Like most businesses, salons are subject to a broad range of legal applications that must be enforced to ensure the safety of not only their clientele but also their employees, and their employees' rights. So as an employer, it's important to be well versed in the many laws that govern your relationships with your employees. Here's how to navigate the maze of rules and regulations that accompany running a salon or spa with this primer on federal employment laws.
INDEPENDENT CONTRACTOR VS. AT-WILL EMPLOYEE
Because independent contractors are common in the salon industry, it's imperative that employers understand the guidelines that govern their classification as such. Salons that the Internal Revenue Service (IRS) determines have wrongly classified employees as independent contractors can face serious consequences. For more information, log on to www.irs.gov.
FAIR LABOR STANDARDS ACT (FLSA)
This covers child labor, minimum wage, overtime and record keeping requirements. A copy can be found at www.dol.gov/esa.
AMERICANS WITH DISABILITIES ACT (ADA)
Intended to prohibit the exclusion of people with disabilities from participating in common activities, this law established requirements for private businesses of all sizes. A technical assistance program is in place to answer specific questions. For more information, log on to www.ada.gov.
IRS TIP TAXATION REPORTING
Unless your spa has a no-tipping policy, you need to understand what is required of you and your employees in reporting this additional income. According to the IRS, "Employers must collect income tax, Social Security tax and Medicare tax on tips reported by employees. You can collect these taxes from an employee's wage or from other funds he or she makes available." For more information, log on to www.irs.gov.
WRONGFUL TERMINATION VS. CONSTRUCTIVE TERMINATION
As in any business, there are bound to be occasions when you find it necessary to fire an employee. Knowing the legal ins and outs can help you avoid a lawsuit and make a decision that is beneficial for all involved.