BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 896  

                                                                    Page  1

          Date of Hearing:  June 29, 2016


                               Lorena Gonzalez, Chair

          SB 896  
          (Nguyen) - As Amended May 23, 2016

          |Policy       |Business and Professions       |Vote:|13 - 1       |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          This bill requires an establishment that offers nail care  
          services that accepts a debit or credit card as payment for nail  
          care services to also accept a debit or credit card for payment  
          of a tip in accordance with existing labor laws regarding  

          FISCAL EFFECT:

          Negligible state fiscal impact. 


                                                                     SB 896  

                                                                    Page  2


          1)Purpose. According to the author, "Currently, nail salons in  
            the state accept various forms of payment for services  
            provided and any tip left for the technician.  Some salons  
            only accept cash.  Most establishments allow clients to use a  
            debit or credit card for the cost of the service and to leave  
            their technician a tip.  A small number of establishments  
            accept paying for a service with a credit or debit card, but  
            do not allow a tip to be charged.  Requiring salons that allow  
            clients to use credit or debit cards to also leave a tip on a  
            credit card or debit card will not only be more convenient for  
            the client but it will also ensure that technicians are  
            appropriately compensated for their labor."  

          2)Background. The Board of Barbering and Cosmetology (BBC)  
            licenses and regulates over 550,000 licensees, including over  
            50,000 establishments including, but are not limited to, nail  
            salons, barbers, and hair salons.  The BBC is required to  
            maintain a program of random and targeted inspections of  
            establishments to ensure compliance with applicable laws  
            relating to health and safety.  The BBC currently licenses  
            over 126,000 manicurists, 310,000 cosmetologists (who can also  
            perform nail care services) and 50,000 establishments. 

            Under existing law, there is no requirement for licensed  
            establishments to accept a certain form of payment for  
            professional services.  Establishment owners or individual  
            licensees may choose to accept any form of payment for  
            professional services including, but not limited, to  
            prohibiting checks, but accepting credit cards, or requiring  
            cash-only transactions.  Businesses that accept card payments  


                                                                     SB 896  

                                                                    Page  3

            pay processing fees for purchase transactions. While the BBC  
            inspects establishments for compliance with applicable health  
            and safety requirements, it does not inspect businesses for  
            labor related issues, including how the payment for services  
            is made.  

            This bill would require nail care establishments which accept  
            a credit card or debit card as a form of payment, to also  
            allow tips to be added to the debit or credit card.  This bill  
            does not require a nail care establishment to accept a credit  
            card or debit card as a form of payment, nor does it alter the  
            BBCs enforcement requirements.  As currently drafted, this  
            bill would apply only to nail establishments.  

          3)Arguments in Support. This bill is authored sponsored.  The  
            author notes that many people simply do not carry cash with  
            them and most consumers have a credit or debit card that they  
            use for all their transactions.  The author states that it is  
            more convenient for the consumer to be able to use their card  
            for both the service and tip, especially if they don't have  
            cash with them. The author further contends that with so many  
            establishments statewide, it would make sense to have a  
            uniform payment system.

          4)Arguments in Opposition. The Professional Beauty Federation of  
            California writes in opposition, "While we support the intent  
            to encourage tips to be given to our wonderful licensees, we  
            cannot support the level of statutory micromanagement of salon  
            business operations called for under [this bill].  Salon  


                                                                     SB 896  

                                                                    Page  4

            owners pay on average 3% fees to credit card companies for the  
            benefit of allowing their clientele to use such payment  
            methods, and those charges apply to tips.  While rare, some  
            salons choose to forgo having to pay that fee for tips (and  
            instead encourage cash tips), and we believe that should be  
            their prerogative."

          Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081