What California Bill 1513 Means for Salons and Spas on Commission

28 Mar 2016 ~ Joseph Kellner

The Real Hair Truth

About frigging time, say goodbye bye to free labor. People deserve to be paid. Especially for sitting there waiting for a customer. Time is money. The ol trick of hiring a professional and giving them a chair and telling them they have to build up there clientele when they answer a advertisement for employment will be gone. That old trick is history, and should teach salon owners labor is not free. Good for the industry this should keep the owners honest. The industry was built on free labor. Pay back time. How can a professional come to work worrying about rent, food, electric, transportation etc if they work on commission. Salon owners will say I can’t do that, then you shouldn’t have opened a salon. Now I will wait for all the know it all’s to reply. Please do I love debate. I have watch professionals I have worked with in my 33 years of this industry, ripped offed, taken advantaged of, and done so much wrong to they have gotten out of the profession. Its interesting how salon owners can come up and blame the professionals. And assume that with your words that all are alike. “Have to pay people to sit in the break room, on their cellphones, bitching about how they are not busy.” Well not everyone in this industry does what you say. I’m glad to see this, it should have happened along time ago. I love it! Boo Hoo for the salon owners, good for the employees. The employees are what make you. About time this happened, I love all the new ways and new roads the industry is changing. Be your own Boss everyone Don’t live other peoples dreams. You will have nothing in the end. Especially in the Beauty Industry!, Hah!

Note: Although CA employment attorneys were consulted when researching this article, we highly recommend that you contact a legal representative to discuss your rights and responsibilities on this topic. Strategies is not a legal counsel and the contents of this article should not be considered as such. We will be updating this post as more information is presented to us.

Commission salons and spas in California were just given the ultimate “Bad Hair Day”.

With the passage of California Bill 1513 “piece-rate legislation”, the rules have completely changed on how salon and spa owners can compensate their stylists and massage therapists.

For all intents and purposes, the traditional commission model is no longer compliant in California. Strict new laws now require salons and spas to drastically alter they way they compensate their commissioned employees.

And unfortunately, the potential financial impact of Bill 1513 on many salons and spas could be catastrophic. See the full bill here.

What you need to know

Piece-rate vs. commission compensation:

As per the Labor Code, compensation for salon/spa services is technically labeled as “piece-rate” work, and not commission. Confused? Let’s look at the Labor Code’s definition of each classification:

Piece-rate is defined as pay “based upon an ascertainable figure paid for completing a particular task or making a particular piece of goods.”
Commission employees are defined as anyone “involved principally in selling a product or service, not making the product or rendering the service, and their compensation must be a percent of the price of the product or service.”

Because stylists and massage therapist are rendering services and not just selling them, their work is considered “piece-rate.” Why does this labeling matter? Because Bill 1513 only applies to piece-rate work and not commission work. But again, the Labor Code’s definition of commission is not the same as the salon/spa industry’s.

Big game changer #1…

Effective January 2016, all “piece-rate” California salons and spas must track, report and pay their stylists or massage therapists for “non-productive” and “rest/recovery” time.

“Non-productive time” is defined as the time employees are required to be at work, but are not actively servicing clients. This includes time…

Waiting for the next client to arrive
Folding towels
Sweeping the floor
Assisting at the front desk
Attending meetings
Technical training’s

“Rest/recovery times” is defined as time…

On break and meals

In other words, every minute that services providers are in the salon/spa and are not either servicing a client or on break, needs to be tracked, reported and compensated for.

The “non-productive” and “rest/recovery” pay rates must be at least the California minimum wage.

Big game changer #2…

And it’s a biggie…

The law states compensation for “non-productive” and “rest/recovery” time must be a separate pay rate from the rate paid for when services are being produced.

This means you are no longer allowed to average the total dollars paid by the total hours worked and let that cover both “productive” and “non-productive/rest” hours.

Previously, as long as the averaged hourly rate equaled or surpassed minimum wage, all was good.

This is no longer the case.

Big game changer #3…

In addition to aforementioned restrictions, Bill 1513 also contains one final crippling blow for California-based commission salons and spas:

Employers are required to calculate and pay back wages for all “non-productive” and “rest/recovery” hours worked dating back to July 1, 2012. And yes, employees have started filing lawsuits demanding back wages for this time period.
Or… choose the Safe Harbor option: Valid until July 1, 2016, Employers may choose to pay each employee 4% of their total earnings dating back to July 1, 2012. The state must be notified by July 1, 2016 that this option is being pursued, and full payment would be due by December 15, 2016. Doing so will also make them immune from any future employee lawsuits specifically related to Bill 1513.

