Dylan Petrohilos/ThinkProgress

Why Your Beauty Salon Likely Doesn’t Have Any Employees

Chandra Dagulin was drawn to the beauty industry as an outlet for artistic expression and a way to earn a living. “I’m a creative person from a working-class upbringing and had been on my own off and on since I was 16,” she said. So she was in pursuit of a calling that “paid well enough to keep me off the streets and out of strip clubs,” given how plentiful they are in her hometown of Portland, Oregon.

She’s now been in the industry for over ten years and has experienced nearly every salon model out there. Few have served her well. In a series of emails, she detailed an apprenticeship where the “master stylist” didn’t pay her anything at all. Once she got paying work, she ended up leasing a booth from a salon owner as an independent contractor. But she labored under the owner’s strict rules about booking and procedures. It went so far that the shop owner began making important decisions for her.

Chandra Dagulin

Chandra Dagulin

CREDIT: Chandra Dagulin

One day, a father came in with his daughter, who had dyed her own hair black, looking to get it turned back to blond — a lengthy and costly procedure, which Dragulin said she explained to him. But once the girl’s mother found out the price tag, she called up the salon owner demanding a full refund. So the owner issued a refund — and took the full cost out of Dragulin’s pay. Shortly afterward, the owner let Dragulin go, forcing her to find a new location within 24 hours and refusing to pay her back the prorated amount of rent she had already paid for the month.

Dragulin’s experiences in the industry have been so negative that they’ve impacted both her finances and her mental health. “I’m heavily in debt from school loans and medical expenses,” she said. But she hasn’t been able to right any of the wrongs. “I have never been able to see any of these people brought to justice because the stress of legal battles and expense just seemed too great.”

Sitting in a stylist’s seat and asking her to wash and cut their hair is one of the most intimate services consumers seek out. But while some may make small talk with their hairdressers, few inquire about the way they scrape together their livings. No matter the setting or the price tag, the people washing, cutting, dyeing, and drying hair are often being exploited financially in an industry rife with abuse.

When Flexibility Turns Into Financial Vulnerability

Hair styling may appear to be an industry that allows for creativity and flexibility, offering the mostly female workforce a career without needing to get a four-year degree. But the harsh reality for many who try to make their living this way is that the finances are incredibly difficult, often thanks to unscrupulous salon owners who run afoul of labor laws and operate with little regulatory oversight.

Hair salons have moved rapidly toward a model where stylists are treated as independent contractors, rather than full-time employees with all the benefits that can come from that status. And it’s often done in circumstances where workers should instead be paid like regular employees. “It has become standard practice in many hair salons … to treat workers as independent contractors, to require them to even rent a chair or space in the salon, not to pay them an hourly wage and instead to have them subsist on tips or payments,” said Sarah Leberstein, a senior staff attorney at the National Employment Law Project (NELP).

It makes sense for employers to keep stylists on 1099s instead of W2s. Owners aren’t on the hook for paying their share of contractors’ Social Security, Medicare, or unemployment insurance, nor the employer’s share of income tax. The workers also aren’t covered by employment and labor laws like workers compensation or discrimination protections. “In some ways it’s a great deal for the employer or the business to call all of its workers independent contractors,” Leberstein said.

According to reports from the Professional Beauty Association, an industry group that represents both stylists and salon owners, salons and spas that don’t have any direct employees — meaning someone who owns her own salon and works alone, someone who works as a contractor in entertainment and fashion, or, most common, a salon that doesn’t employ people directly but instead brings in independent contractors — have grown 83 percent over the last decade. Salons and spas that have direct employees, on the other hand, have only grown 16 percent.

Today, more than 90 percent of all salons have no direct employees, meaning they either have just one person cutting hair or rely completely on independent contractors. Meanwhile, more than a third of all hairdressers, stylists, and cosmetologists are self-employed, compared to just 7 percent of the overall workforce.

