The ABC test 9 Labor Code sec. 2775 (b) (1)), now apply to manicurists, effective January 1, 2025, and can significantly impact the beauty industry, particularly manicurists and salon owners. According to the new changes, salon owners can no longer classify manicurists as independent contractors or booth renters but only as employees. These new changes pose potential challenges but also present opportunities that could positively impact the beauty industry, offering a new perspective and hope for the future.

How Does AB 5 Change the Law for Manicurists?

Under AB 5, a licensed manicurist must either be an employee or operate independently under an establishment license, which can be applied for through the California Board of Barbering and Cosmetology. It's important to note that establishment licenses are issued one per address. If you are considering renting a suite, it must be appropriately zoned as a suite to qualify for an establishment license. Cosmetologists can provide manicuring services without being impacted by the employee classification.

What Are the Implications of AB 5 for Manicurists?

I’ve worked in the nail spa business for more than 20 years, and I feel this new law could significantly impact nail technicians and nail salon owners. Here are some of the greatest concerns that manicurists share about AB 5 going into effect.

Loss of Independence

One of the main concerns for manicurists is the possible loss of independence. Many manicurists cherish the freedom that comes with being self-employed. They set their hours, choose their clients, and have the liberty to work at multiple establishments. AB 5 mandates employee status, potentially curtailing their autonomy and affecting their earning potential and work-life balance. However, the benefits of employee status are that you relinquish responsibilities such as marketing, bookkeeping, and product purchase management, allowing employees to focus more on client retention and product sales.

Increased Financial Instability

The new changes could also introduce financial instability for some professionals. Many manicurists have built their clientele based on personal relationships and the ability to market their services independently. Employees may face limitations on tips and commissions typically enjoyed as independent contractors, potentially reducing their overall income and causing financial anxiety. The upside is that employee benefits include paid sick leave,  a stable income, and the ability to earn an hourly wage, which can be particularly advantageous when client hours are inconsistent. 

Barrier for Newcomers

AB 5  may also present a barrier for newcomers to enter the profession. While independent contracting often offers a more accessible entry point for aspiring manicurists, the increased competition for these positions could make it harder for newcomers to establish themselves in an already saturated market. However, The benefits of AB 5 can be advantageous for salon owners. It can provide better job security and protections for salon workers, which may lead to a more stable workforce—positioning salon owners to retain skilled manicurists and improve the overall quality of service. Additionally, with more employees classified as employees rather than independent contractors, salon owners might have more control over training, scheduling, and maintaining their brand standards. Overall, these changes could create a more professional environment that enhances the reputation and success of the salon.

What Does AB 5 Mean for Nail Salon Owners?

Nail salon owners might respond to rising labor costs by cutting back on hiring or reducing the number of manicurists they employ, leading to fewer job opportunities. Employers will likely consider raising service prices to support payroll taxes and workers' compensation insurance, creating a cycle of instability that will affect employees and clients who face reduced service availability. This could lead to a shift in the business model of many salons, potentially affecting their profitability and sustainability.

The new structure could also diminish nail salons' unique character. Many salons thrive on the diverse experiences that independent contractors provide. A shift toward a corporate model may lead to uniformity, reducing the diverse experiences customers cherish when visiting the salon. Alternatively, the benefit is that salon owners can have more control over the salon model. 

While the intent behind AB 5 is to protect workers' rights and banish labor trafficking, its impact on manicurists as employees could be disruptive. Understanding the potential repercussions and opportunities of the new changes is crucial. Advocating for a system that balances manicurist protections and sustainability for independent contractors and employers is also essential. I remain optimistic and committed to empowering and championing the changes necessary for compliance and workforce sustainability.

Need Help Implementing AB 5 in Your Nail Salon?

If you're a salon owner at a crossroads regarding reclassifying your team members from independent contractors to employees, I can help. I understand the benefits and challenges of these new changes. Click the button below to schedule a time to discuss your options with me. I would love to guide you through this transition. It may seem daunting, but I'm here to reassure you and provide the support you and your team need during this process.