An Example…Salon Sacramento

Open since 2006
$800,000 in gross service sales every year
10 full-time stylists, each paid 50% commission
Each stylist works 40 per week, and is 75% productive.
California minimum wage as of 1/1/16: $10.00 per hour

Now let’s do some math…

$800,000 / 10 stylists = $80,000/yr gross revenue generated per stylist
$80,000 @ 50% commission = $40,000/yr gross pay for each stylist
If each stylist works 40 hour per week and is 75% productive, this means that 30 hours are spent servicing clients, and 10 hours are “non-productive” or “rest/recovery” hours.
10 “non-productive” hours per week for 52 weeks is 520 “non-productive” hours for per year, per stylist

How this scenario would look under Bill 1513…

In addition to the $40,000 paid to each stylist for their commissions on services, they would each be due an additional $5,200 in compensation for their 520 “non-productive” hours worked at the minimum wage rate of $10 per hour.
This brings each stylist’s pay to $45,200/yr, the equivalent of 56% commission.
Multiplied by 10 stylists, this is a $52,200 increase in total salon payroll.

Salon Sacramento’s back wages due on all “non-productive” hours since July 1, 2012

We’re going to round our numbers to 3 years for clarity-sake
$52,200 x 3 = $156,600 due to employees if paid in full without using the Safe Harbor Clause
Or, if Salon Sacramento chooses to use the Safe Harbor Clause and pay the 4% penalty on all wages paid since 7/1/12, the amount due by December 15, 2016 would be as follows:
- $40,000/yr x 10 stylists x 3 years = 1,200,000 / .04 = $48,000

Compensation alternatives for California salons & spas

So where do commission-based California salons and spas go from here? One thing is clear, the days of easily calculating 50% for them and 50% for the house are gone.

Here are four employee-based compensation structures for California salons and spas moving forward:

Continue to pay commission/piece-work. The big challenge presented here is how will salons and spas be able to afford paying for “non-productive” and “rest/recovery” hours on top of the commission rates they are already paying? Yes, commission rates that fluctuate or are averaged based on weekly sales could be used, but these methods would also introduce substantial increases in bookkeeping responsibilities. They also may spawn confusion and resentment from service providers.
Hourly pay: Putting service providers on a fixed hourly rate is a sure-fire way to meet all California compensation requirements, as long as the hourly rate is at minimum wage or higher. However, if salons and spas don’t have the systems and leadership to drive sales and keep staff motivated, issues may arise.
Hourly plus commission: Keeping close to the current commission structure, employers could elect to pay service providers a set hourly wage (such as minimum wage), and then add a reduced-rate commission for each service rendered.
Team-Based Pay: Converting to a Team-Based Pay (TBP) structure not only meets all Bill 1513 requirements, but also offers growth and cultural benefits far beyond traditional salon/spa compensation models. TBP is an hourly and/or salary program with a team bonus that is tied the achievement of critical numbers (e.g., revenue, gross margin, client retention, productivity, pre-booking, retailing, net profit). Individual growth is tied to overall performance – not just the employee’s ability to generate revenue. A TBP system is designed to reward the right behaviors and performance – those that support the business’s goals and culture. RELATED: To learn more about the benefits and structure of Team-Based Pay, download Strategies’ free Team-Based Pay white paper report here.

As counter-intuitive and debilitating Bill 1513 is to the California salon/spa landscape, it is not something not to be taken lightly. If you are not pro-active in making the necessary changes now, you could be facing state fines, employee lawsuits for back wages or both.

Where can you get help?

Your first step should be to talk to a legal representative to learn what your legal rights and responsibilities are with Bill 1513. They will also have a very firm understanding of the bill as more details and cases are presented.

Your next step should be to restructure your pay structure to meet all compliance standards. If you would like one-on-one help from our team of Certified Strategies Coaches to quickly execute the restructuring of your compensation system to Team-Based Pay, click the link below. Not only will we ensure you meet all Bill 1513 guidelines, we will help you implement a pay program that can increases sales and profits, motivate your staff to grow the business, and provide world-class customer service.

Click here for hands-on help from a Strategies compensation expert.

Note: We highly recommend that you contact a legal representative to discuss your rights and responsibilities on this topic. Strategies is not a legal counsel and the contents of this article should not be considered as such. We will be updating this post as more information is presented to us.

Revlon CEO rips blacks, Jews, hates ‘dirty’ Americans!

9 Jan 20159 Jan 2015 ~ Joseph Kellner

Revlon CEO rips blacks, Jews, hates ‘dirty’ Americans!

