Independent Contracting

Iam considering moving to a small spa and becoming an independent contractor. I work in a large spa and have been working there for 11 years as an employee. My question is this, is it normal to pay a monthly rent and say a 10% service charge ? She wants to charge me 10% of my total monthly services and a monthly rent. Is this the normal practice?

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Permalink Reply by Shelley Hancock on March 4, 2011 at 11:37am

Unless they are willing to negotiate and make things right...I'd run and find another spot!

Sheila Brittingham said:

Hi Shelley....no....my equipment and my products. Thank you for your input.

Shelley Hancock said:
No...it's usually either rent or a percentage split. Not both. Is she providing anything to you that would warrant her wanting 10% at the end of the month? I'm glad to see your post stating you didn't accept her offer!

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Permalink Reply by Necia Kuleck on March 4, 2011 at 2:17pm

My hours are weird right now because she is on vacation. I filled out a 1099. I have to pay for my own insurance, business license and city license. The days I originally was to work Sundays and Mondays. I can't really do any other days since she has them and works from morning to night. The other thing is, any time she gives out/donates a GC I don't get paid if I do the service.

Thanks for all the input. I for sure will be telling her NO!

Susan Ferguson said:

No that is not normal. If they tell you when you are to be at work, control what you do, and supply everything and pay you commission then you are considered an employee by IRS standards. You should not be paying rent also. Are they wanting to take taxes out of your check? If not and they still have the level of control mentioned above then they are simply trying to skirt IRS issues. In most instances this is not legal. I really hate that many salons and spas try to do this, they are trying to save on paying their share of employment taxes, this also means you are not covered under their Work Comp policy and you are more than likely not covered by any liability ins. If they are going to take taxes out of your check and you are covered on work comp. then why in the world would they be wanting to charge you rent also, basically they would be stating that they are going to keep the first $150 in commissions earned, that means you are working for free until you have earned above that amount.

Necia Kuleck said:
I recently started working at a spa on commission. The other day (before my contract was signed) she mentioned wanting to charge $150 a month for rent!? I told her I have never heard of this. Has anyone else? Every place I know that pays commission does not charge rent.

Thanks, Necia

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Permalink Reply by Pamela Cantor on March 6, 2011 at 6:49pm

Cheap, cheap, cheap!!! You don't get commission on gift certificates?!?!? She got paid for the gift certificate but, because the money was spent as soon as she deposited it, she's not willing to pay you. No, no, no. She collected $$$ for the service, the commission is due you, period.

Call your local IRS office and ask them to mail the Independent Contractor information. Most owners are ignorant of these and could find themselves in lots of trouble. The funny thing is that it's as much for their protection as the IC. For example, if you neglect to pay your taxes and the spa owner isn't following the correct protocol, they can be held responsible for your taxes and you're off the hook!

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Permalink Reply by Lovita Ransom on March 8, 2011 at 7:56am

They have tried to do this in the small day spa where I work - rent + commission (20% on all "spa" clients) but it's gotten really crazy for everyone. We've had people quit or refuse to sign with the spa as a result in the owner's mis-interpretation of what constitutes what in the cosmetology industry. In this day spa, we are all independent contractors. I own everything in my room from product to q-tips. Before I signed my contract I contacted several places to find out what the norm is. Nobody charges both rent and commission locally. However, all of those spas own everything an esthetician would need in the treatment room; she walks in, does her services, goes home - she's an employee. I also contacted the small business development center and received information from them as to how the IRS determines whether or not you are an employee or an IC and gave the owners copies. I have a wonderful relationship with the owners and we were able to find a very good compromise (no commission!) and I felt good about signing my contract. Do your homework. Check around and find out what is typical in your area and take care of you. If this place isn't a good fit, start looking around for a better one. As a side note, I had heard that in California they were auditing places who tried to do this - I used that bit of info with the owner and I think that helped my cause!

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Permalink Reply by Susan Ferguson on March 8, 2011 at 7:59am

I would run, not walk to the nearest exit. She is doing nothing but taking advantage of you. She can not, not pay you if you provide the service. If she gives the service away that comes out of her pocket not yours. What she is doing is NOT LEAGAL!!!

Necia Kuleck said:

My hours are weird right now because she is on vacation. I filled out a 1099. I have to pay for my own insurance, business license and city license. The days I originally was to work Sundays and Mondays. I can't really do any other days since she has them and works from morning to night. The other thing is, any time she gives out/donates a GC I don't get paid if I do the service.

Thanks for all the input. I for sure will be telling her NO!

Susan Ferguson said:

No that is not normal. If they tell you when you are to be at work, control what you do, and supply everything and pay you commission then you are considered an employee by IRS standards. You should not be paying rent also. Are they wanting to take taxes out of your check? If not and they still have the level of control mentioned above then they are simply trying to skirt IRS issues. In most instances this is not legal. I really hate that many salons and spas try to do this, they are trying to save on paying their share of employment taxes, this also means you are not covered under their Work Comp policy and you are more than likely not covered by any liability ins. If they are going to take taxes out of your check and you are covered on work comp. then why in the world would they be wanting to charge you rent also, basically they would be stating that they are going to keep the first $150 in commissions earned, that means you are working for free until you have earned above that amount.

Necia Kuleck said:
I recently started working at a spa on commission. The other day (before my contract was signed) she mentioned wanting to charge $150 a month for rent!? I told her I have never heard of this. Has anyone else? Every place I know that pays commission does not charge rent.

Thanks, Necia