Oppose WA State SB 5326 Regarding Booth Rental Agreements for Cosmetologists

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If any of you see hairdressers who are independent contractors who own their own small businesses, pay attention. Washington State recently announced a bill that would aim to prohibit Cosmetologists and Hair Designers from booth renting. 

For help better understanding I’ll post this quote from the Evergreen Beauty College Site: 

“For those that just want a summary, the Washington Department of Licensing provided the following:

The legislature finds that broad exemptions for businesses structured using booth renters deny individuals eligibility for unemployment insurance and industrial insurance, and give businesses that use booth renters an unfair competitive advantage. Therefore, the legislature intends to encourage a competitive marketplace by removing these broad exemptions for businesses that rely on booth renters.  No holder of a salon/shop license may lease, sublease, or provide space at the licensed location to any person for providing cosmetology or hair design as part of a separate business to be conducted by the person.

Let’s unpack this:

First, this bill claims that businesses which allow for booth renting deny those ‘renters’ unemployment insurance and industry insurance.    That claim is does not hold much water because booth renters are typically sole-proprietor (individual business owners) where unemployment insurance and industrial insurance does not apply.   ‘Renters’ typically pay rent for a ‘chair’ or ‘room’ and operate their business within a salon/shop setting.   These individuals are required to have their own salon/shop license, carry their own individual liability insurance, and have the freedom set their own prices, define their services, use their own tools, etc.  It’s a model where you operate a business within a business.

Secondly, if passed the bill claims it would encourage a competitive marketplace by removing these exceptions.   There are many arguments on what makes a competitive market but this claim unravels as you read further into the bill.   The proposed bill would apply to ‘any person for providing cosmetology or hair design’ but is silent on master estheticians, estheticians and nail techs.

For my regulatory nerds that read through the bill, you’ll note in on Line 18, Section 3, a carve out (aka exception) is made for licensed barbers.   Individuals that hold a Cosmetologist License or a Hair Design License will NOT be permitted to booth rent, but if you have a barber license, you ARE permitted to booth rent.     If the bill’s goal was to encourage a competitive marketplace, why would it restrict certain licensees but allow for others to participate?” 

I have been a cosmetologist for 12.5 years. In those years, I have worked very hard to build a solid clientele, spent countless weeks working 50+ hours to build rapport with my guests, and continued to hone my craft as a cosmetologist and make sure I’m receiving up to date continuing education. For 12 of those years I was employed by corporate or independent commission-based salons where I was capped out earning 57% (which is very generous, and above industry norms) before taxes of every dollar my hard work, time, energy, and skill brought in their doors. During my 12 years as an employee, because I was only earning a portion of the money I was bringing in, I was unable to solely support myself financially, unable to afford health insurance and only able to afford putting money into a retirement account for 2 of those years. 6 months into my career booth renting and things are much more financially sound, I can afford insurance and retirement accounts and I’m able to continue to grow my small business and run it how I choose to. It’s my little piece of the American Dream.

Booth renters are not trapped in the kind of situation where they can be fired through no fault of their own. They keep their own client lists, and the ability to rent a chair from any booth rental salon and take all of their clients with them. This bill will, in part, take away that ability. Many (certainly not all!) commission-based salons now require a contract with stipulations that should you choose to leave or be let go, all client information belongs to the salon. That’s contact information, and all client records which could actually be classified as intellectual property of the stylist when we’re talking about color formulation as it is the stylist’s skill and creativity that does all the formulating. In these situations, stylists could never leave without having to start all over again, and in many cases won’t be able to solely support themselves on a piece-rate income with our state’s high (and rising) cost of living. 

They’re trying to promote what they are calling “tax fairness” by forcing us to have to pay into such things as unemployment and L&I which commissioned-salon owners pay into for their employees. This is especially confusing because, as it stands with current Washington State law, as self-employed individuals, we aren’t even eligible to receive unemployment benefits. As for L&I, we are given the option to opt into it - some of us choose to, some of us choose to use other forms of coverage in case of short-term disability instead. They claim this bill will promote “tax fairness” among business owners in our industry so they can “level the playing field” and we can take advantage of these benefits we either don’t qualify for, or choose not to opt into. 

This petition is not about trying to pit renters and employees against each other, or to say that one business model is better than the other - they both have a place in our industry. This petition is in opposition to the fact that the proposed bill would take away a stylist’s right - in what is supposed to be a free market - to choose what business model they prefer to work under, and it will impose new taxes on self-employed individuals specific to our industry. This bill disenfranchises stylists who choose to be self-employed and suppresses our local community of cosmetologists in Washington State. This bill is unethical, immoral, and undeniably unconstitutional. It will force cosmetologists to work as employees and never have their own businesses unless they choose to own salons and take on employees which will require overheads, taxes, and insurances an independent owner can’t pay unless they are taking a larger portion of what their stylists make. When someone comes into a salon and pays a booth renter for services they are helping to pay for a home, for health care, for ballet classes for a child, for care of an elderly or ailing parent, and most importantly, you’re supporting a local business and actual people instead of big business and a corporate machine who doesn’t have the best interests of their employees at heart. This bill does NOT keep us from falling through the cracks or level the playing field- it pulls the rug out from under us and will ultimately make it harder for thousands of hairstylists in our state to survive. This is not the American Dream.