My question involves business law in the state of: California
Hello. I am a senior level hairstylist at a well-known privately owned hair salon in Los Angeles. We are told that we are "Independent Contractors" and that the benefit of that is that we are able to utilize deductions at tax time and make our own schedules, etc (although junior level stylists and assistants are expected to work a specific number of days and hours). We are given a 1099 in January for the prior year.
All clients book their appointments and pay for services and product purchases through a central front desk receptionist. All calculations are done regarding tips, services and retail sales and we are given a paycheck every 2 weeks and are paid a percentage (commission) on services and retail sales. Deductions from our pay (after the salon takes their percentage) include workman's comp insurance (around 4.8%), and all credit card charge fees. Tips are paid to us in cash daily and are not reflected in the paycheck. We all hold keys to the salon although there are clearly defined business hours in which front desk support will (or will not) be available. The last client must pay before the receptionist leaves, wether or not the stylist is finished with the service.
My questions are:
1: Are we indeed IC, or rather employees? It seems that clients paying the desk and thus stylists getting a paycheck for our commission renders us employees of sorts. A true IC would collect the client's money, then pay the salon their "rent". And if we are employees, are there not labor laws that entitle us to hourly pay, paid breaks, etc? I am loosely aware of AB1513 and am not sure how that impacts us now.
2: The workman's comp deduction. We were told in July 2016 that there was a "new law" that all salons were required to charge their staff for this or face a hefty fine. When I dug into this it seems that yes, EMPLOYEES must all have this (paid by the employer). But if we are true IC, then we aren't employees and therefore not required to carry our own workman's comp insurance. This leads me to believe that since all employees are required to have it that our salon is simply stretching the truth and therefore getting us to pay something that they are supposed to be paying instead. They tried to say that as IC, we are "our own employees"...
3: If we are found to be employees, are we not legally entitled to hourly pay in addition to commission pay? And retroactive?
In summary, I feel like the salon is using the IC label to basically utilize the loophole of not having to pay taxes on us, to not have to pay hourly and also to pass the workman's comp insurance that THEY as employers are required to carry, on to us, telling us that we have to have it and pay for it. I am smelling a RAT.
Thanks for your time.