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The Impact of California Unfair Labor Laws on Small Businesses - Employer Attorney Los Angeles and Orange County

unfair labor laws small business

Posted on December 12th, 2019


Below is a full transcript of this video.

 

BR: Okay, my name is Beatrice Regalado. I own a business, a hair salon business for over 10 years in Downey, California.

JF: Okay. How long? 10 years?

JF: Oh, okay. And so how many people were you helping make money because they were providing services in your beauty shop?

BR: Now we have 10 employees there.

JF: Okay. So if you were to go out of business, what would happen to those 10 people?

BR: Well, they’ll lose their job. They’re not going to have a job. We need to close the business.

JF: Yeah, okay and tell me about your business. You said it’s a beauty shop.

BR: Yes. We work by commission. Which to me was my accounting was doing for me, in commission whatever they make a day and then I pay.

JF: And that’s pretty standard, most beauty salons are doing that. Right.

BR: Standard, yes. But now that the new laws are changing, we need to pay them minimum of $22 an hour.

JF: Okay. So tell me about that.

BR: I’m trying to think how I’m going to be covered to pay the $22 an hour. Sometimes even we don’t make $22 an hour with a service. Let’s say we do haircut and then we’re not going to be able to.

We charge like $25 and then stylists, depending on the experience, they take more than that. Sometimes the stylist, they are not at the salon all day.

So I don’t know how I’m going to be paying hourly because when they don’t have anything to do they go shopping or they take days off, because supposed to be independent sometimes.

JF: So just so I’m clear and everybody else’s clear, you have a beauty salon? You have independent contractors that cut hair when they have appointments, right?

BR: Yes, correct.

JF: And they come and go as they please. And some days they work, some days they don’t. It just depends on and what they have, right?

BR: Yes.

JF: So what this new law will do, is force you to pay them $22 an hour minimum, while they sit there and they’re not doing anything while you’re waiting for customers to come in.

BR: Yes, they’re not doing anything.

JF: Right. So there’s no way to sustain that, right? And you’re not a multimillion dollar company here, you’re… right.

BR: Yeah, I was trying to figure it out how I’m going to be able to do this, because it’s hard for me. Some days we are really slow on the business, and so I was trying to think how am I going to keep these 10 employees?

Probably I may need to have less. I may need to cut like half of them, to be able to give some type of.

They make enough money to pay the $22 an hour. Or either try to do it that way for as long as I can if not I need to close.

JF: And what would you do if you closed?

BR: I’ll look for a job, I don’t know? I guess.

JF: So, instead of helping 10 people make money, you’re going to have to close down and you’re going to have to, then find a place to employ you.

BR: Yes.

JF: So besides the 10 people and then you, you’ve got the landlord who you pay rent to, I mean there must be tons of other people that benefit because you have a business.

BR: Yes, we have a contract too, I don’t know, I was thinking how I’m going to be able to finish if this is not going to work for me.

JF: Oh, so you have a lease?

BR: I have a lease, yes.

JF: So, not only would this potentially stop you from running your business, but this could put you in financial jeopardy because, by the sheer fact of them creating a system where your business can’t survive. They’re damaging you, because now you’re going to have to deal with a landlord that says, “No, you’ve got a lease.

JF: So figure it out”. Right?

BR: Yes. We start in different locations in Downey, we started with two employees and then we were doing good, we hired another one.

Everybody was okay with that, because they have a job. Now we recently moved to a bigger location.

So then that way we have to have some loans too, in order for us to open the new business because we have more employees, we need more parking, more… But at this point, I probably just never move to this new location.

 

JF: How much longer do you have on your lease?

BR: Three years.

JF: Okay.

BR: We have three years.

JF: So that’s three years that you’d be liable for, right?

BR: Yes. Yes.

JF: And what made you want to be an entrepreneur and start your own business? I mean, it’s just so much safer to be an employee these days, especially in California.

BR: Well, because I like my job and I like to expand. I don’t know. I like to have my employees, most of them they start with me since they finish school. So and then I train them, I train them to be better stylist. So that’s why, and then I liked the beauty industry plus to be a business woman.

JF: And what about the neighborhood that you’re servicing? That’ll be affected also if there’s… I don’t know how many beauty salons are there. But, I’m assuming even if there’s multiple ones besides you, they’re going to have the same problem that you’re having, which is-

BR: Yes, they are really worried about these new laws. All of them are concerning about what they are going to be doing with this.

JF: And let’s talk about who this new law is supposedly, supposed to be protecting. Right? So, when someone came to you, because they wanted to be one of your independent contractors, you spoke to them. You either liked them or didn’t like them, and then you negotiated something with them, right? Something that worked for you, something that worked for them. Right?

BR: Yes.

JF: So, even if you were able to sustain this, this new law, well now they’re getting paid $22 an hour. But depending on what they want in their life, they could make much more than $22 an hour.

BR: Of course, yeah. They’re able to make more because if they make more on commission, they are going to be able to make more.

JF: Right. And so, and then times that they’re not working, they can do their own thing.  They can go pick their children up from school, they have the freedom to do what they want. So they contracted with you. So this law also restricts your freedom of contracting, right?

BR: Yes.

JF: You now can’t decide, who you want to be in business with. Because this law says no, we’re trying to… Even though the law was based on truckers, it’s saying, this applies to everybody now except some exceptions.

