the shocking truth about wage theft - Part 2

How can you avoid being misclassified or having your wages stolen? What actions should you take if you find yourself in this situation? When legislators recognize the prevalence of wage theft in the beauty industry, we can expect harsher penalties for unethical salon owners. In Part 2, we describe the warning signs to look for and offer recommendations and resources to remedy illegal employment practices.

Show Notes


Independent Contractor (Self-Employed) or Employee?  (IRS)

Wage and Hour Rights (Department of Labor)
DOL Toll-free helpline: 866-4US-WAGE (487-9243)

State Labor Offices

Money Matters: Accountant Answers ( Part 1)
Money Matters: Accountant Answers ( Part 2)

Processing Payroll: Doing it Right (Part 1)
Processing Payroll: Doing it Right (Part 2)


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JAIME: Welcome to Outgrowth: A Slice of Pro Beauty with your hosts Jaime Schrabeck.

ASHLEY: And Ashley Gregory Hackett. Last week, we started a conversation about wage theft and didn’t finish. There’s so much to say on this topic that we had to split it into two parts.

JAIME: In part two, we identify the warning signs of wage theft and encourage listeners to take action. Let’s grow together. 

JAIME: Ashley, this was meant to be just a one part episode. 

ASHLEY: It was, and we had so much to say about it, we definitely need to break this into two.

JAIME: So, in the first part, we focus more on the different forms of wage theft and in the second part we got into more of the warning signs to look for. 

ASHLEY: So let’s continue with our beautiful, exciting, riveting conversation on wage theft and some of the things that you should look out for to see if this is actually happening to you. Let’s get into it. Let’s talk about what some of the warning signs may be if you think that you might be in a situation where you’re either being misclassified or you’re a victim of wage theft.

JAIME: So many of these warning signs you could see right from the very beginning with how a position is advertised. So the example that you give of, we’re hiring, but bring your clientele, you know, things like those types of phrases, or even just the word commission is a trigger for me. We know my trigger word is commission, so there’s that. But when you see those things in an advertisement, that should really set off some alarm bells. But if you’ve committed to the situation already, if you find yourself in a situation where there is no time clock, where there is no requirement that you clock in or out at the beginning of the day, at the end of your day, and for your meal break, that’s a problem. 

ASHLEY: if there’s no pay stubs or no remittance advice where you can see that breakdown could be a red flag as well. 

JAIME: Getting paid in cash or being handed that check that doesn’t give you that additional information, that those are warning signs that that person does not have a system to account for the work that you’ve done and is just thinking that they can make it the simplest way possible to give you some money to quote unquote satisfy you when, in fact, that does not satisfy any of the legal requirements. 

ASHLEY: One of my favorites is not being given or no request being given for an I-9, which is employment eligibility verification where you fill it out with your ID and all of those things, or the W-4, which is the withholding certificate where you select zero or one. Everybody knows it. Everybody loves it, but if that’s not part of your onboarding process, then that’s a big problem.

JAIME: How could anyone possibly pay taxes on your behalf if they don’t have that information? 

ASHLEY: If they don’t have your social security number, how can they do that? They can’t.

JAIME: We have seen cases where there’s an expectation that instead of the employer training you, that you, as the employee, pay for your own training. 

ASHLEY: And then you get to work it off as a way to guard against you possibly going somewhere else. What?

JAIME: You ungrateful person, you, how dare you leave after I’ve mistreated you.

ASHLEY: So you pay two grand up front to pay to be trained to be an employee of this establishment. No, sir. No, ma’am. 

JAIME: Oh, my goodness. And there’s no such thing as a probationary period. There’s no such thing as an apprenticeship, or internship, or anything like that. If you are doing work, if you are on the clock, you have to get paid. It’s that simple.

ASHLEY: Yes, you have to. And there’s this weird dues paying mentality of, oh, you need to sweep, and be a shampoo person, and do this for a pittance. If you’re not making the federally mandated minimum wage, at least, an hour, there’s a problem. Or how about having to pay a percentage to the salon owner as like some weird protection scam, like, oh, nice salon. Sure would be a shame if something happened to it. What?

JAIME: Well, here’s where that whole issue of misclassification gets muddied in that  if you are a true independent contractor, how much time you spend at the salon, how many clients you see, how much money you generate is none of the salon owner’s business. 


JAIME: You pay a flat rate for the amount of time that you spend in terms of either per day, or per week, or more frequently, per month. That is something that should be in a contract. And what you generate as income has nothing to do with how much you pay the salon owner when you’re an independent contractor. 

