Salon employee contracts clearly define the conditions of employment and should not be confused with an employment offer letter.  An employment offer letter comes before the contract, they do not go into detail about the job, and are not legally binding.  Employment contracts are also different from employment agreements.  Employment agreements are usually verbal agreements between the employer and employee, they do not include paperwork or signatures.  In most states, employment agreements are not legally binding.

 

Disclaimer: The advice detailed below is for educational purposes only and is not meant to act as legal advice. Members should seek proper legal advice from a licensed attorney.

 

 

 

Salon employee contracts should include:

 

• Parties Involved - Clearly defining who the contract is between helps to also define who the employer is and who is the employee.

Example: “This employment Contract is between The Best Salon, Inc. (Employer) and Sally Stylist (Employee).”

 

• Start Date - The date that the employee starts employment is important because it will be used as a reference for the end of a probationary period and the start of other benefits such as insurance, paid time off, and pay increases.

Example: “Employment shall start on this the first day of May 2020 and shall continue until the termination of this Contract.”

 

• Probationary Period - A common practice is for employers to offer employment based on performance during a probationary period of time - usually three months.  During this time the employer is evaluating the employee to determine whether the employee is a solid cultural fit within the company; if the employee truly has the skillset to perform his/her job responsibilities; and if the employer still believes that the employee can benefit the company in a long-term manner.

Example: “The first 90-days of employment will be a probationary period in which the Employer will evaluate and determine whether the Employee will be offered continuous employment with the Employer.  At the end of 90 days, the Employer can choose to offer the Employee a permanent position or terminate the Employee for whatever reason without the need to provide reasonable notice or compensation.”

 

• At-will Employment - An employer has the right to terminate an employee at any time and for any (or no) reason. It also means that the employee has the right to terminate his or her own employment at any time and for any (or no) reason.  Please note that you should check with your individual state’s definition of at-will employment and their regulations.

Example: “The terms of employment are at-will.  Either party may terminate the relationship at any time with or without cause.  The Employee cannot be fired for a discriminatory reason and the Employee cannot be fired out of retaliation for performing a legally protected activity.”

 

• Termination Notice - A notice of termination of employment is when the employer requires the employee to provide a notice that they will be ending their employment with the business.  If the employment is considered at-will, the employee can not be required to provide a termination notice.  Termination notices are usually not a part of the salon industry as it gives the employee time to let clients know that they are leaving and let them know where they are going, ultimately resulting in the salon owner losing customers.

Example: “Employee will be required to provide the Employer with a notice of termination in writing 14 days prior to the end of employment.”

 

• Job Description - It is important that the employment contract consists of detailed information describing the duties and responsibilities of the employee.

Example: “The Employee is being hired as a licensed cosmetologist and will perform the following duties:

• Maintains supplies by checking stock; anticipating needs; placing orders; verifying receipt.

• Prepares hair for styling by analyzing hair condition; shampooing and treating hair.

• Conditions hair and scalp by applying treatments.

• Plans desired effect by studying facial features; examining potential styles; conferring with customers; making recommendations.

• Produces desired effect by arranging, shaping, curling, cutting, trimming, setting, bleaching, dyeing, and tinting hair.

• Maintains quality service by following organization standards.

• Maintains safe and healthy conditions by following organization standards and legal regulations.

• Maintains an active cosmetology license in (State)

• Obtains revenue by recording or collecting charges.

• Maintains technical knowledge by attending educational workshops; reviewing publications.

• Contributes to team effort by accomplishing related results as needed. Skills/Qualifications: Listening, Supply Management, Analyzing Information, Customer Focus, Client Relationships, Organization, Creativity, Attention to Detail, Confidentiality, Professionalism, Verbal Communication”

 

• Additional Duties - It is very possible that the employee may have to perform duties outside of the detailed description already listed.  Clearly defining this aspect of the job is an important component of the employment contract.

Example:  “The Employee may be asked to perform additional duties as needed and asked of by management such as:

• Cleaning restrooms

• Answering phones

• Sweeping/Mopping

• Dusting Shelves

• Etc.

 

• Payment - The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered businesses and nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek. What this means is that employees have to be paid at least minimum wage for the hours worked or their commission percentage times services rendered, whichever is greater. The schedule in which the employee will be paid should also be defined in the contract.

 

NOTE: For commission-based employees, there is a possible exception to the standard overtime requirement. The exception has 3 requires which must be met:

1. the employee must be employed by a retail or service establishment, and

2. the employee's regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked, and

3. more than half the employee's total earnings in a representative period must consist of commissions.