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CREDIT: Dylan Petrohilos/ThinkProgress

This trend wouldn’t be concerning if these workers were simply choosing to be independent contractors and were afforded all the freedoms they are supposed to get. If a worker is simply renting a booth from a salon owner and setting her own hours, prices, and products, then she qualifies as one.

“Except that’s not how it works,” asserts Tina Alberino, a consultant in the salon industry who works with stylists who think their rights have been violated.

Many owners require employees to comply with rules about dress code, product use, hours, billing, and even handing over control of contact information for their personal clients. For Dragulin, this meant that even though she had to deal with paying extra taxes because she was technically self-employed, when she worked as an independent contractor she was still required to attend mandatory staff meetings in which the owner gave out “arbitrary” rules, use a unified booking and payment system that collected her clients’ information but was controlled by the owner, and sell certain products picked by the owner. This “inevitably cost me hundreds of clients’ information, because it all went into a central database that she owned,” Dragulin explained.

In cases like these, or even less egregious ones, Leberstein argues that the independent contractor status is being abused. “All of those factors would really weigh in favor of the workers being found to be employees,” she said. “I think there are very limited instances in which a hair cutter is an independent business separate from the hair salon where she’s probably doing almost all of her work.”

Dragulin sees it the same way. “You can’t act like the boss and not pay taxes for employees, which is ultimately what [the owner] was doing,” she said. But even though Dragulin became aware that she was possibly misclassified, there weren’t many places to turn for help. “There are laws, there’s just not a lot of support or direction when things happen, and bad salon owners are totally exploiting that,” she said. Plus, maintaining and growing a client base depends on having a good reputation, something that can be risked by taking action.

“You can’t make a fuss without experiencing fallout, so if you go to battle you better win,” she said.

Being misclassified as contractors rather than employees also means that accessing workers’ rights becomes even more complicated, because they would have to first prove they were misclassified before they could even file claims for unemployment insurance if they’re fired or try to get workers comp if they get hurt. And anti-discrimination protections, for example, only apply to employers with a certain number of employees, but a salon with all independent contractors technically doesn’t have any. A worker “faces a more uphill battle defending her rights, which are already hard for workers to enforce in the first place,” Leberstein said.

Another way this often plays out is in pay. Independent contractors aren’t covered by the Fair Labor Standards Act that requires employers to pay at least the minimum wage as well as overtime for work done over 40 hours a week. So hair stylists often end up not being paid that way. In a 2008 survey that NELP conducted of workers in New York City, 45 percent of the hairdressers and cosmetologists the researchers talked to were paid less than the minimum wage and more than 98 percent weren’t paid overtime for the extra hours they worked. Most were also made to work off the clock before and after their shifts and denied meal breaks.

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CREDIT: Dylan Petrohilos/ThinkProgress

Unfortunately, stylists who are classified as payroll employees often don’t fare much better. The salons that do pay hourly employees may also deduct fees for products or even each customer that comes in. If an unhappy client returns and wants a refund or a redo, many owners take the extra money out of an employee’s paycheck. Many salons don’t pay them an hourly wage at all, compensating stylists on commission alone or even paying them nothing as part of a training apprenticeship where the stylist is still servicing clients. “It’s more and more common,” said Alberino. “It’s very rare to find an owner that complies with wage and hour laws.”

Anna, a hair stylist in Michigan who wished to remain anonymous because she was involved in a labor dispute with a salon, has worked in the industry for 21 years, even owning her own salon twice. But her worst experiences were as a payroll employee. “Most days I worked 10 hours straight without one single moment to go to the bathroom, let alone sit down or have a bit to eat,” she said. “That was a typical day.” Nor did she earn any extra overtime pay for putting in those long days.

Her wages were stolen in other ways. In five different salons, she encountered owners who deducted the cost of every hair product she used on clients out of her paycheck. “When you’re hired, for the most part commission across the board was about 45 to 55 percent starting out,” she noted. But product charges, never mentioned during interviews, brought the amount far lower. “When you end up getting your paycheck … it could be all the way down to 25 percent.” The owners then turn around and deduct the cost of those supplies on their taxes as business expenses, she says.

