Barbershop Workers Quit After California Supreme Court Ruling

Some small businesses are scrambling to figure out how to stay afloat after a high court ruling.

A recent California Supreme Court decision is changing the way independent contractors are classified, and it’s already having a big impact on local shops. May fear it will hurt millions of workers and affect businesses’ bottom lines.

The work doesn’t stop at Downtown Sacramento’s Bottle and Barlow, even if it became a one-man shop.

He says all seven of his barbers quit after a state supreme court ruling that will change their way of work.

“It doesn’t just affect my business, it affects every independent contractor in the state of California,” said Gianotti.

Historically, the cosmetology industry, which includes barbers and hair stylists, have been classified as independent contractors, but that won’t be the case anymore. Gianotti explains the new rule.

“That you cannot classify someone as an independent contractor if they offer the same service that is the primary business of the business.”

So, basically, a barber can no longer work in a barbershop as an independent contractor, where they typically set their own hours and pay. Instead, they’ll now have to become employees of the business on an official payroll.

“Which is insane for a small business, like this. We can’t afford to have a bunch of employees. What are you going to pay them you know, minimum wage?” said Victory Ink Tattoo owner Ristina Rodriguez.

real estate is the same way. Agents are independent and file 1099s but they have to hang their license with broker under company name. I became a broker not wanting employees or an office. We have three associate agent hope this doesn’t spread.

My son has been a real estate broken since 2007. He started as an agent in an office. The broker was his sole employer and set his duties and hours. He was supposed to have him tracked as a W2 employee. The broker failed to withhold taxes and pay his share of the social security. My son already had a BA in Business and was doing all of the real work in the office. He did some review and took the broker's license...and passed. He "lost" his job and opened his own corporation. That said, he has had tax problems for years that started with that jackass. He never fit the specs for a 1099 independent contractor.

California’s pension system is going broke. The big brains who think up new ways to “make money” probably dreamed this up.

Instead of independent contractors renting space from the barbershop owner and paying self-employment tax, the State will get double the tax. The employer payroll tax runs up to 20% of employee’s salary. In addition, the employee pays taxes to the State.

I predict every person in California will notice the effect of this new law.

“Employers are going to scream because making your former employees independent contractors saves the employers tons of money! It means they don’t pay for workers compensation insurance”

Louisiana work comp law makes the hiring contractor responsible for wc claims of independent contractors if the ind contractor does not provide proof of coverage by means of an “Insurance Certificate” stating name of ins company and policy dates. The other 56 states have comparable wc law.

When the wc insurance company payroll auditor does the payroll audit (wc premiums are based on payroll) the auditor will use the total contract price of labor and material of the sub to determine the additional premium to be paid by the principal, the business owner hiring the sub, independent contract person or company.

Most attorneys do not advise their contractor clients that they have this exposure so it can come as an unpleasant surprise when they get the additional premium billing for this exposure. Even greater surprise if the IC incurs an occupational injury while doing the contracted work and files a wc claim against the principal. The claim cost will then be added to the Experience Modification calculation of premium, possibly resulting in premium surcharge for the next three years.

In today’s workplace environment, an irate haircut patron just might have his weapon with him and shoot the barber for the lousy haircut thus creating a workplace injury and wc claim (unlimited medical, loss of earnings, widow and children death benefits, funeral expense) against the shop owner.

No US state wants to bear the cost of workplace injury claims being made by disabled workers, widows and orphans is why this
is in the wc state law of each state, otherwise the state taxpayers would have to pick up the claim cost.

Lawyers make more money on retrospective events than on prospective advice is probably why they do not advise their clients of this exposure or the alternative is that they are ignorant of their state WC law.

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