Hairstylists by the Thousands Balk at Proposed Tax Plan Introduced at State Legislature

Hairdressers and barbers from across the state gathered Monday in Olympia to speak against a bill that would change how B&O taxes are levied in the hairdressing industry.

A bill sponsored by Sen. Karen Keiser, D-Kent, is meant to ensure that salon owners who rent booths to stylists working as independent contractors would be subject to the same B&O taxes as those salon owners who directly employ hairstylists or barbers.

Keiser's original bill included a provision that would have prevented salon owners from renting booths to independently contracted stylists.

That sparked a massive outcry. Nearly 77,000 Washington residents signed a Change.org petition last week to oppose the bill.

A proposed substitute to the bill then was introduced and was heard before the Senate Labor and Commerce Committee. Over 1,000 people signed in against SB 5326 during the public hearing at the Capitol.

"Many were fearful that my goal was to take away your livelihood, and I want to say in the strongest possible terms -- that is not my intent," said Sen. Karen Keiser, D-Kent, who sponsored the bill. "I promise you that wont be the outcome of this effort."

Currently, salon owners who directly employ hairstylists are subject to B&O taxes based on the services those employees provide. Salon owners who simply rent booths to independently contracted hairstylists are not subject to the same tax rate despite offering the same services.

Independently contracted hairstylists are responsible for paying their own taxes unlike employees, who have the taxes paid by their employers.

Since 1991, booth renters have been considered independent contractors for the purpose of B&O taxes in Washington state.

The substitute bill included the removal of the most controversial aspects of the bill, including the prohibition against salons renting booths to independently contracted stylists, forcing them to work as employees instead.

Critics also said they think the bill favors corporate salons over independently owned businesses.

"If corporate salons want to be more competitive, they need to be more competitive on how they treat their employees," said Rachel Perez, a hairdresser who owns her own business. "Take better care of them and don't take such high commissions."

Keiser said she was moved to introduce the legislation after being contacted by a Spokane salon owner over the summer who complained of unfair treatment of salon owners who employ cosmetologists.

Keiser sought corroboration elsewhere and started by speaking with her own stylist. He confirmed there was indeed a problem with some salon owners treating booth renters as employees and not as true independent contractors.

The salon owner who originally contacted Keiser did not attend the hearing, concerned about safety issues stemming from harassment she has received as a result of the summer conversation she had with the senator.

Few people testified in favor of SB 5326, and those in support still raised concerns.

"We have said since the beginning that the language banning booth rentals is not acceptable to us," said Scott Missad, CEO of Gene Juarez. "Focus on tax fairness provisions. All businesses should pay equal taxes to ensure a level playing field for everyone in the industry."

The substitute bill will undergo more work in the next few weeks.