Stylist Rights: It's Illegal for Salons to 1099 You as Employees

Is there conflicting information out there about being a 1099 employee? Or is it something some salon owners use with the excuse of "I own a salon so obviously I know what's best."

Don't let the language trip you up. 1099 Employee is NOT a true Independent Stylist. For decades, salon owners have been using this misclassification to skirt around their tax liabilities and required benefit offerings.

In this blog, I'm going to tell you, the stylist, more about how this is illegal. Since this is your chosen career, it's essential to know your rights when it comes to employment classification. Let's dive into why this practice is illegal and how you can protect yourself.

Understanding 1099 vs. W-2

First, let's clarify the difference between a 1099 contractor and a W-2 employee:

• 1099 Contractor: Independent contractors are self-employed. They manage their own taxes, don't receive employee benefits, and have 100% control over their work hours and methods.
• W-2 Employee: Employees receive a regular wage, have taxes withheld by their employer (they also liable to pay 7.65% of your payroll taxes), and are sometimes entitled to benefits such as health insurance, unemployment insurance, and workers' compensation.

Why Misclassification Happens

If you've been in our industry for a while, you'll know that one of the standards for commission in salons for employee stylists is typically a 40/60 split. 40% goes to the stylist, while 60% goes to the salon. Its been the standard for years since salon owners have always had a notoriously high overhead with a profit margin that is super low–like 0-10% low.

One of the largest–if not the largest–expense for owners is payroll taxes. So...someone came up with the seemingly bright idea of taking away this expense with having stylists fill out a 1099 at the end of the year. Effectively making the stylist 100% liable to pay their payroll taxes. 

By making this switch, the salon owner just increased their profits and maintains their control over the stylist's duties: schedule, services, prices, timing and whatever else the salon decides to require...while the stylist now has to pay their normal taxes plus all of their payroll taxes (15.3% total).

Everyone would do it, if it was legal. But it's not.

If you’re being treated like an employee—having set hours, using salon equipment, and following specific salon rules—this classification is illegal.

Signs You're Being Misclassified

Here are some signs that you might be misclassified as a 1099 contractor when you should be a W-2 employee:

• You have a set schedule dictated by the salon
• You use the salon’s tools and products
• The salon sets your prices and services
• You are required to follow a dress code
• You receive training from the salon

If one or all of these apply to you, then you're an employee. This is not me saying that it's better to be an employee stylist over an independent one. I just want you to know your rights no matter what. 

Maybe you truly do want to be independent and this blog helped open your eyes to what your salon owner can and can't do. Or maybe you do want to be a true employee and have all of the benefits of being one. 

No matter what it is, I'm here to help clear things up along the way because being misclassified can lead to several issues, including:

• Loss of Benefits: You miss out on health insurance, retirement plans, and other employee benefits.
• Tax Burden: Independent contractors pay higher self-employment taxes.
• Job Security: As a contractor, you have fewer protections against unfair termination or workplace disputes.

How to Protect Yourself

1. Know Your Rights: Familiarize yourself with the labor laws in your state. The IRS and the Department of Labor provide guidelines to determine proper classification (I've got a link list below for you).
2. Document Everything: Keep records of your work hours, responsibilities, and any communications that demonstrate your employee status.
3. Speak Up: If you believe you're misclassified, discuss it with your salon owner. They may not be aware of the legal requirements.
4. Seek Legal Advice: If the issue persists, consult with a labor attorney or contact your state labor department for assistance.

Truth is, most salon owners don't even know that you can't treat someone as an employee but classify them as an independent contractor. The last thing you want to do is potentially hurt someone who just doesn't know better. 

First thing, always bring it to their attention. Share this blog with them! I've included everything you need to show that this is 100% fact ✅. You can even go a step further and fill out Form SS-8 on the IRS website to have them tell you determine which classification is correct for you.

Conclusion

I've been misclassified before in many salons when I first started as a stylist, worked in salons who did everything 100% by the book, had a wildly successful business as an independent stylist, hired employees and owned a salon for years. When the rose colored glasses were lifted off my eyes, I realized how important it was to be educated in all aspects of business.

As the saying goes: "I know enough to be dangerous." –so should you.

Understanding your rights as a stylist is crucial. Misclassification can have severe consequences on your finances and job security. If you suspect you're being wrongly classified as a 1099 contractor, take steps to protect yourself and ensure you receive the benefits and protections you deserve as a W-2 employee or the freedom of being an independent stylist. Don't let anyone take advantage of you—stay informed and know your rights.

Helpful Links

1. US Department of Labor -  https://www.dol.gov/agencies/whd/flsa/misclassification/myths/detail
2. Internal Revenue Service - https://www.irs.gov/newsroom/irs-reminds-business-owners-to-correctly-identify-workers-as-employees-or-independent-contractors
3. Internal Revenue Service - https://www.irs.gov/newsroom/worker-classification-101-employee-or-independent-contractor