The California high court is looking at distinctions between independent contractors and employees and salons operating with a booth-renter model are paying attention. Currently, the California Supreme Court has focused on a package and delivery company (in Dynamex Operations West, Inc. v. Superior Court) but salons are in-line to be impacted as things move forward across industry sectors.

The argument is that designating some work as "contract work" (or some employees as "independent contractors" as in the salon world) might be a way to get around employee and wage laws. The Court held that it is the burden of the hiring entity—the business, the salon or spa—to establish that a worker is an independent contractor who was not intended to be included within the applicable wage order’s coverage.  

To meet this burden, the hiring entity must establish each of the following three factors, commonly known as the “ABC test”:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Following Dynamex, hiring entities in California categorizing some workers as independent contractors will want to take the “ABC test” and look again.

According to Fred Jones, Legal Counsel to the Professional Beauty Federation of California, "It is still possible for some booth rental salons to survive legal scrutiny under this ABC test, like those with clear physical and operational separation from the establishment owner—who may also be leasing space to non-beauty related tenants, but the vast majority of booth rental salons as currently constituted in California are now in legal jeopardy."

Learn more about this ruling at these links:

https://www.dir.ca.gov/LETF/LETF.html

https://www.dir.ca.gov/LETF/LETF_Legislative_Report_2016.pdf