Originally posted September 2012. Revised and updated January 2016.
I’ve been getting a considerable amount of emails from salon and spa staff around the country asking me, “Is it legal for my boss to take product fees from my paycheck?”
In the vast majority of states, arbitrary deductions from paychecks (even if you’ve authorized them by written agreement) are NOT permissible.
Most states have “wage theft protections,” statutes that prohibit wage deductions entirely, aside from “mandatory deductions” (taxes, for example) and rare circumstances (loan repayments to the employer, reimbursement for property damage, etc).
The clients who enjoy the services should be covering the product costs; not the employees who perform them.
If a salon owner isn’t able to cover the product costs, they need to do the math to properly calculate their service prices. Had those calculations been run at any point, they wouldn’t have to resort to wage deductions to cover their costs. Charging employees to work for you is completely unacceptable, unethical, and unprofessional. It is an amateur move.
Salon owners, before you start forming your counter-argument, answer this question: Can you think of any business in any industry that requires its employees to pay cost of doing business expenses without reimbursement? Because I can’t. Just because it’s your salon does not mean you can steal wages for your own benefit.
Your place of business is not some sovereign state, exempt from the laws that govern every other employer in America.
Whether you agree with the law or not, the IRS and DOL do enforce these violations and if you don’t figure out how to run your business and correct your mistakes before they find you, you’ll likely be looking at a really nasty (and tremendously expensive) situation. Don’t believe me? Read this.
To those of you who want to contact me and say, “Well my attorney said this,” or “My accountant said that,” I have this to say to you: I have had many salon owners email me the same lines. I have done Google searches and within mere minutes proven to them how wrong they were.
Do your own research.
Opening a salon or spa isn’t as simple as finding a building, decorating it, and filling it with staff members. There’s a lot more to it. It is your responsibility alone to ensure that you’re in compliance. Your business and your ass are on the line. Contact an IRS representative and contact your local labor board yourself. You are the business owner. Act like it.
I have composed a list of states that restrict or outright prohibit arbitrary wage deductions below and linked the relevant statues. Please be aware, per federal law (the FLSA, applicable in all 50 states) the “commission-only” compensation method is typically only legal if the employer is diligently tracking hours and ensuring the hourly rate for each employee meet or exceeds the prevailing wage for each hour worked. If the employee’s commission earnings fall short of this, the employer must make up the difference.
“Commission” employees are not treated any differently than any other non-exempt employee.
The federal government classifies employees into two distinct groups: exempt (salaried) and non-exempt (everyone else). Employers are generally required to adhere to the Fair Labor Standards Act, which assures minimum wage, overtime pay, and many more protections. Our industry is not given special exemption from these laws.
The Salon Compensation and Pricing Megakit calculates salon compensation and service pricing for you! It includes:
- The Salon Compensation and Pricing Calculator, an 8-page spreadsheet system that makes salon compensation and pricing calculation as simple as data entry. The best part? The system is enabled with protections to make it impossible to “break” the formulas!
- The Salon Compensation and Pricing Guide, a 44-page instruction manual that not only explains how to use the system but also explains every formula so you’re never confused about what the numbers mean or where they came from.
- A 9-page Employer Obligations Information Sheet to keep you from making very common life-destroying mistakes.
- Be Worth What You Charge, an 11-page checklist and salon evaluation resource.
Wage Deduction Legislation by State
ARIZONA (written agreement only)
COLORADO (written agreement only when deduction is for employee benefit, ie: employer loans, goods, meals, etc.)
Employees, take ownership of your career and your finances with The Salon Employee
Suitcase. This downloadable toolkit includes everything you need to know about your rights as a worker. It also contains a spreadsheet that will allow you to track your hours and your sales to ensure your paychecks add up at the end of the pay period.
Salon owners, if you need help transitioning your salon in a way that ensures profitability, you’re welcome to make an appointment online here. You may also find The Service Pricing Toolkit useful. In addition to an easy-to-use spreadsheet system that will easily calculate your service prices based on your expenses (including labor, tax, and product costs), it includes a ton of information about your obligations as an employer.