Classified Information
MTJ. By Cindy Simmons. Photo:Steve Woods. When California labor inspectors conducted a sweep of 108 spas and salons in 2008, they decided many massage therapists who were working as independent contractors were actually employees. The reclassifications led to fines for many spa owners. At one spa, fines totaled $40,000. The California enforcements are part of a trend that has been observed at the federal level and in many state governments. To increase tax collections, government agencies are categorizing fewer workers as independent contractors.
Stan Youngs, a Seattle accountant who has worked for three massage therapists, describes the California franchise tax board as “the Gestapo of taxing in the U.S.” He also says that people in bodywork are often helpful and trusting, making them easy targets for enforcement.
Being Blindsided
Some owners of spas who were caught up in the California sweep said they didn’t understand what was at stake. Tanya Wigger, for example, says she mistook the inspector who came to her practice, Napa Valley Day Spa, for a saleswoman. “She said, ‘We’re just visiting spas,’” Wigger says, “acting kind of nicey-nice.” Wigger, unassuming and unaware of the potential for trouble, continued making polite conversation. “She gave me a business card,” she adds. “I didn’t look at it. I didn’t have my glasses. We just visited. We talked about hot flashes.”