We created 1513.sucks because we believe a lot more needs to be done to better inform and educate business owners, their staff and customers about the impact of AB 1513. Costs are going to sky rocket.
The State of California has done a horrific job communicating the content of AB 1513, because there has been no known outreach. The average salon may owe an average of $4,603 per stylist in back pay.
Estimated State Wide AB 1513 Safe Harbor Penalty for Salons

California salons are going to owe a tremendous amount of money in back pay. Employers are required to calculate and pay back wages for all “non-productive” and “rest/recovery” hours worked since July 1, 2012 for “piece-rate” employees.

You can calculate the actual amount of wages due or use the "safe harbor" option which equals 4% of total earnings. Calculating the actual amount due may result in a lower amount owed but there are many pitfalls.

If you have no idea what we are talking about, head over to the links section and start reading.

Employed California hairdressers, hair stylists, and cosmetologists 26,340
Mean Wage $28,770
Total Mean Wage
Mean Wage x State Employees
$757,801,800
4% of Total
Total Mean Wage x 0.04
$30,312,072
Total Owed
4% of Total x 4 years
$121,248,288
Average per Employee
Total Owed / Total Employees
$4,603
Assumes all salons are “piece-rate” employers
Source: BLS
Estimated Successful "Piece-Rate" 10 Chair Salon 1513 Safe Harbor Penalty

If you are a "successful" salon then you could easily owe $120,000 or more in back pay. We know you do not have that available but do not stick your head in the sand and ignore the law. You could personally be liable for wage and hour violations (SB 588).

You may be saying to yourself, we pay a commission, but according to the State of California you pay a "piece-rate".

This has to be paid by December 15, 2016.

If you have no idea what we are talking about, head over to the links section and start reading.

Estimated Mean Wage
Per Employee
$75,000
Total Mean Wage
Estimated Mean Wage x 10
$750,000
4% of Total
Total Mean Wage x 0.04
$30,000
Total Owed
4% of Total x 4 years
$120,000
Source: 1513 Sucks Estimate
Severely Underestimated or Hair Stylists are Low-Wage Workers

According to an article in the Sacramento Bee by David Siders, "The bill’s author, Assemblyman Das Williams, put estimated back payments to workers at about $200 million, while farm industry officials feared their liability could reach five times that amount or more." Either they failed to account for other industries or they were only focused on the farm industry or maybe it's an estimate of what will actually be paid versus what is due.

According to a Das Williams press release "It provides an estimated $200 million in back wage payments to low-wage workers." We never considered hair stylists low-wage workers but I guess it is time to rethink everything.

Another press release says, "the Assembly member noted that he was 'proud to find a way to stand up for low-wage farm workers and truck drivers who will finally receive earned back pay while protecting businesses from lawsuits that would cause them to go under.'"

Unfortunately the bill will probably force salon owners to go under anyway. If they can pay their penalty they will probably be driven out of business by having to rework their compensation models, which may result in an exodus to booth rentals.

Fcuking Shady or The Power of Lobbyists

According to the previously mentioned article in the Sacramento Bee by David Siders, the bill provides custom tailored benefits for AT&T.

"The legislation also contained a custom-tailored benefit for one telecommunications company, AT&T. The bill grants the company extra time to program payroll systems to comply with the law. The company, a major donor to Brown’s political causes, recently acquired DirecTV, a company facing litigation over piece-rate pay. “We had to, let’s say, put out some brush fires with both the consumer attorneys raising some issues, AT&T raising some issues,” Williams said. “Those kind of things can kind of blow things up.”

Within the bill AT&T is not mentioned by name but there are some amazing exception requirements so they can have more time to reprogram their payroll systems.

The employer was acquired by another legal entity on or after July 1, 2015, and before October 1, 2015. The employer employed at least 4,700 employees in this state at the time of the acquisition. The employer employed at least 17,700 employees nationwide at the time of the acquisition. The employer was a publicly traded company on a national securities exchange at the time of the acquisition. WTF.

What about exceptions for the small businesses that do not have a team of lawyers and programmers at their disposal, nor the cash to influence policy making.

What Can Be Done

Besides becoming compliant as soon as possible, we have no idea what can be done - we will not be meeting with a lawyer until the end of April. At least contact your Assembly and State representative, to let them know they need to consider small businesses when they pass laws on the last session day.

Most likely the only option available will be to have your stylists legally reclassified as commission-based employees, but that will take money and time.

The law as documented (2011) seems like it would be very difficult to change. Unless the mistaken referencing of "Webster’s Collegiate Dictionary" can be challenged on a legal basis, it should have been a reference to "Merriam-Webster Unabridged Dictionary."

If only we could afford to hire Diane Lockhart and Alicia Florrick from Lockhart/Gardner.

Disclosure
We are not lawyers, we are small business owners, so do not consider any information provided on this site as legal advice or accurate. Contact an attorney.
Join us to connect with other salon owners and head over to the links section and start reading.