BR: Yes. And then I don’t know, because sometimes we hire employees that they asked for her system and they don’t have no experience.

I cannot find like the way how when I because they’re supposed to pay $22 if you have a license, doesn’t matter if you have experience or not. To me that doesn’t make any sense to pay $22 an hour with the stylists that they’re not that productive like the ones they have more experience.

JF: So there’s just no way to make money.

BR: No.

JF: But let’s say you were a $1 million business, right? So even a million dollar business, you still have to be generating something. You have to have enough numbers or whatever. But is there any way that you can think of, knowing how your business makes money and I don’t know? I don’t know if you sell shampoos and brushes and whatever else, but is there any way for anyone to cover that $22 an hour, if you’re a beauty salon, that you can think of?

BR: Yes. Make the day productive. Like having more customers.

JF: So having enough customers where it’s just back to back to back.

BR: Back to back, back to back and, well, nonstop.

JF: So, if a haircut’s $25, well how much time does it take to…

BR: Depending on the experience, depending on the stylist, sometimes he can take-

JF: What’s the average?

BR: 45 minutes to an hour.

JF: Okay. So, let’s say it even takes 45 minutes, right? Well let’s make it easy. We’ll make it easy math. Right? So if even if they could cut two heads an hour, that’s what?

That’s $50 and then you’re paying $44 of that in labor.

How would you pay the rent? How would you pay the equipment? How would you? Right. So even if… It just doesn’t, it just absolutely isn’t sustainable. At least from my opinion. Unless you’re of a size where, I don’t know how many beauticians you would have to have.

BR: No unless we raise the prices. But we cannot because, even like that the customers think that it’s already expensive.

JF: Yeah because the neighborhood that you’re servicing isn’t looking for that. It can’t sustain that. So what they’re doing then is, they’re taking certain neighborhoods and they’re, with these laws kicking out the businesses that service them.

Now, not only are they going to pay higher prices somewhere else, but they have to leave their neighborhood to do it. Doesn’t make any sense. Yeah. Yeah. Interesting. Yeah. And I asked you earlier, what made you become an entrepreneur?

And I’m just curious. It has nothing to do with any laws or whatever. But so few people are entrepreneurs and people that aren’t entrepreneurs don’t understand what it takes to be an entrepreneur.

They don’t understand the risk. They don’t understand the hours. They don’t understand just everything that’s put into starting something, let alone running it. Right?

BR: Yes.

JF: So there’s a certain thing that entrepreneurs have, that makes them willing to put up with that, or are willing to go through that hassle and that pain. What made you an entrepreneur?

BR: To be like a business woman?

JF: Yeah. What made you decide to be a business woman versus just a beautician

 

BR: Because we want a better standard life, or better make more money and have… Because I’ve been working like hairstyle like 20 years.

And I have a lot of experience, and then I always tried to help be better and to have more opportunities and give my employees more opportunities to grow.

JF: Okay. Anything else you want to… Oh, actually, one more question and then I’ll let you add whatever else you want to add. What would be the best case scenario for you with your business?

What laws could they put into place that would help your business grow so that you could bring more people in, and give more people an opportunity to make a living?

 

BR: Oh, okay. Yes. For us to be able to keep this business. I think we used to have people contract, or working the hours that they have the appointments.

Then they are happy that way because they have more days off, or they can travel.

Basically I think probably make the hourly pay, but when they are working not all day when they are not doing anything at the salon. Sometimes there is not appointments.

JF: And what ideas have you come up with, in light of this new law that maybe you could save your business?

BR: Like I said, pay them, let’s say they’re a new stylist they are not a product in what they are like a hair assistant. They can pay at least the minimum wage, because they don’t do like when they have a lot of experience.

And then for me it will work if I can pay them hourly, like whatever law says. Sometimes they are six hours in waiting or they were chopping or they are there but they are not making any money. We are not making any money, not the business making money.

JF: All right. Anything else you want to close with or say? You know we had such a great conversation on the phone when you first called me, so that’s why I wanted to interview you because you had so much to say.

BR: Yes, I guess I can say that I’m trying to figure it out. How am I going to manage this business, and with those new laws. I’m going to do my best to see probably I can just have instead of 10 employees, probably like 10 main contract or to keep half like fire them and see if that’s going to be OK.

To me it looks really hard because being there like all day and using different situations. I’m just trying to figure out how I’m going to be able to manage this new law.

Because sometimes there is not enough appointments to keep them eight hours, or to pay them like per hourly, or probably like I’m going to just try the best to see if I can keep the business for… To keep the best I can do. See how this new law is going to work, I might need to close the business.

JF: Yeah. Well thank you so much Beatrice. I really appreciate you coming all, excuse me. All the way down here from? Where are you in? Downey?

BR: Downey. We’re in Downey.

JF: So, not too far but with traffic, with LA traffic. Thank you so much. Thank you for your time.

And I hope your interview will maybe make a difference to other business owners, but also maybe some of these politicians that just don’t understand how it works in the real world.

BR: Yes. Yeah, its hard.

JF: It’s very easy for them to get a paycheck from our tax dollars. But then they make decisions that screw us.

BR: Yes. We work hard to pay all the bills.

JF: All right. Thank you.

 

 

Summary
The Impact of California Unfair Labor Laws on Small Businesses
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The Impact of California Unfair Labor Laws on Small Businesses
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This article explains unfair labor laws in California affect small businesses.
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Defend My Biz
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