Salon commission agreement: what to put in writing

This is a checklist of what to cover, not legal advice. Commission rules differ by state, and some — California, for example — require commission arrangements with employees to be in writing and signed, so have the final version checked for your state.

1. Who it covers and how they are employed

Name the person, their role and whether they are an employee or an independent booth renter. Commission with salon-set prices and schedules is normally employment; classification depends on how the work is actually run, not on what the agreement calls it.

2. The rate, in a full sentence

Avoid bare numbers like “60/40”, which don’t say whose share comes first. Write “the stylist is paid 45% of commissionable service sales”. If the rate rises with sales, list each band and say whether a higher rate applies only to the sales inside its band (marginal) or to the whole period once it is reached (retroactive).

3. What counts as a sale

This is where most disagreements start. Say how each of these is treated:

• Discounts and promotions — commission on the price charged, not the menu price.
• Tips — belong to the employee and are not commissionable sales.
• Gift cards and prepaid packages — counted when the service is performed, or when sold.
• Memberships — a one-off amount per sign-up, a percentage, or a pooled bonus.
• Redos and refunds — whether commission is reversed, and within what window.

4. Anything taken off first

If a product (back-bar) charge comes off service sales before commission, state the amount or percentage and that it appears as its own line on the statement. Rules on deductions from pay vary by state.

5. Retail and bonuses

Retail commission is usually a separate, lower rate. List any bonuses — product mix, membership pools, goals — with the exact condition that earns them and what happens when two people share a sale.

6. A minimum you can count on

Commissioned employees must still earn at least minimum wage for the hours they work. Say how that is met: an hourly base plus commission, or the higher of hourly pay and commission for each pay period.

7. When commission is earned and paid

State the commission period (weekly, twice a month, monthly), when it is paid, and which report the figures come from. If commission is reversed for a cancelled membership or refund, say how long that window lasts.

8. A worked example inside the agreement

One example settles more than a page of wording. For a plan paying 40% up to $4,000, 45% from $4,000 to $6,000 and 50% above, on a $7,000 month:

If the same tiers were retroactive, the whole $7,000 would be paid at 50% — $3,500. Writing the example down is how both sides find out which one they agreed to. Try your own tiers in the tiered commission calculator.

9. Statements and questions

Promise a statement every pay period showing sales, anything taken off, each rate, bonuses and the total, and say who to ask and by when if something looks wrong. The commission statement guide shows what each line should be.

10. Changing the plan

Say how much notice is given before rates or rules change, and that changes apply to sales after the change, never to sales already made.

11. Leaving

Say how commission on sales made before someone’s last day is calculated and when it is paid. Final-pay deadlines are set by state law and can be short.

Keep the agreement and the payroll in step

An agreement only helps if pay is actually calculated the way it says. When the plan lives in one document and the arithmetic is redone by hand each month, the two drift apart. CommissionBoard runs the plan you set up — rates, tiers, product charges, bonuses — from your POS report, and shows each person the result line by line during the month. For the plan itself, start with the salon commission structure guide or how commission splits work.