Help! Having a hard time deciding on what to pay employees..

Hello,

I am in the process of expanding my business and opening a full service spa but am having a hard time figuring out how much I should pay a massage therapist and nail technicians. I am hiring a full time Massage Therapist and one full and one part time nail technician. I live in the East coast, Rhode Island to be exact. Can anyone tell me what their thoughts are? I called the school I graduated from 12 years ago and they couldn't help me and I am opening the week of February 12th and am holding interviews tomorrow. I know that alot of people in our industry want to rent but I do not want to rent space or rooms, my dream has been to own and operate my very own spa. Thank you in adavance for your help.

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Permalink Reply by Yadira Alexander on January 20, 2013 at 10:57pm

Thank you Natalie... Just replied to you! :)))

Permalink Reply by Amy Lynn Scheele on January 22, 2013 at 9:41pm

do an internet search for the prevailing wage, for each position, in your area.  im on east coast, i see many 50, 50 splits... they supply product.  if u are going for employee and not independent contractors, ive seen between 8 and 12 and hour for noncommissioned time, and 40 to 50 percent for commissioned time.  im in upstate ny.  ri may be different

Permalink Reply by Yadira Alexander on January 22, 2013 at 10:13pm

Hello Amy!! I have gotten great information from several people which is helping me decide in which direction I should go... My question to you is when you said that you see many 50/50 splits, did u mean that the employees supply their own products or the salon does? I always thought that if an employee is on commission, the salon or spa supplies everything. Thank you very much for the feedback! I appreciate it lots! :)

Permalink Reply by Amy Lynn Scheele on January 22, 2013 at 10:16pm

ive seen both, 50 50 for spa supplying, 60 40 when professiknal supplies. 

Permalink Reply by Yadira Alexander on January 22, 2013 at 10:27pm

Thank you for the info Amy!! I appreciate you taking the time. :)

Permalink Reply by Hina Sethi on January 25, 2013 at 2:01pm

I totally agree with Amy.

50/50 with you providing 40% of supplies and they are providing 60%.

It this case you both are happy as well.

Permalink Reply by Yadira Alexander on January 25, 2013 at 7:35pm

Thank you Hina!! :)

Permalink Reply by Cindy Greenwood on January 23, 2013 at 4:58am

The 50/50 commission split has been around for awhile, but seems to be waning.

For comparison, the massage franchises pay their employees 35% commission (which comes out to around $18/ hr ).

I know everyone likes to pay their employees as independant contractors, but the IRS has their antennae up for this and I think that any employer needs to be careful.

If I were hiring people, I would not start anyone out at 50%. I would probably start much lower for a probationary period. Then I would bump them up a little bit after that. I would think that a "tiered" approach would be a good idea.  I would try to base the higher tier payments on quality work, client retention, and other things that make that person valuable to me as an employer.  I don't think I would ever pay out higher than 50%. And I would pay them as employees not IC's...but that's just me.

If the employees are supplying all product, THEN they are really more of a "renter" or IC - but then the owner does not have any control over how the work is done nor do they have control over a lot of other things - such as setting hours etc

Here is a link to the IRS regarding employee/IC classification

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/...

Permalink Reply by Yadira Alexander on January 23, 2013 at 10:42pm

Thank you kindly for such a detail post. I will have a look at your link now! :)

Permalink Reply by Magdalen on January 24, 2013 at 1:51am

Permalink Reply by Jodi on January 26, 2013 at 11:19am

As an employee, and soon to be an IC, I can tell you, it would be easier to make the switch to working in the industry full time if employers paid a base salary + commission, sort of like sales jobs.  Being paid strictly commission, I can't take the chance and commit full time to the spa where I work, which isn't really good for me, or the owner, as she wants me available more hours. If I was at least making a small base salary to be there 30 or more hours a week, then a small commission on services, it would be easy to make that jump.  Just a perspective from the other side of things. 

Permalink Reply by Yadira Alexander on January 26, 2013 at 9:22pm

Thank you Jodi... That is an option that a friend of mine who owns a salon told me about yesterday as well. Salary plus commission. I must decide soon as I am opening my spa in 3 weeks and am going to be holding interviews this coming week.. Everyone has been very helpful w their feedback! Thank you! :)

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