AllWork’s Solution for the Beauty Industry’s Army of Gig Workers: Impact of the New AB5 Law

By Kelly Kovack, Founder of Beauty Matter

Uber is often credited with unleashing the gig economy, but freelance workers have been the front line of the beauty industry at retail for decades. This army of beauty gig workers are the ultimate influencers—in that store, at that moment, for that consumer, they are the face of your brand and they close the sale.

While laws were already in place under the “ABC” test making it virtually impossible for beauty brands and retailers to classify their hourly workers doing sales, merchandising, events, and other retail support functions as 1099 workers, many businesses have done just that for years. However, the California bill, known as AB 5, that went into effect in January has increased awareness across the country for the need to properly categorize workers.

We asked AllWork CEO Glenn Laumeister for insight on the implication of the recent California law and how beauty brands can stay on the right side of the law.

Many beauty brands have been rolling the dice managing small armies of 1099 freelancers to support their retail doors in an attempt to manage costs. How is the new California law going to impact these businesses?

That was already the wrong thing to do, and now with AB 5 the level of scrutiny by the states and the federal government is increasing exponentially. In other words, they won’t fly under the radar anymore just because they are small or claim not to know the rules, no more excuses.

Some services related to the beauty industry like cosmetology services were carved out. Can you share the specific carve-outs?

The carve-outs are complicated and require looking at not just the job function like cosmetology, but also how the individual person is managed for each shift. So for example, if someone is a cosmetologist, but they are trained by the brand, scheduled into specific doors by the brand, given specific goals by the brand, and told what to wear by the brand, then the carve-out probably will no longer apply. From our perspective, it is almost impossible to consistently adhere to the true nature of being an independent contractor each and every time across hundreds or thousands of shifts per year.

Do you think the California law will become commonplace in all 50 states?

We don’t think so, but we do think there will be a version of it coming to most of the largest states by population, so it won’t just stop with California. There is also some work being done at the federal level to create a uniform standard but that is in the early days.

Labor and tax laws can be quite complicated and vary from state to state. What do beauty brands need to be considering?

The laws go way beyond just the AB 5 issue of how you classify the worker. Once you classify a worker as a W-2 employee as mandated by AB 5 and other existing rules, it triggers a number of other laws around overtime pay, minimum wages, expense reimbursement, required breaks, change-of-schedule notice periods, and the list goes on and on.

How can brands to ensure they stay on the right side of the law when it comes to beauty gig workers?

Simply put, they need professional advice on how to structure their labor force state by state and now even city by city. Also, it is not a one-time thing, these laws are constantly changing so the brands need a partner to keep a close watch on the new laws being passed.

AllWork was launched to address the need of managing this flexible workforce in the beauty industry. What are the benefits of using the platform?

Yes, we found that there was not a comprehensive solution that was cost-effective and easy for the brands to adopt. So we built one based on using technology to replace inefficient manual processes and combined that workforce management software with an integrated payrolling service made for beauty brands to ensure compliance with how they use gig workers. Typically we are replacing spreadsheets or staffing agencies and our value proposition is that we are much more effective than spreadsheets and much less expensive than the typical staffing agency.

As regards to AB 5 and all of the legislation around W-2 employees, we constantly monitor the new laws being discussed even before they are passed to ensure that our clients are compliant with all current and future laws.

Photo: Candice Picard via Unsplash