The CEO of Revlon is a bigoted bully who hates “dirty” Americans, thinks Jews “stick together” and believes he can “smell” black people when they walk into a room, according to a new lawsuit.

The beauty company’s boss, Lorenzo Delpani, made the ugly comments after taking over in 2013, according to a discrimination suit filed by Revlon’s former top scientist, Alan Meyers, who says he was ostracized because of his Jewish heritage.

Delpani, a native of Italy, told Meyers he was “shocked” there weren’t more Jews at the company because the biggest shareholder is Ron Perelman, a prominent Jewish American, according to the suit.

“Jews stick together,” Delpani quipped. He also allegedly added that “thankfully,” Perelman “is not like that anymore.”

Delpani also said that he hates living among Americans, whom he called “small-minded” and “dirty,” and that he can’t wait to get back to a “real” country, according to court papers filed this week.

He later allegedly went on an “anti-American tirade” in which he said the US is getting closer to being like ISIS.

Meyers also claims Delpani made a racist comment after a meeting in South Africa, when he said he “could smell a black person when he entered a room.”

Meyers says Delpani had it out for him for having red-flagged safety issues in the production and manufacturing process.

Meyers claims he was concerned that several labs were not equipped to adequately test raw materials to satisfy Revlon’s safety standards.

Meyers, 56, who joined Revlon in 2010, was fired last month after he complained about the issues and his treatment, the lawsuit says.

Revlon spokeswoman Kiki Rees on Wednesday said Meyers was a disgruntled employee who did not perform up to company standards.

“Mr. Meyers repeatedly demonstrated critical lapses in judgment and failed to perform at the high standard we demand of our employees,” Rees said.

In the suit, Meyers claims Delpani’s tirades and tormenting eventually became outright bullying.

Meyers described one incident in October, when he allegedly was forced by Delpani to act as a human easel during a high-level meeting.

Meyers says he was instructed to hold a whiteboard, which covered his entire upper torso and head, for approximately 30 minutes.

He saw this as a demeaning gesture, he says, especially since he was supposed to be part of the leadership team.

Stress from the ordeal forced Meyers into the hospital with chest pains, the lawsuit says. He said he was fired on Dec. 10.

In his suit, he is demanding unspecified punitive and compensatory damages.

Attorneys for Meyers were unavailable Wednesday for comment.

Busted we win! Unilever for breach of warranty, violation of consumer fraud and deceptive trade practices pays up!

19 Feb 201422 Feb 2014 ~ Joseph Kellner

I love it, I love it. Busted for whatever the lawyers could get, they got in full from Unilever!. According to documents filed Friday in Illinois federal court, Unilever United States Inc. has agreed to pay $10.2 million to settle a class action lawsuit accusing it of marketing and selling a Suave-brand hair treatment that causes significant hair loss. The Suave Keratin class action lawsuit was initially filed in August 2012 on behalf of a class of consumers who purchased or used Suave Professionals Keratin Infusion 30-Day Smoothing Kit, a product that was recalled in May 2012. The plaintiffs alleged that the product included dangerous ingredients that caused injuries, and that Unilever failed to properly inform consumers about the proper way to use the product to avoid injury. During this time frame we at the “Real Hair Truth/Jotovi Designs Inc.” watched closely all the litigations that went forward with this class action lawsuit. And passed along any and all emails we received from consumers to the appropriate law firms representing the clients involved. Jotovi Designs Inc. was also used as a avenue for any and all complaints within the professional beauty industry, working hand in hand with consumers and professionals directing them to the proper law firms involved with the plaintiffs. Now trust me my friends that is just penny’s to them not even nickels or dimes at all. They are a large corporation will it hurt them, “NO” not at all. These large manufacturers are always in court. Look at L’Oreal, the mother of all lawsuits does it hurt them “No”. They always find a way to push the envelope, this is just a part of there corporate lives. No biggy to them. The consumer and professional are the ones who get hurt. And trust me the so-called professional beauty industry does not care to inform there industry of these deviate practices. They will actually support these company’s. Basically because they need there money to survive. They cannot do it on there own.

On the Unilever website the company claims that. “Our brands play a major part in helping us achieve our sustainable living aims of helping more than a billion people improve their health and well-being; halving the environmental footprint of our products and sourcing 100% of our agricultural raw materials sustainably”. Really?

