Questioning Booth Rental 

Last year, this site dedicated three columns to the dramatic changes threatening Booth Rental in our industry, most notably in the Golden State via a recent State Supreme Court ruling called Dynamex.  Other states, including our nearby northern neighbor, Washington, are seeking the end of Booth Rental via legislation, modeling East coast states who’ve already enacted similar legal crackdowns. 

So it should be abundantly clear to any industry observer that Booth Rental is under siege, but will it survive this growing threat?  I think it may, but only if Booth Rental salons dramatically evolve to meet the heightened scrutiny that courts, policymakers, regulators and even insurance brokers are leveling upon them.

Our best guess is that California policymakers will carve-out some sort of Dynamex exception for our industry, given the disproportionate number of Booth Rental establishments in our state and the outcry from those earning a living in such salons and barbershops.  In fact, no industry is speaking more loudly to our state electeds than stylists and landlords upset with this bombshell legal ruling.  Yet again this industry shows its ability to exert its numerical strength in the political arena when a galvanizing issue rises to our collective consciousness.

However, given the political power of labor interests within our State Capitol and their disfavor of businesses utilizing independent contractors, which skirt labor laws and hamper union organizing efforts, I think any potential exemption will be narrowly tailored, and therefore still be out of reach of a large percentage of currently operating rental shops.

This may actually end-up being a good thing for our industry, including the long-term viability and legitimacy of the Booth Rental business model.

Let’s face it: for far too long far too many Booth Rental establishments have operated under the radar of tax and labor laws.  This has undermined the professional reputation of our industry and its credibility with policymakers, who are now in charge of setting the lending standards for all federally-backed student loans, as well as other public incentives that encourage young people to pursue certain career pathways.

These under-the-radar salons have also cratered continuing education opportunities for stylists, who used to be encouraged — and often mandated — by their employers to enroll in seminars, attend trade shows and continuously improve their craft.  With the widespread advent of Booth Rental, our collective, professional advancement has been significantly eroded, as has the right of privately invested stakeholders to control the health/safety protocols of beauty services within their places of business.

For anyone honestly assessing the impact of ever-increasing numbers of Booth Rental salons on our industry’s overall trajectory, one would have to acknowledge a steady decline in the professionalism of beauty services and diminished goodwill among our clientele.

That’s not to say that all forms of Booth Rental are illegitimate.  Quite the contrary; for those dwindling number of Rental salons who have worked closely with legal counsel to devise models that keep the appropriate level of distinctiveness, while at the same time creatively divining incentives for those independent contractors to continuously improve their skills and knowledge, this approach to salon management can be rewarding for landlords, convenient for stylists, and safe for their clientele.

But far too many Booth Rental salons haven’t been able (or willing) to find that secret sauce, opting for quick profits, fast-and-loose management, and little to no support for their hard working renters.  And the blame goes beyond the landlords.  

Booth Renters, themselves, have most of the leverage, since a salon’s book of clients essentially belong to the stylist, not the establishment.  A salon’s regular clients are wedded to the skill of their preferred stylists, not necessarily the ambience and location of a particular salon, and therefore will follow those stylists wherever they go.

If a salon employer demands too high of standards of a stylist, they can move down the street, rent space and invite their clients to follow them.  And if they are no longer strictly adhering to the health/safety protocols or income tax disclosures, or if they stretch their meager resources by reusing single-use implements, they could actually afford to charge even less for their services — or the same and pocket the savings.

While keeping more of what you earn may sound attractive, particularly to a young stylist beginning to develop a book of faithful clients, consider some of the downsides of going it alone.  You will not have the peace of mind knowing you are insured against on-the-job injuries (through an employer’s workers comp policy), nor will your employer be responsible for withholding sufficient funds to cover your annual tax bill, instead requiring you to do quarterly paperwork and payments.  You could also be short-changing your eventual Social Security benefits by under-reporting your current income.   Moreover, you will be responsible for all of your business expenses, including products and equipment, and you’ll likely have to handle your own scheduling, client communications and marketing.

Many Booth Rental establishments, with the eager approval of their stylist-renters, assume and/or share these responsibilities, but they do so in clear violation of the legal separations that must exist in all independent contractor relationships.  This fosters a lax attitude toward tax and labor law, and with it, a reduction in professional standards across the board.

So, for example, has large-scale Booth Renting contributed to the decline in attendance at trade shows and seminars, along with a rise of cross contamination and injuries in salons?  Has the decline in reported income been directly used to justify decreased public investments in beauty schools via diminished grants and loan ceilings?  And have all of these trends increased the growing chorus of politicians calling for delicensure and/or freelancing, shifting the burden to maintain professional standards from regulators and industry stakeholders to consumers, under a buyer-beware approach to oversight?  

If you’re making a living behind the chair or by having your chosen name on the salon entrance, are you comfortable allowing these larger currents to be directing the course of our industry and your livelihood?

It is my hope to encourage all stakeholders in this industry, and in particular young stylists just starting out, to consider the long-term impact of the temptation to avoid the costs associated with abiding by labor laws or institutionalizing a legally above-board rental model.  I hope they will keep in mind how their actions affect the overall perception of our industry by the public, our elected representatives and regulators.  And then include in their profit/loss calculus the draw on their own, individual bottom-lines from increased regulatory costs inevitably tied to declining professional standards and the decreased market value of beauty services resulting from the diminished goodwill of our paying clientele.

Raising the professionalism of how we conduct our services and business operations will accrue to everyone’s eventual advantage, as a rising tide lifts all boats.  Elevate your horizon when chartering the course of your salon and livelihood, for your long-term benefit and the benefit of all making a living in our vibrant, ever-evolving industry.