BILL ANALYSIS Ó
SB 896
Page 1
SENATE THIRD READING
SB
896 (Nguyen)
As Amended June 30, 2016
Majority vote
SENATE VOTE: 27-4
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Business & |13-1 |Salas, Brough, Baker, |Gatto |
|Professions | |Bloom, Campos, | |
| | |Chávez, Dodd, Eggman, | |
| | |Gomez, Holden, | |
| | |Mullin, Ting, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-0 |Gonzalez, Bloom, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Roger Hernández, | |
| | |Holden, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SB 896
Page 2
SUMMARY: Requires an establishment offering nail care services
to accept a debit or credit card payment for a tip or gratuity,
if the establishment accepts a debit or credit card for payment
of nail care services, as specified. Specifically, this bill
requires an establishment offering 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,
consistent with specified provisions in the Labor Code (LC).
FISCAL EFFECT: According to the Assembly Appropriations
Committee, negligible state fiscal impact.
COMMENTS:
Purpose. This bill will require nail care establishments, which
are licensed by the Board of Barbering and Cosmetology (BBC), to
accept credit or debit cards for purposes of leaving a tip, if
they allow credit or debit cards for the payment of services.
This bill is sponsored by the author. 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."
Background. Nail Care. In California, a licensed cosmetologist
can practice nail care and the BBC also licenses manicurists as
a separate licensure category. To become a licensed manicurist,
an applicant must submit to the BBC proof of completion of 400
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hours of technical instruction and practical training as
specified in Title 16 Section 950.4 of the California Code of
Regulations. Additionally, the BBC recommends that schools
provide training in the area of communication skills including
professional ethics, salesmanship, decorum, record-keeping,
client service record cards, basic tax responsibilities related
to independent contractors, booth renters, employees, and
employers.
Licensed Establishments. The BBC licenses and regulates over
550,000 licensees, including over 50,000 establishments. The
types of establishments that the BBC regulates, include, 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. Currently, the
BBC does not differentiate between the types of establishments
it licenses, and business models may vary.
The BBC currently licenses over 126,000 manicurists, 310,000
cosmetologists (who can also perform nail care services) and
50,000 establishments. BBC does not include information in its
establishment license data to differentiate between an
establishment offering nail care services specifically and those
offering other personal beautification services.
An establishment licensee may operate a business to conduct any
of the professional services for which a license is required
under the Act. Establishment owners (establishment licensees)
do not need to hold a separate professional license in order to
own and operate an establishment; however, Business and
Professions Code Section (BPC) 7348 specifies that an
establishment must at all times be in the charge of a licensed
person.
SB 896
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Under current 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. 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. The author contends that with so many establishments
statewide, it would make sense to have a uniform payment system.
As currently drafted, this bill would apply only to nail
establishments.
Tipping. According to information provided on the website of
the Internal Revenue Service (IRS), tips are discretionary
(optional or extra) payments determined by a customer that
employees receive from customers. Tips can be presented in the
form of cash, electronic formats (credit, debit, gift cards or
other electronic means), or as noncash items such as tickets.
"Employees must report to their employer all cash tips received
except for the tips from any month that total less than $20.
Cash tips include tips received from customers, charged tips
(for example, credit and debit card charges) distributed to the
employee by his or her employer, and tips received from other
employees under any tip-sharing arrangement."
Credit and Debit Cards. California businesses are not required
to accept a credit card or debit card as a form of payment for
services. Civil Code Section 1725(a) lists the specific
requirements for businesses if they choose to accept credit
cards, which include, but are not limited to, prohibiting the
SB 896
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recording of a credit card number or contacting a credit card
issuer to determine if the credit amount available will cover
the amount of the purchase. Under current California law, LC
Section 351 specifically prohibits an employer from collecting,
taking, or requiring an employee to credit the amount of
gratuity as part of the employee's wages. Additionally, LC
Section 351specifies that if an employer permits gratuity to be
paid though a credit card, the employer may not deduct any
payment processing fees or costs that may be charged to the
employer by the credit card company. Under this bill, nail
establishment owners would need to comply with the provisions of
LC Section 351 and would not be permitted to deduct processing
fees related to the payment of gratuity. Regardless of the form
of payment, tips or gratuity belong solely to the employee, not
the employer, and the provisions of this bill do not alter this
existing structure in California.
Nail Establishment Concerns. Labor concerns for nail
technicians were raised in a May 7, 2015, article from the New
York Times, "The Price of Nice Nails," in which it was reported:
"The New York Times interviewed more than 150 nail salon
workers and owners, in four languages, and found that a vast
majority of workers are paid below minimum wage; sometimes they
are not even paid. Workers endure all manner of humiliation,
including having their tips docked as punishment for minor
transgressions, constant video monitoring by owners, even
physical abuse. Employers are rarely punished for labor and
other violations. ?Tips or wages are often skimmed or never
delivered, or deducted as punishment for things like spilled
bottles of polish."
In August of 2015, the Assembly Select Committees on Women in
the Workplace, and Girls and Women of Color held a joint hearing
with the Assembly Committees on Health, Business and
Professions, and Labor and Employment, which focused on both the
health and safety of licensees regarding exposure to chemicals
and other ingredients, and concerns about labor practices in
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nail salons. The purpose of that hearing was for state
agencies, advocates, and industry to obtain and share
information, address concerns, and discuss policy
recommendations regarding nail salon practices. As part of that
discussion, the issue of tips was raised.
Analysis Prepared by:
Elissa Silva / B. & P. / (916) 319-3301 FN:
0003576