Example: “The Employee will either be paid 40% of services rendered per work week (Monday through Sunday) or $9.00 an hour for the first 40 hours worked during the workweek, whichever is greater.  The Employee will also receive time and a half for hours worked over 40 each workweek.  Payment is electronically deposited into the bank account the Employee gives the Employer upon hiring every other Friday.”

 

• Benefits - What benefits, if any will the employee receive.  This includes discounted services, paid time off, holiday pay, insurance, 401K, company shares, etc. Give specific details of how they will be dispensed.

 

•  Disciplinary Procedures -  This is where you outline what happens, if the employee fails to meet the requirements of the contract.

Example:  “Should the Employee fail to meet any of the requirements of the Contract the following steps will be taken:

1. Verbal warning

2. Written warning

3. Two-day suspension

4. Termination of employment”

 

• Confidentiality Clause -  Confidentiality clauses, also known as ‘nondisclosure agreements’ or ‘NDA’ for short, are legal agreements between parties that state information to be kept confidential, thus barring the receiving party from disclosing the information.

Example:  “The Employee shall not, without the prior written consent of the Employer, divulge, disclose or make accessible to any other person, firm, partnership, corporation or any other entity any confidential information except (a) in the course of carrying out his duties under this Agreement or (b) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order the Employee to divulge, disclose or make accessible such information.”

 

• Non-compete Clause - A non-compete clause prohibits any employee from using the skills and knowledge used or gained at a workplace for a set period of time after their employment.  Please check with the non-compete laws for your individual state as not all states enforce such clauses or have limitations.  There are two primary reasons to implement a non-compete in a salon/spa:

1. To protect the client list and prevent the departing service provider(s) from soliciting clients serviced while employed at your salon.

2. To protect your investment in training and education

Example:  “The Employee can not obtain employment at a business of similar practice within a 5-mile radius of The Best Salon, Inc. for 12 months after termination of employment.”

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• Non-solicitation Clause - An employer may be concerned that an employee who has resigned may attempt to take customers or other employees from their former employer for the benefit of their new employer. Like non-compete clauses, non-solicitation clauses must meet certain parameters to be declared valid, such as a provision that limits the time in which this restriction would apply to a reasonable length of time.

Example: “During the period commencing on the date of this Contract and continuing until the first anniversary of the date when the Employee’s employment terminated for any reason, the Employee shall not directly nor indirectly, personally or through others, solicit or attempt to solicit (on the Employee’s own behalf or on behalf of any other person or entity) the employment of any employee of the Employer or the business of the Employer’s customers.” 

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• Exclusive Clause - Requires that the employee restrict his/her work to this company and they refuse to engage an employer in a similar industry or function while the employee is contractually bound by the agreement.

Example: “Employee shall devote full time, ability and attention to the business of The Best Salon, Inc. during the Employment Term, and shall neither directly nor indirectly render any services of a business, commercial or professional nature to any other person, firm, corporation or organization for compensation without the prior written consent of the Employer.”

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• Severability - Refers to a provision in a contract or piece of legislation which states that if some of the terms are held to be illegal or otherwise unenforceable, the remainder should still apply.

Example: “If any part or parts of this Contract shall be held unenforceable for any reason, the remainder of this Agreement shall continue in full force and effect.”

 

• Dispute Resolution

  • Dispute Resolution goes by many names. We will focus on two of the standard practices: Arbitration and Forum Selection  Depending on the contract, it is typical to find both clauses.

    • Arbitration - Arbitration is a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments. Arbitration is different from mediation because the neutral arbitrator has the authority to make a decision about the dispute.  Tenants should be aware that the arbitrator is chosen by the landlord and anyone can be an arbitrator, there is generally no legal education or license unless required by State law.  Arbitrators generally favor the landlord limiting the recourse after the judgment.  The situation is also confidential meaning there will be no public record of the bad behavior in question.

Example: “All claims and disputes arising under or relating to this Agreement are to be settled by arbitration in the state of Nebraska or another location mutually agreeable to the parties. An award of arbitration may be confirmed in a court of competent jurisdiction.”

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• • • Forum Selection - The purpose of Forum Selection is to dictate the contracting parties’ agreement on where a dispute will be litigated geographically. The clause identifies the courts of a specific jurisdiction that will hear and resolve any dispute that arises out of the contract. Forum Selection also requires that the parties waive any right to litigate in any other forum.

Example: “Any dispute arising from this contractual relationship shall be governed by the laws of the State of (State Name), and shall be decided solely and exclusively by State or Federal courts located in (City), (State).”

 

• Entire Agreement - This is where both parties sign in agreement to the stipulations outlined and agree that this contract supersedes all previous discussions or arrangements regarding the subject.

Example: “This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.”