Since a hairdresser is generally considered to be services that fit into the “regular course” of a salon`s business, the salon (or hiring unit) can never really meet Part B of the “ABC” test. Thus, AB5 provides an exception for certain workers in the beauty industry, including hairdressers, beauticians, beauticians, electricians and manicures. Although you consider your stylists to be independent contractors, and even if they ACCEPT IN WRITING that they are independent contractors, unfortunately, IDES can still suddenly audit you, the unsuspecting salon owner, and reclassify your stylists as employees. (The facts of your case will be decisive – not the formal agreement.) • Does the hairdresser have an agreement with the salon owner that he rents his own stand in the salon? • The employee (i.e. Hairdresser) is not subject to the control or instructions of the employer in the provision of the service; ET • Does the hairdresser have his own assistants? Who hires, disciplines and/or fires them? This means that the status of the independent hairdresser contractor is regulated by the Borello test and not by the “ABC” test. However, to be subjected to the Borello test, the individual worker or hairdresser must first meet all of the following conditions: • Does the salon owner provide the supplies, equipment, etc. available to the hairdresser (or indicate what supplies or equipment to use)? Products and inventory to add a rental fee product to load the client profiles of independent contractors – to add an independent contractor as a customer to charge them a rental fee Parts B and C are two new factors that have never before been part of the analysis of California independent contractors under Borello, the previous multifactorial test by S.G. Borello & Sons, Inc. against the Department of Labour Relations (1989). What the IDES Auditor requests: The IDES Auditor will want to review all written independent contractor and/or stand rental/lease contracts. Then the listener will look beyond the words of the agreement and examine exactly how you interact with your stylist, beautician, and others. Under Client Profiles: The employer simply adds the independent contractor as a client.

Under AB5`s “Professional Services” exception, hairdressers (defined as licensed hairdressers) are exempt from AB5. Results of the investigation: After gathering these and many other facts, the auditor decides whether the independent contractors concerned should be reclassified as employees. Often, the auditor will find that the hairdresser is an employee. The auditor will then pay the unemployment insurance taxes to the salon owner for a certain period of time (up to 4 years!). If you need help with independent contractor analysis or creating a legally compliant independent contractor contract, contact Hackler Flynn & Associates. If conditions have been discussed and agreed upon by both parties that have not been discussed in these documents, they must be documented and included in this document at the time of signing. You may use section “X. Additional Terms and Conditions” to report such additional agreements between the Company/Company and the Contractor. If you need more space, you can provide a full description of these applicable provisions on a separate document, label it, and then attach it to that document. • Does the salon have the right to dismiss the hairdresser or terminate the rental contract of the stand “at will”? IRS Standard: Many business owners are more familiar with the Internal Revenue Service`s famous “Twenty Questions” test for independent contractor status. The IRS uses the common law “control test” to determine whether an employee is actually an independent contractor. The 20 questions relate to the type of employment relationship (e.B.

training, uniforms, working hours, method of payment, reimbursement, advertising, etc.). Let`s say Salon X is a mixed salon and employs a mix of independent contractors and employees. According to Borello regulations, customers must pay their service provider directly if they are independent contractors. The tenant/stylist must have their own insurance policy Salons that wish to avail themselves of this exemption must exercise care and diligence in implementing an agreement and conduct with the hairdresser that meets all five requirements. To avoid the likely risk of misclassification under AB5, we recommend that companies hire legal counsel to assist with an independent contractor analysis and create written agreements on independent contractors that accurately reflect the actual business relationship between the salon and the hairdresser. • Does the hairdresser only work for that particular salon? Recently, on September 4, 2020, California Governor Gavin Newsom signed a new bill called Assembly Bill 2257 (AB2257), which amends certain sections of AB5. While the “ABC” test remains the standard for the classification of independent contractors and employees, there are new legal exceptions to the test, which may apply retroactively, as well as changes to existing exceptions. • Does the salon owner receive a guaranteed amount of hairdressing fees? • Is the hairdresser an entrepreneur, i.e. does he have risks and rewards in the course of his professional duties? • If the hairdresser makes a mistake, who pays for his mistake? Need for a self-audit: If you are currently using independent contractors, it is important that you conduct a self-audit. Consider every aspect of the employment relationship in light of Section 212 of the Illinois Unemployment Insurance Act. Refer to the IRS Form SS-8, which includes a good list of questions for a self-audit as part of the IRS test. Check all stand rental agreements.

Salon owners who choose to use the services of independent contractors or tenants should seek legal advice when entering into an independent contractor contract or lease for the rental of stands, etc. It is strongly recommended that a lawyer or other payroll tax professional be involved in the entire self-examination process. • Does the hairdresser have his own business cards? On behalf of whose company? The IDES test: In order for an Illinois salon owner to prove to IDES that an independent contractor should not be classified as an employee, the salon owner must pass all three parts of a three-part test under Section 212 of the Illinois Unemployment Insurance Act. Illinois` Unemployment Insurance Act was drafted in 1937, and the essence of this very difficult test was never changed. • Does the hairdresser pay a fixed or “variable” rent to the salon owner? The Department does not make general decisions about specific professions or professions. A hairdresser in an environment can be considered an employee by IDES. Another stylist on the street working in slightly different circumstances can be considered an independent contractor by the IDES. For products: The employer adds a product for the “rental fee” so that it can charge contractors what they owe. The last area to be maintained may only be completed by an authorized representative of the company and the contractor entering into this Agreement. Before these parties formally enter into this Agreement, note the state whose laws govern and enforce this Agreement in the empty box in section “IX.

Applicable law”. Find the “Company” header at the end of this document. Here, an authorized representative of the company must sign their name in the “Signature of the company representative” line and then note the current date on which they submitted this signature immediately after signing in the blank line. The signatory representative of the Company must print his name and title with the Company in the following two lines (“Print Name” and “Title”). The Contractor entering into this Agreement must sign his name on the line “Signature of the Contractor” under the heading “Contractor”. The date on which he signed this line must be indicated in the line entitled “Date”. Finally, the contractor must include their name printed on the last empty field in this section. • Does the salon owner determine the hairdresser`s working days and hours, minimum working hours, clients` schedule, etc.? The problem: Some salon owners may not want to hire a fixed number of hairdressers, beauticians, nail designers, etc. .