ASHLEY: This is something I see all the time where it’s newer members of our industry who don’t necessarily have a huge client base, but also want to be independent, or booth rent, or have a suite, or whatever it is. And they’ll say, oh, the salon owner is so kind, and willing to help me out, and they will just take a commission of every client I see in order to help me kind of get my feet wet and get things off the ground. No, no, no, no, no. That’s not how this works. If you are an independent contract, I just hit myself in the head. If you are an independent contractor, you’re independent. That means there’s no mingling or merging of payment systems. I see that all the time too, where it’s there’s one receptionist that’s supplied by the venue and they process all the payments. What are you doing? Why would you give your money to someone else and trust that they’re going to do it correctly? So whether it’s a percentage to the salon owner or essential processes of the service are being mixed together with other people, if you are truly independent, that is not something you should be doing. 

JAIME: Right. There should be nothing centralized in that situation. And then going along with that, if the salon owner wanted to be generous, then offer reduced rent or free rent for the first three months. I mean, that’s completely legitimate, but requiring a percentage is not. And then of course this whole idea that if I sign a contract or if I present a contract, then that’s it. That’s how it goes. 

ASHLEY: Or putting something into the contract that is illegal or doesn’t meet any of the factors or criteria that we’ve discussed. What we’re discussing here is the law.  There’s no wiggle room and the law doesn’t account for, oh well, since you have a contract that says that what your arrangement is is not legal. We’ll just look the other way. No, if there’s illegal or unlawful things in a contract, the contract is void, so.

JAIME: Oh no, even better, Ashley, it’s evidence. Keep those contracts because baby, that is evidence.

ASHLEY: Yes, definitely. 

JAIME: Of wage theft.

ASHLEY: Keep the contract anyway. 

JAIME: And intentional wage theft. 

ASHLEY: Keep the contract anyway, but yikes. There’s this prevailing attitude that, well, if this is happening to you, just get a different job where it’s not, and suck it up, and this is what you signed up for. Nobody signed up to be exploited. Nobody signed up to be misclassified. I think that there’s a lack of awareness of what the law actually is, and what legal, lawful employment arrangements look like, and the factors that have to be in place. So to say, just suck it up and get another job tells me that you are currently misclassifying your employees. You’re not compensating them correctly and maybe, maybe we need to take a look at you. 

JAIME: Or you’re a jerk. 

ASHLEY: Okay. Sure. 

JAIME: And maybe you deserve to be in prison. 

ASHLEY: Oh, okay. Well, those are strong words. Tell me more.

JAIME: They are strong words, but as it happens in California, there is a proposed bill AB 1003, that instead of making this issue a civil issue where someone would have to file a claim with the labor commissioner and let the labor commissioner do the work, or would have to hire a lawyer and file a lawsuit, it would give prosecutors the discretion to actually charge these salon owners for what they’re doing, which is stealing. It’s wage theft, the word theft being the operable word. And if you can imagine someone doing jail time for stealing wages from their employees in the beauty industry, I think that would serve as a wake up call. 

ASHLEY: I love that in this bill the direct quote is, it’s time they be treated like any other thief. It’s powerful.


ASHLEY: It’s very powerful. 


ASHLEY: But it’s what’s happening. It’s theft. 

JAIME: Well, and you know what’s so fascinating about this bill, it’s the same author who gave us AB 5, but this bill applies to all the industries in California. But the direct quote from a victim of wage theft and to the credit of our colleague, Wendy Jacobs at the California Aesthetic Alliance, the direct quote for this bill is from a licensed esthetician. So the beauty industry gets the focus, even though this bill applies to 


ASHLEY: That’s fantastic. And this is something we’ve discussed with Assemblywoman Cruz in a past episode about what’s happening in New York and the proposed bill that would basically, it’s a babysitting bill of the nail industry in that area, making sure that they’re not exploiting workers or compensating incorrectly. This is a huge stride forward for our industry, but it will inevitably see pushback because people want to fight and say that, oh no, this is right. This is what we’ve been doing. It’s just how it’s always been done. And this is how my whoever who ran a salon did it and this is how I’m going to do it. Just because it’s how it’s always been done doesn’t make it right. And there are people who really need to hear this episode to understand that what they’re doing is not only illegal, but it’s putting their entire business in jeopardy. And if some of these laws start passing, it’s putting their freedom in jeopardy as well.

JAIME: Excellent point and watch the pushback because while beauty licensees have an exemption from AB 5, which now allows them to be independent contractors, if there’s enough recognition of these problems and not enough commitment to solve them, there will be no independent contractors.

ASHLEY: True, and so you can ruin it for everybody. Jaime, if somebody finds themselves being described in some of these warning signs, what’s something that they can do to start correcting the situation and taking some action?

JAIME: I want to answer your question from the perspective of a salon owner first.  We know that because the salon owner is held responsible for these issues, not the employees, it’s on us as salon owners to make sure that we’re compliant. So we have to immediately stop whatever it is that we’re doing that’s incorrect and start remediating our practices. And that’s where you’ll want to connect with a CPA. You’ll want to make sure that you are processing payroll correctly, and we’ll be including links in the show notes to get you started on that process. 

