SITUATION: Paycheck Switch: I am 1099 at the spa I work at and have been there going on six months. I go in today and the owner told me that her accountant said I cannot be paid weekly anymore. I was told that I must be paid on the same schedule as her employees, which is two weeks behind. An example would be the October 6th pay date for the dates of September 14-28. I disagreed with this. She then changed it to where my pay would only be one week behind. Is this allowed? Can she tell me how she is going to pay me since I am 1099? I am feeling more like an employee lately than an independent contractor. Oh, I’m in Georgia, if that matters. Any advice is appreciated!
SITUATION REVIEW: In today’s culture, more and more beauty professionals are working as independent contractors. Per the IRS, working as an independent contractor is self-employed. When working as an independent contractor, there are many things that one must take into consideration, and payment for services rendered is an important one.
SOLUTION: To begin with, it’s important that you and the salon/spa owner correctly determine whether you are working as an independent contractor or employee. An estimated 3.4 million employees are misclassified. They are classified as independent contractors when they should be reported as employees. I recommend that you and your employer contact the IRS to determine your business relationship status.
Regarding compensation, there are several methods for receiving compensation while working as an independent contractor. All of this depends on the agreement between the company and you, the contractor. Compensation can be calculated based on hours worked, by the job, or commission. In addition, the contractor and owner must agree on payment terms. Payment terms are just as important as payment amount.
It’s important to keep in mind that employers that hire independent contractors treat payments as accounts payable. The agreement for payment terms can vary. For example, an independent contractor may request payment due on completion of service, or they submit an invoice for services rendered. The salon/spa processes the invoice as they do any other outside vendor’s invoice. These terms can vary from weekly, bi-weekly, or even monthly.
Before entering an independent contractor relationship, I suggest these details and terms be clearly outlined within your independent contractor’s agreement. I also suggest that you have a clause within the agreement that states if any either party changes these terms that each party must be notified in writing within a certain number of days prior.
GROWTH OPPORTUNITY: Working as an independent contractor provides a great deal of freedom. However, with that freedom, it requires one to manage their own business. There are many independent contractors and salon/spa owners that have a very healthy and happy working relationship. I highly suggest that you contact the IRS with any questions regarding classification of your working relationship, tax laws, and reporting. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
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Patti Wanamaker currently serves as an Academic Trainer for Milady. She is responsible for developing and delivering academic and business programs for the Cosmetology Industry. Her intimate understanding of the salon/school/beauty industry comes from 21 years of hands-on experience, includes 8 years of salon/spa ownership, co-owner and co-manager of three salon locations with an annual sales of $5 million. She has 13 years’ experience as a multi-faceted, training specialist within the industry. Her experience in all three areas of the beauty and wellness industry allows her to think outside the box and develop innovative trainings that are not only inspirational, but that get down to business, the business of empowering industry professionals to a new levels of success.