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  1. #1
    Join Date
    Sep 2014
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    Default Can an Employer Take a Percentage of an Independent Contractor's Tips

    My question involves business law in the state of: I am considered self employed. I work in a nail salon on commission. I give 40% of my work to the owner. I can keep 100% of cash tips. What I want to know is it illegal for the owner to take 25% of the tips I get on card transactions, while they also charge the customer .50 cents to use their card?

  2. #2
    Join Date
    Oct 2006
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    16,474

    Default Re: Can My Employer Take 25% of My Tips from Card Transactions

    Quote Quoting kcarranza
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    My question involves business law in the state of: I am considered self employed. I work in a nail salon on commission. I give 40% of my work to the owner. I can keep 100% of cash tips. What I want to know is it illegal for the owner to take 25% of the tips I get on card transactions, while they also charge the customer .50 cents to use their card?
    I don't know whether or not its illegal, but its certainly greedy. I also think that you are likely misclassified as a contractor when you are really an employee. I would suggest that you look for work in another salon. They certainly don't need 25% of your tips to cover the cost of the credit card transaction.

  3. #3
    Join Date
    Dec 2009
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    Lake Chapala
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    Default Re: Can My Employer Take 25% of My Tips from Card Transactions

    Many salon workers are correctly classified as ICs, and OP seems to be one of them. OP, because you are an IC, you are not covered by employment laws.

  4. #4
    Join Date
    Jan 2006
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    Default Re: Can My Employer Take 25% of My Tips from Card Transactions

    Actually a lot of hair and nail salons rent chair or booth space to ic's. Very common and quite legal as long as the shop owner does not treat them as employees.


    As as far as I know they can charge you anthing you agree to. You need to also understand there is more to them accepting tips for you. They have to account for them when they do their books and file tax returns. While I believe 25% is excessive the money the bank charges them for accepting credit cards is only part of their expenses when accepting your tips on their credit card transactions.

  5. #5
    Join Date
    Oct 2006
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    16,474

    Default Re: Can My Employer Take 25% of My Tips from Card Transactions

    Quote Quoting jk
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    Actually a lot of hair and nail salons rent chair or booth space to ic's. Very common and quite legal as long as the shop owner does not treat them as employees.


    As as far as I know they can charge you anthing you agree to. You need to also understand there is more to them accepting tips for you. They have to account for them when they do their books and file tax returns. While I believe 25% is excessive the money the bank charges them for accepting credit cards is only part of their expenses when accepting your tips on their credit card transactions.
    Being paid a percentage of the fees collected from a client is different than renting booth space. I agree that if someone is renting booth space they are properly classified as IC's, however based on her description of how she is paid, I don't think that she is an IC.

  6. #6
    Join Date
    Sep 2005
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    98,846

    Default Re: Can My Employer Take 25% of My Tips from Card Transactions

    That's correct. She can be a booth renter, an independent contractor or an employee, but there's no allowance for mix-and-match.

    Most nail and hair salons that attempt to classify their workers as independent contractors mess up, and in fact have misclassified employees. How do they mess up? They try to compel the independent contractor to work a specific schedule, require them to stay on the premises if there are no clients available and they want to leave, require them to perform work unrelated to their own clients and services when they're not attending to clients (such as general cleaning, answering the phones), require them to commit to work exclusively at the one salon, require them to use only salon equipment and supplies, require payment to be made through the salon rather than directly to the stylist, etc.

    The OP didn't follow the instruction to identify her state, but many states offer guidance on the independent contractor / employee distinction for the beauty industry. Here, for example, is guidance from California.

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