ASHLEY: That’s one of the number one questions I am asked when it turns out somebody has figured out that, ooh, this is a bad situation and I need to start doing something about it. It can feel a little bit overwhelming as well as lonely and helpless that your employment situation isn’t exactly what you thought it was and now your job is tied up in this activity that’s illegal, immoral, all of these things. It can feel really crummy to make this realization if you are an employee or should be an employee. so what’s something that the worker can do?

JAIME: Please, don’t just walk away. That’s one of the most disheartening pieces of advice that I hear repeated is that, you know, that’s just the way it goes. Get over it. Move on. Find someplace better. We’ll never get better as an industry if that’s the attitude. You, as an employee, are protected. You have these rights and if you are in this position, you can definitely take action, and do something about it, and be protected by the government. You do not need to hire a lawyer. If you report this to the proper agencies, that can be at both the state and federal level, that can be both labor and tax agencies, you are protected from retaliation. You cannot be fired for reporting these things. Not that you’d want to continue to work there anyway, but you will not face negative consequences and not have the protection of the government. 

ASHLEY: And it’s a situation where you’re going to correct this for the people that come after you, which is really important and as Jaime said, it’s one of those things where we can’t be taken seriously as an industry if we’re doing things that could potentially land someone in jail and we just let it continue. You know, not on my watch, right? And not on yours either. So lots of links and resources in the show notes. If what you’re listening on doesn’t give you clickable, show note links, head to, and you’ll be able to find those links, and get a little bit of advice and support. And we are here for you as well. If you want to reach out, please do so. There’s a lot of things to do, and again, it can feel overwhelming and crummy, but you deserve your wages. And I don’t think anybody would question that.

JAIME: No, they wouldn’t question that. And one of the contrasts I’d like to make is that if you were stealing wages from your employer, do you think your employer would hesitate to take action against you? 

ASHLEY: Exactly. I love the reverse of that where if you’re stealing from your employer, you’ll probably go to jail. So why shouldn’t it work the other way around? And this is a situation that is completely correctable and you may be due those back wages. So the theft isn’t complete if you report it. It means that you may have access to some of that back pay that you are owed.

JAIME: Right, and in addition to doing it for those who may come behind you, it also will help your colleagues 


JAIME: And it will help your industry overall. You will be doing us a huge favor, a huge service in elevating the industry. We hear that term all the time, elevate the professionalism, elevate this, elevate that. You know it’s not about how we’re perceived. It’s how we actually behave that will elevate us. 

ASHLEY: And if you want some courage, I highly suggest you watch Norma Rae before you do anything and it’ll give you that little extra push, but super important conversation. This is something that touches every part of our industry no matter the discipline, no matter the level of experience. This is something that a lot of us are facing and I think it’s more than we could ever know.

JAIME: And the more we learn about it and the more we share what happens to us to those who have the power to protect us and to protect salons who are doing the right thing. There’s the other part is that it’s not just protecting individual workers. It’s protecting salon owners who are ethical.

ASHLEY: And who are spending the money, and the time, and being victim to unfortunate and unfair competition because they are compliant and the place down the road isn’t. You can’t compete with somebody who’s doing it illegally. You just can’t.  And this way, there’s a reckoning coming, I think, in our industry and I thought it would be coming sooner once everybody found out that they couldn’t claim unemployment, but as we get back into our salons and we start falling back into old habits, let’s not let this be one of them. 

JAIME: We can do better.

ASHLEY: We definitely can, and we can demand it and we could create a better situation for our entire industry. So, again, linked in the show notes, if you want to take action, please take a look at those links and yeah, lots to do.

JAIME: Thank you, Ashley. 

ASHLEY: Thanks. 

JAIME: As always you can connect with us directly on Instagram at @outgrowthpodcast. 

ASHLEY: And I hope that you do. Go ahead and like, share, and subscribe and do all of the podcasty things. We really appreciate you helping us grow our audience. And if you’re enjoying Outgrowth, feel free to leave us a review on Apple Podcasts. You can do so with just one click. Visit Until next week, be smart.

JAIME: Be safe.



independent contractor beauty salon hair salon who is given a 1099-MISC by a salon owner and is paid straight commission, not commission vs. hourly. Employment misclassification, labor violations and wage theft are rampant in the beauty industry. Licensed professionals are notoriously ignorant of their rights and you must know your rights this ugly beauty business. Described as the best beauty podcasts in 2021, Outgrowth Podcast is for hairstylists, nail techs, estheticians, massage therapists and lash technicians. Hosted by beauty industry experts Ashley Gregory Hackett and Jaime Schrabeck, PhD, this salon industry podcast has helpful  interviews with guests that teach topics from increasing salon clientele, salon marketing, covid guidelines, beauty industry insights, starting a salon, renting a salon suite, salon Instagram tips, and how to run a successful salon. Join us for weekly episodes of hair podcasts, nail podcasts, esty podcast, and more.

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