishment (i.e., Booth Renter), or an employee to the salon owner. Depending on which they determine you are, you or the establishment owner could be saddled with severe financial penalties, fines, and back-taxes, not to mention civil liabilities from harmed clients if you are not correctly abiding by applicable employment law.
For the past couple decades, many beauty schools have not been able to spend much time on legal and business realities with their students, so it is not surprising that so many licensees are not aware of these serious issues and consequences. In defense of the schools, out-dated and overly micromanaged State Board curriculum mandates have inhibited their ability to spend adequate time on this instruction; however, the State Board has re-examined the license curriculum requirements and are in the process of reforming school curricula to offer schools more latitude to teach more modern-day trends, techniques, technologies and business to their students.
Whether you are a booth renter or employee, all licensees have a legal and moral obligation to adhere to the health and safety laws regulating our industry, for the benefit and protection of our trusting clients. If you have chosen the entrepreneurial and self-determinative path of renting your workspace, be cognizant of your additional ethical, legal and tax responsibilities to city/county officials (e.g., business permits and/or licensing), State Board regulators, and State and Federal taxing agencies. With the opportunities and freedom afforded a booth renter to be her/his own boss come the responsibilities of all other legitimate independent businesses; we must all live up to these responsibilities to be able to truly call ourselves professionals.