Unilever is a major force in the beauty/cosmetics industry with household names as, Dove, Axe, Lux, Pond’s, Sunsilk, Tresemme, and who could also forget the beauty industry TONI&GUY that you can buy anywhere and beauty professionals will hail the product. Knowing full well they have no exclusive of the product what so ever. But they will sell it in there salons. And buy there tickets to there hair shows supporting TONI&GUY. But that’s another story in itself. The Suave Keratin class action lawsuit asserted claims against Unilever for breach of warranty, violation of consumer fraud and deceptive trade practices statutes and unjust enrichment arising from the manufacture, advertising and sale of the Suave Keratin Infusion smoothing kit. According to the plaintiffs’ motion supporting preliminary approval of the class action settlement, between 225,000 and 260,000 smoothing kits were sold.

Under the terms of the proposed Suave Keratin class action settlement, Unilever will pay $10 million to establish two settlement funds: a reimbursement fund and a personal injury fund. The $250,000 reimbursement fund will be available to Class Members who purchased a Suave Professionals Keratin Infusion 30-Day Smoothing Kit, providing a $10 refund for the past purchase of the product.

The class action settlement injury fund will provide relief to Class Members who suffered bodily injuries to their hair or scalp as a result of using the Suave keratin treatment. Class Members who incurred expenses for hair treatment but who no longer have receipts for their expenditures will be eligible to receive up to $40 per claimant. Class Members who have receipts from their treatments will be eligible to receive up to $800 per claimant for their expenses. Class Members who suffered significant bodily injury to their hair or scalp will be eligible to receive up to $25,000 per claim.

During the filming of my next documentary “The Beautiful Lies”, I received numerous emails for consumers who used this product. Writing to me the causes, and health hazards they experienced with this product.

” Dear Mr. Kellner, I too used this product and fried my hair…4 haircuts later still having issues with dry hair and itchy scalp. Any ideas on what I need to do to promote good hair health?”

” Dear Joseph Kellner,I found this email when reading about the horrible suave keratin product. I haven’t developed any health issues that I know of but my hair continues to fall out. I have had at least 10-12 inches cut off in the last 5-6 months and my hair used to be thick and is now just so thin and horrible feeling. Anything that can be done?”

“I bought the treatment on 3/23/12 from Wal-Mart and I used it a week later. I have previously used Sally’s brand about 8 months prior so I knew what I was doing and I read the directions correctly. Not even a week after I used the Suave brand, my hair got considerably lighter, which has never happened and my hair started to fall out. Even now, every time I was my hair, more of it breaks and I am losing it by the handfuls. I only use the treatments because after I had my daughter, my hair got wavy and thicker only in the back and I wanted an easier way to maintain my hair. The treatment I used before worked wonders and seeing as Sauvé’s was a whole lot cheaper, I took a chance. I know it is not supposed to make it straight, but it is supposed to make it easier to straighten, and this did not do as it was supposed to. I saw the recall at my local CVS and wanted to know what I am supposed to do from here? Thanks for your time.”

“I used this kit twice the first time my tightly curled hair was soft shiny the second time at first I didn’t see any change in my then a couple of weeks after my hair started coming out by the handfuls it took me three years to get the growth I had now all Ivan do is cut it all off and do intensive conditioning treatments .something should be done to suave for the damage it has done to my hair.”

“I to had a bad experience with this product. My hairdresser called their 1800 # to let them know the damage that their product had done to my hair. It’s taken 6 months to get it back to almost normal. This has cost me a lot of money. Another dissatisfied customer”.

“I just used this product a few days ago and my hair is also fried. And when I went to the store to try to find a deep renewing conditioner the product was still on the shelf! I don’t know what to do with my hair at this point. I’ve been trying to nurse it back to life with coconut oil and mayonnaise but it still isn’t enough. Help?!”

“Help it has been 4 months for my hair and it continues to break off and is fried. It seems like it is getting worse not better. I have spent over $2000 and yet I am still struggling. No one is responding to my letters Unilever, Suave or Kroger. I tried to join a class action lawsuit with Wasserman, Comden, Casselman& Esensten but they have not contacted me back yet either. The $12 is not sufficient and my current professional stylist believes it will be at least another year before my hair is back to normal if ever. I can not afford this!! Is there any hope we will get some resolve from the company. Please someone help!! This is truly a nightmare and not only has it ruined my hair but my personal life, my professional life and my personal well-being have all been severely compromised. Any information that you might have regarding where I might go next would be greatly appreciated.”

The Suave Keratin settlement will also resolve several similar class action lawsuits that were filed in Kentucky and California.

The Suave Keratin class action settlement agreement was reached after nearly 18 months of litigation and lengthy mediation sessions with former U.S. District Judge Wayne Andersen. According to the court documents, the plaintiffs believe that the settlement agreement is “fair, reasonable, adequate and in the best interests of the Named Plaintiffs and the putative Settlement Class. Unilever, denying wrongdoing of any nature and without admitting liability, has agreed to the settlement terms in order to address claims brought by consumers of Unilever products, and in order to avoid the burdens of continuing discovery expenses and litigation.”