Things got particularly bad in one salon that was deducting product charges as well as taking the stylists’ tips and counting them as part of the pot of commission they were paid. Anna was told she would make 50 percent commission on the cuts and other services, but over the course of two years she claims that the owner deducted $16,830 from her pay without her authorization for the products she used, according to documents shared with ThinkProgress.

“Because [the owner] was taking so much out of my paycheck, my husband and I had completely diminished every single cent we had … that was supposed to be our savings for the future,” Anna said. “A couple of different times, I actually broke down at work I was so stressed out over money.”

The Professional Beauty Association denies that wage and hour violations are widespread problems. When asked about how prevalent wage theft practices are, Bridget Sharpe, government affairs and industry relations manager at the Professional Beauty Association, the largest industry group representing hair dressers, salon owners, and product manufacturers and distributors, replied, “To be honest with you, it’s not something I’ve heard much about.”

She also said she hasn’t seen any other widespread forms of exploitation. “We want to make sure that everyone’s compliant” with labor laws, Sharpe said. “Our biggest concern is that our members are compliant.”

But that’s not what advocates say. They claim these practices are so widespread that they’re simply seen as business as usual, and improving them too costly a choice. “In some industries, misclassification is so pervasive it’s become the standard way of doing business,” Leberstein said. “For companies that want to do right, they may have to charge a bit more, they may find it harder to compete for customers.”

Yet higher prices are little guarantee that hairdressers are being treated fairly. “It’s generally widespread across the spectrum,” Alberino said. “Whether it’s upscale, middle tier, or low scale, it doesn’t really matter. Exploitation is likely to be happening in any of them.”

The one kind of salon that is more likely to be following existing wage and hour laws are corporate chains. “Generally they do adhere to federal laws because they have teams of lawyers advising them,” she said. “You can be assured your hairdresser is making at least minimum wage.”

A Dead-End Degree That’s Required Entry

The difficult finances of being a hair stylist begin before she even gets to the salon.

Dragulin had to go into debt to cover the $16,000 in tuition it took to enroll full time at Phagan’s School of Hair Design in Portland. She’s not sure it was worth such an expense in the end. “Many schools have a slick presentation that gets you to sign up and believe in an industry full of opportunities that don’t exist,” she said.

On top of that, the school had students giving haircuts that it charged for but didn’t share any of the money with them. “I remember thinking how much it sucked that the school charged for our service and called it ‘on-floor education’ after taking so much money from us,” she noted. “It felt like the schools really win/win on both ends.”

Stylists are required to get licensed in order to cut, style, and dye hair, although the requirements vary considerably state by state, ranging from 1,000 hours in New York and Massachusetts to 2,300 in Oregon. “It’s crazy that two states can have such different length requirements,” argues Ben Miller, senior director for postsecondary education at the Center for American Progress. “Why does it take 1,000 hours to become a cosmetologist in Massachusetts, but 1,500 in Maine? Is it really 50 percent harder to be trained to do this stuff there?”

The way to log those hours is almost always by attending a beauty school. Some states also allow stylists to do apprenticeships or vocational training, but not many public schools offer it. “These beauty schools basically exist because of state licensing rules,” Miller said. And they are nearly all costly, for-profit institutions. In Oregon, for example, average tuition is $16,937 and can be as much as $24,515. Even in a state with much lower requirements, Massachusetts, average tuition clocks in at $11,360.

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CREDIT: Dylan Petrohilos/ThinkProgress

Many students take on debt to finance their beauty school tuition, but it’s different than taking out a loan to get a bachelor’s degree. “These are not colleges where your certificates are going to lead you on to something else,” Miller explained. “They are basically dead-end credentials.”

Yet the loans that people take out to cover that cost if they can’t pay out of pocket or find financial aid have the same terms and conditions as loans for any other undergraduate education. Meanwhile, hairdressers make just under $28,000 a year on average, and starting wages can sometimes be less than the cost of beauty school tuition.

That lands many of these schools on the government’s list of those whose graduates are most likely to default on their student loans. “It’s very risky debt … probably some of the riskiest debt we hand out in higher ed,” Miller said.

