Legal Tips Salons and Stylists Need to Know
By Elizabeth Mitchell on 2017/01/09
Salon owners face unique challenges in operating their businesses. One such challenge is recruiting and retaining talented and productive stylists. When the stylists do well, the salon does well. However, hairstyling is also a relationship driven profession, and clients may feel more loyalty to an individual stylist than they do to the salon itself. This reality can leave salon owners feeling vulnerable, because if stylists leave, they may take clients, or even other stylists, with them. This can be damaging or even devastating to the owner’s business.
Is there anything salon owners can do from a legal perspective to make themselves less vulnerable to the fall-out from a departing stylist? The answer is, to some extent, yes, but there are a few key considerations and principles to keep in mind.
1. There is no legal way to force a stylist to stay if they have indicated an intention to stop working for you.
Whether the stylist is an employee or an independent contractor (which is determined by the actual circumstances of the work they do for you, and not simply by what you label them) employment standards laws or a well drafted contract my require that they give you advance notice of their departure. But beyond that, people are free to come and go from their work situations as they please.
2. A stylist does not have any legal duty to refrain from competing with your business by working at a competitor salon when he/she leaves or to refrain from soliciting your clients or other stylists away from you.
However, one exception is that if a stylist was a ‘fiduciary’ or key worker at the salon, the stylist may have legal duties not to do these things after they leave. Whether a stylist was a key worker in your business depends very much on the facts of your case, but things to look for include whether the stylist was a known ‘face’ of the business, and how much knowledge or control the stylist had over the inner workings of the salon. If a salon can credibly say that a recently departed stylist was a fiduciary of the business, this can be a useful tool in addressing unfair competition by the stylist after they leave.
3. Salon owners can also take proactive steps to create some protection for themselves before or while the stylist is still working with the salon.
The most popular option is a ‘restrictive covenant’. This is a contract between the salon and the stylist in which the stylist agrees not to compete with the salon and/or to solicit clients or other stylists from the salon should the stylist eventually leave. However, restrictive covenants are far from fool proof. For one thing, a stylist needs to agree to the terms of the covenant, and they need to receive something of value in exchange for their promise. The salon cannot impose the covenant on the stylist unilaterally and expect it to be enforceable. This often requires some strategic thinking about the optimal time and manner in which to introduce a restrictive covenant into the relationship.
Very importantly, courts start from the proposition that restrictive covenants are unenforceable because they restrain free trade among people—they purport to stop people from working wherever and with whomever they want, and the law takes a dim view of that. Accordingly, the party seeking to rely on the covenant (ie., the salon) must be able to prove that the covenant is reasonable in the circumstances. This means demonstrating that the covenant only restricts the stylist’s post-salon activity as much as is actually necessary to protect the salon’s interests, and no more.
- What geographic area is the stylist prevented from working in?
- For what period of time?
- Who is the stylist prevented from contacting, and for how long?
These are critically important considerations. Protecting your salon from departing stylists isn’t easy, but it can be done well.
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