The plaintiffs are represented by Marvin A. Miller, Lori A. Fanning and Andrew Szot of Miller Law LLC; Peter Safirstein, Christopher S. Polaszek and Elizabeth S. Metcalf of Morgan & Morgan PC; and Jana Eisinger of Law Office of Jana Eisinger PLLC.

The Suave Keratin Infusion Class Action Lawsuit is Sidney Reid, et al. v. Unilever United States Inc., et al., Case No. 1:12-cv-06058, in the U.S. District Court for the Northern District of Illinois.

Real Hair Truth Cosmetic/Beauty Product Injury Lawsuits

22 Jan 201422 Jan 2014 ~ Joseph Kellner

Injuries from cosmetic products can come in a wide variety of forms — from allergic reactions to infections and other complications. There are two main legal theories that a person injured by a cosmetic product (the plaintiff) could sue under: product liability and breach of warranty. This article discusses what a plaintiff in a cosmetic injury suit must prove under either theory, cases specifically related to allergic reactions, and the possibility of class action lawsuits.

Product Liability: The Basics

The most likely theory to be used in a lawsuit involving cosmetic product injuries is product liability. An injured plaintiff can sue both the manufacturer and/or the seller (the defendant) of the cosmetic product if his or her injury was caused by a defect, a defective design or improper labeling. Most states follow what is called the “strict product liability” rule, although a few still use traditional negligence rules.

A plaintiff suing under a strict liability theory simply needs to prove:

that he or she was the kind of consumer that the defendant intended to use the product
that the defect did not occur after the product was sold, and
that the plaintiff was injured.

This kind of theory is called “strict liability” because many of the requirements in a standard negligence case, like proof of a specific duty of care owed to the plaintiff, are not included. Most states adopted strict liability for mass-marketed consumer products because, among other things, the manufacturers needed to be financially responsible for their products, and not be allowed to escape liability simply because of the difficulty plaintiffs faced trying to prove negligence claims.

In a negligence case (in those few states that still use this theory for consumer products), the plaintiff will need to prove:

that he or she bought the product from the defendant
that the defendant should have known that the product could be dangerous if unaccompanied by proper warnings, or that the product had a defect
that the failure to warn the plaintiff, or the defect or defective design, injured the plaintiff, and
that the plaintiff didn’t do anything to cause the injury.

Breach of Warranty

A cosmetic product injury case based on a breach of warranty theory will be the same as other standard breach of warranty cases.

An injured plaintiff could sue for breach of an express warranty if the seller or manufacturer made specific guarantees that a product would have specific effects that the product did not have (note that this theory might not fit with most cases involving an actual injury).

The plaintiff could also sue for breach of an implied warranty that the cosmetic product was fit for normal use, i.e. the implied guarantee that no normal cosmetic product would cause an injury if used properly.

Finally, the plaintiff could sue for breach of an implied warranty that the product was fit for a specific purpose, i.e. that the defendant knew the plaintiff wanted to use the product for a specific purpose, but the product caused an injury when the plaintiff tried use it.

There are many state and federal laws controlling breach of warranty claims. Some breach of warranty claims may not be appropriate when the plaintiff is suing for physical injuries, if the law only allows compensation for the money lost on the product (what is called “economic damages”).

Some warranty laws, however, do allow a plaintiff to sue for physical injuries. Perhaps more importantly, proving a breach of warranty can help prove a strict liability or negligence claim. A plaintiff is not limited to suing under one theory, so including a breach of warranty claim in a cosmetic injury lawsuit will generally help a plaintiff’s case overall.

Injuries Caused by Allergies

If a manufacturer knows, or should know, that a product might cause an allergic reaction in some people, injured plaintiffs could potentially sue the manufacturer for failing to warn about the allergic reaction under a strict liability or negligence theory. A breach of warranty theory might also be possible if the allergic reaction is not extremely rare, i.e. the product was not fit for cosmetic use because some percentage of the population was allergic.

Class Actions for Cosmetic Product Injuries

If a cosmetic product causes many or all of its users the same kind of injury, then a class action may be possible. In a class action case, multiple plaintiffs with the same kind of injury from the same source sue the defendant in one lawsuit.

If someone is injured by a cosmetic product, they or their attorney should research whether there is already a class action case or a settlement fund for people injured by the product. Often, even though the case has settled, there will be a fund to pay those who were not a part of the original case.

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