One solution, according to Miller, is to reduce the number of hours required to get a license, which he thinks would result in a reduction of tuition costs if students don’t have to attend for as long a time, although he does recognize that there are safety issues that are addressed in getting licensed. “We have probably transferred some skill acquisition that used to occur on the job to college,” he said.

The beauty industry doesn’t quite agree. Sharpe, for instance, warned against deregulation. “We are steadfast and very focused on continuing regulation of our industry,” she said. “If every single state were to deregulate cosmetologists or barbers, there would be no state boards … no appearance enhancement committee to oversee licensing issues, consumers would not have the opportunity to report complaints to anyone. It would basically be a free for all.”

But the Professional Beauty Association is in support of making sure the requirements don’t vary so widely state to state. “We want to be able to keep the licensing intact, but also to streamline it,” she said. And it recognizes some of the same issues with the current system. “The stylist in Iowa [which requires 2,100 hours] isn’t any better or more trained,” she noted. “Inequality in hour requirements makes it more difficult for stylists to move.” The association has convened a working group to examine the impact of smoothing out the hours.

An Industry With Little Government Oversight

Remedying any illegal practices stylists encounter at the workplace — misclassification, wage theft, discrimination — can be not just an uphill battle, but next to impossible. Anna decided to take action against the salon owner docking product charges from her pay when she began examining her paychecks and realizing that the charges were changing week to week even though the services she was performing stayed the same.

But while she spent eight months and about $5,000 trying to prove to the Michigan Department of Licensing and Regulatory Affairs that the practices were illegal, the investigator on her case ultimately sided with the salon owner and concluded that the deductions were legal. The owner won “completely free and clear,” Anna said. She thinks she never really had much of a chance. “Never at any point was [the labor investigator] on the side of the employee,” she said.

To add insult to injury, after the investigator made the final decision Anna received a check from her former salon for just 50 cents.

Alberino’s experience is that lawsuits on behalf of workers don’t go anywhere. The owners may not keep very detailed records or may simply make them disappear when they get inquiries from state labor agencies. Many stylists don’t think to keep their own records of what they’ve agreed to. Anna, for example, had no written agreement about her commission and few records of her schedule. “Often there’s a lack of evidence when it comes time to defend themselves,” Alberino said. Then it becomes a “he said, she said” situation and many cases get thrown out.

And while some laws exist that would protect hair stylists from these forms of treatment, they don’t mean much. “It’s just the enforcement doesn’t happen,” Alberino said.

Anna noted the same thing: regulators rarely, if ever, stop by to make sure that labor and safety rules are being followed in hair salons. “The only investigator I’ve ever seen is from the health department,” she said. “And in all honesty, in 20 years I’ve maybe seen three investigators.”

There were 92,172 workplace inspections conducted by the Occupational Safety and Health Administration last year and 14,924 cases from the Department of Labor Wage and Hour Division among the country’s more than 8 million workplaces.

Some federal lawmakers have taken notice of the problems with independent contractors throughout the economy. Bills introduced in the House and Senate in both 2013 and 2014 would have cracked down on the misuse of that employee status, although neither moved forward. A spokesperson for Sen. Sherrod Brown (D-OH) said his office is still working on a reintroduction of the bill this year.

Dragulin suggested that there needs to be a concerted effort to help stylists access their rights. “Ideally I would like to see a movement, maybe starting with classes in beauty school that teach you your rights and provide resources, anonymous tip lines to report issues with salons and prompt investigations, and unions,” she said. “We are stronger together.”

For now, she’s back on her feet working at a salon that she says is cooperative and treats her well. “It’s wonderful, and I lease alongside a group of women who formed the salon as refugees from bad salon situations,” she said.

But her experiences with abuse have been hard to overcome. “I was literally just trying to make a living as a creative person who made people happy,” she said, “and there were all these assholes out there taking advantage and being totally cruel and selfish, and I just couldn’t seem to avoid them if I wanted to get by.”

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