A step-by-step guide to protecting yourself and correcting the problem
Recognizing misclassification is the first step. Knowing what to do next is where most beauty professionals feel overwhelmed. That is because the industry has normalized illegal structures for so long that workers often blame themselves instead of seeing the real issue.
This section will walk you through exactly what to do. It will not tell you to quietly accept the situation or start fresh next year. Misclassification is not a misunderstanding. It shifts legal and financial responsibility onto the worker, and you have every right to take action.
1. Start by protecting yourself with documentation
Before you talk to anyone, gather the information that reflects how your work is structured. The IRS and Department of Labor look at how the relationship functions, not what the salon calls it.
Collect:
• screenshots of your schedule
• proof that you use the salon’s booking system
• pay stubs or commission breakdowns
• screenshots showing pricing is controlled by the salon
• messages instructing you when to work
• any written rules or protocols
• the contractor agreement you signed
• proof that client payments go to the salon first
• any required meeting or training notices
You do not need every item on this list. Even one strong indicator can show that the salon is controlling your work as an employer.
2. Do not confront the owner until you understand your rights
Many owners become defensive or retaliatory when workers begin asking questions about misclassification. This is common because misclassification allows the owner to avoid payroll taxes, wage laws, overtime, unemployment insurance, and workers’ compensation.
Talk to the IRS or Department of Labor first. You can do this anonymously.
You do not need to warn the salon.
You do not need to negotiate with them.
You do not need to ask permission to understand the law.
3. Correct your tax situation
If you were misclassified, you may have been paying taxes your employer was legally responsible for. This includes:
• the employer’s half of FICA
• federal unemployment
• state unemployment
• payroll taxes that should never fall on the worker
• higher self-employment tax because the salon mislabeled you
When you file using the correct classification, the tax burden often changes significantly.
You can:
• amend prior tax returns
• file using Form SS-8 for a worker classification determination
• get guidance from a CPA familiar with misclassification
• request a refund for taxes you overpaid because of the incorrect classification
Correcting this is not “getting anyone in trouble.”
It is correcting a legal error that harmed you financially.
4. Report the misclassification and understand exactly how it works
Reporting misclassification is neither dramatic nor extreme, nor is it vindictive. It is the legal process for correcting a structure that is harming you financially and shifting an employer’s legal responsibilities onto you. Thousands of workers file these reports every year in all industries, and the laws exist for this exact reason.
Here is what beauty professionals need to know.
A. Reporting to the Department of Labor (Wage and Hour Division)
This agency handles:
• misclassification
• wage theft
• overtime violations
• minimum wage issues
• illegal commission structures
• denied breaks
• lack of workers’ compensation
• unsafe working conditions
When you report to the DOL:
• They do not call your employer and say your name unless you choose to give permission.
• Many reports are anonymous.
• They determine whether the business is following classification laws.
• They can audit payroll, books, scheduling systems, and classification records.
• They can require the employer to pay back wages and unpaid employer taxes.
Reports can be filed online, by phone, or through your state DOL. It takes about ten minutes.
Workers who are misclassified often qualify for:
• back pay
• unpaid minimum wage
• unpaid overtime
• unpaid employer-side taxes
• corrections to their tax status
B. Reporting to the IRS
The IRS focuses on the tax side of misclassification. They look at the money flow, the pay structure, the control, and the employer’s tax obligations.
You can report misclassification to the IRS using:
• Form SS-8 (worker classification determination)
• Form 3949-A (reporting a business for unpaid taxes or misclassification)
The IRS may:
• review how your work is actually structured
• analyze control, scheduling, and payment flow
• determine whether you were legally an employee
• reclassify you for the tax year
• pursue unpaid employer payroll taxes from the salon
• require the salon to correct the structure
This protects you from tax liability that never should have been yours.
C. What you need before you report
You do not need to build a perfect case. You already live the structure every day. Gather:
• pay history
• screenshots of scheduling requirements
• proof that the salon controls pricing
• commission or percentage breakdowns
• messages requiring meetings or trainings
• screenshots of the booking system you must use
• any contractor agreement
• messages showing you cannot work elsewhere
This does not have to be perfect.
It only needs to reflect the reality of your work.
D. What happens after you report
If you report to the DOL:
• They review your information
• They may schedule a call with you
• They can open a case without revealing your identity
• They will request documentation from the salon
• They may require the salon to classify workers correctly
• They may require the salon to pay unpaid wages and employer taxes
If you report to the IRS:
• They review your SS-8 form
• They may ask follow-up questions
• They issue a written classification determination
• They may reclassify you
• They may pursue unpaid employer payroll taxes from the salon
• They may notify the salon to correct their classification practices
This is not a lawsuit.
It is not a personal attack.
It is a legal correction designed to protect you.
E. What most beauty professionals do not realize
- You cannot get in trouble for reporting misclassification.
- You may qualify for refunds or back pay.
- You can file anonymously.
- You are not harming a business by reporting. You are correcting a structure that is already illegal.
- Correcting misclassification protects your future taxes and income.
F. What to do if you fear retaliation
Retaliation is illegal under federal law.
If a salon fires you, cuts your hours, threatens you, or mistreats you after you ask questions or report the issue, the DOL can act.
Consequences for the employer can include:
• fines
• back pay owed to you
• reinstatement if you request it
• expanded investigations
Workers are protected. Employers are accountable.
G. You do not have to be perfect to file
You do not need perfect records.
You do not need legal knowledge.
You do not need permission.
The IRS and DOL deal with misclassification every day. They will guide you through the process.
5. Moving forward
You deserve a workplace where you are classified legally, paid legally, and protected legally. Misclassification is not a small bookkeeping issue. It affects your taxes, your income, your protections, and the stability of your career.
No worker should feel pressured to remain in a structure that harms them financially. You have options. You have support. You have legal protections on your side.
Closing Statement About Heather’s Nail Boutique
At Heather’s Nail Boutique, we comply with all legal employment standards. Every employee receives proper payroll, tax withholding, employer-paid contributions, workers’ compensation, and wage protections. This is the structure the IRS and Department of Labor require, and it is the structure that protects beauty professionals from the financial harm caused by misclassification. It is the foundation of a healthy, stable career in beauty, and it is what every professional deserves.