In response to the 2015 piece rate law, which caused confusion among salons and spas that pay their employees on a “commission only” basis, a new California law effecting all commission paying salons became effective this year.
In short, the new law (SB490) requires that licensed salon employees must be paid at least double the state minimum wage, twice per month, in order to earn any “commission-based pay.” You can read the full text of the bill HERE. The law is intended to allow salon owners the option to continue paying their employees commission-based pay while lessening the paperwork & administrative burden imposed by the piece rate compensation law passed in 2015. If licensed salon employees are not paid double the minimum wage twice per month, any incentive pay they earn does not qualify as “commissions” and may instead be deemed “piece rate” compensation subject to the 2015 piece rate law. Of course, salons are still free to pay their licensed employees a straight hourly wage or salary without commission-based pay.
Here’s an example of an acceptable commission-based pay arrangement under the new California law:
(courtesy of Myra Reddy of the Professional Beauty Association)
- Salon agrees to pay the employee an amount equal to two-times the state minimum wage for each hour worked. If, for example, the minimum wage is 11.00 per hour, the Salon must promise to pay the employees at least $22.00 per hour.
- The Salon may also pay the employee an agreed commission for all services performed. The commission amount is in addition to the base hourly rate. For example, the Salon agrees to pay the employee a 20% commission for all services. If the employee works 8 hours and performs $750 of services, her pay for the day would be $326. ($176 hourly and $150 in commission)
- The employee’s rest periods are included in the base hourly rate of two times the minimum wage of $22 because the employee is on the clock for the two rest periods. The employer does not need to calculate rest periods separately or show them separately on the employee’s wage statement. This means that the the employer avoids one of the most onerous and time consuming aspects of complying with the piece rate rules.
- It is important to note that the hourly pay and the commission are independent and must be shown separately on the wage statement as separate items (i.e. 8 hours @ $22/hr = $176, Commission @ 20% = $150).
It’s clear from the recent legislation that California frowns upon commission pay for beauty industry professionals. If you want to continue paying your staff commissions, without the hassle of the piece-rate requirements, make sure your software can give you revenue projections so you know whether you can afford a base pay of double the minimum wage and can accommodate different commissions structures (i.e. sliding scales) that can protect your bottom line!
About the Author: Mark is a licensed California attorney and currently serves as counsel for Prosolutions Software, Inc.
DISCLAIMER: This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this article do not create an attorney-client relationship between Prosolutions Software, Inc. or Mark Wiggins Jr., Esq. and the user or browser.
