Gift Certificate Dilemma

[Old Folkie]

I am sure this has been discussed before, but I can't find it, so I apologize if this topic is redundant.....

I have been working as an Independent Contractor for a local salon/spa for 18 months (since they opened for business). The policy is that the salon will sell GC for services, including the IC services, (such as massage therapy and reflexology), and then we get reimbursed once the gift certificate is redeemed. The GC's have an expiration date of 1 year, so while the salon owner gets all the money up front, we have to wait on the money until the service is rendered (which can be up to 1 year later). The problem is that some GC are never redeemed, and so the salon owner is pocketing all the money. She stated that she keeps track of the GC's sold, and that she will 'give us a cut' of any GC's that were not redeemed, but after 18 months, I have never seen one dime. I know for a fact that there are GC's out there that have never been redeemed, and yet she had never mentioned it until I asked this past week.

After discussing it with the Reflexologist (the only other IC), we both feel that any money that comes in for GC's sold for our services should be given to us at the time of sale. We both agree that we should pay the salon owner her booth rent off the top, but that the owner should not have the right to pocket that money for herself. If the GC's are specifically sold for our services, we feel that we should be entitled to that money.

Neither of us have written contracts, and the terms of GC sales were never discussed until recently. This was because the owner is a 'friend', and no one ever felt the need to have a written contract. YES, I know.....live and learn I suppose. Can anyone offer suggestions or insights on this situation? What is the proper way to handle GC's in an IC situation?

Any help would be much appreciated! Thanks!

 

[flames]

please keep in mind that the salon owner's name is on the lease. her personal credit is at stake... this is her business. she's paying the power bill, the gas and water, she's paying the marketing, advertising, she works probably 4x as much as you and the other ICs do - she decorated the place, she is personally responsible for the existence of the business. whether the business makes it or not, she is responsible. and if you leave tomorrow and the g/c is redeemed in april and she's already paid you - how is she going to pay the person who has taken your place? she will quickly go out of business if she's paying two people to do one service.

i've been on both sides. i've been the employee/ic, and now i'm the business owner. and yes, when people purchase g/cs, the $ goes into the business account. period.

my name is on the lease. my children's home is at stake - i have taken the risk to have my business. and yes, the money for unredeemed gift certificates goes to pay on bills that the business has incurred. and if the emp's don't like it they can open their own business - like i did.

 

[pit lover]

Hear, hear!

Well articulated.

 

[CHiL0Sa]

Thank you for the honest input. I do see your point, and while I appreciate the fact that the owner has many things to take care of and that she works hard, I still don't feel that it is entirely fair. For me, it is the idea (intention) that someone was paying for my services, not her electric bills.
Furthermore, I too have a family to feed, and I don't buy into the sob story of just because she is an owner, that she is entitled to it. It was my understanding that is why I pay booth rent......for my share of all the responsibility that she bears and the bills she pays?
Don't misunderstand, I do completely see the dilemma of getting stuck with honoring the GC's if I were to leave. For the record, I would have the decency to honor (or repay to the owner) any GC"s sold if I were to decide that I no longer wanted to stay there. I am an honest person, and only ask for the same consideration in return.
Again, thank you for your candid view. I think it is wonderful that you were able to become an owner and do things your way even (if someone else doesn't like it.) I will take your opinion and consider it heavily. Your sarcasm, however, I can do without.

 

[Autumn]

I have never heard of an IC getting paid up front on gift certificates. It makes more sense to me that it would go to the business account and then be paid out once the massage session has occured.

Currently I do a little part time IC work at a massage studio. They pay me on gift certs when the service is performed. Most of these gift certs were issued before I joined this studio. I would never expect to receive payment at the time of sale.

 

[TheOne]

Didn't see any sarcasm, just good commonsense. Gift certs sold by an establishment are expected to be redeemed at the establishment. If you leave, are you going to personally contact each and every person who bought (and hasn't used) the gift certificates to offer them the option of exchanging them for your new place, or getting a refund? Or would you wait until it comes up? And how would that work with your non-compete, if you have one?

If the salon sells a GC for a service, and the recipient wants to use that GC for something else of equal value, does the salon honor that? Would/could you? Do you market the GCs or does she?

I also have never heard of an IC getting paid upfront on GCs. I'm sure there are people out there that do it, but as a business owner I would advise against it, and not just because I want to "pocket the money for myself." I would advise against it because it is my name, and my risk on the GC, and I'm going to have the flexibility to honor it the way I see fit, regardless of ICs who move on to other work situations.

If you made that request of me, the answer would be "no." full stop.

 

[svengali88]

Thanks for your insight. I have never worked as an IC before, and I wasn't sure how these situations are 'typically' handled. It's good to hear from others who work in similar circumstances and see how they do it.

 

[Eric Davidson]

Thank you for the honest input. I do see your point, and while I appreciate the fact that the owner has many things to take care of and that she works hard, I still don't feel that it is entirely fair. For me, it is the idea (intention) that someone was paying for my services, not her electric bills.
Furthermore, I too have a family to feed, and I don't buy into the sob story of just because she is an owner, that she is entitled to it. It was my understanding that is why I pay booth rent......for my share of all the responsibility that she bears and the bills she pays?
Don't misunderstand, I do completely see the dilemma of getting stuck with honoring the GC's if I were to leave. For the record, I would have the decency to honor (or repay to the owner) any GC"s sold if I were to decide that I no longer wanted to stay there. I am an honest person, and only ask for the same consideration in return.
Again, thank you for your candid view. I think it is wonderful that you were able to become an owner and do things your way even (if someone else doesn't like it.) I will take your opinion and consider it heavily. Your sarcasm, however, I can do without.

i certainly wasn't trying to give you sarcasm or a "sob story" - i was trying to let you see it from an owner's point of view. as the owner, SHE is the stable factor - not a massage therapist. keep in mind, that if it weren't for her electric bills, responsibility that she bears and bills she pays, you might not be discussing this issue at all.

 

[Beastly]

That situation would be an accounting nightmare.

I have been an IC too so I understand where you come from. However, and this is my BIG beef with these salons hiring IC's instead of employee's, the lines get blurry.

Regardless, unless you personally take the money for GC's, then I agree that the salon is not responsible to pay you for unused GC's. If you leave the salon tomorrow, the business will replace you and still redeem the certificates. I would bet that the certifcates are sold to be used at the salon, not to be used for you, who happens to work at the salon.

Also, there are state laws to contend with. Well, maybe.... I don't know where you live.

 

[psymon]

Thank you all again for setting me straight. I can definitely see the purpose in why it is the way that it is. It's nice to know that there are others who have been on both sides, and can share their experiences so the rest of us can learn from them.

i certainly wasn't trying to give you sarcasm or a "sob story" - i was trying to let you see it from an owner's point of view. as the owner, SHE is the stable factor - not a massage therapist. keep in mind, that if it weren't for her electric bills, responsibility that she bears and bills she pays, you might not be discussing this issue at all.

I apologize if I seemed defensive or mistook your advice for being sarcastic. Sometimes when I think I am justified, I have trouble seeing the other side of things. I really do appreciate your insight though. I think my attitude about this stems from other bigger issues I have with the salon I work with, and I was hoping this would be one way that I could effectively assert myself. :?

Along the same lines.......how do you all handle sales tax and GC sales? If someone comes in to buy a GC for a 1-hr. massage, do you charge them the fee + the sales tax at that time? Or do you charge them just the 1-hr. fee, and then take sales tax out of that?

 

[Mz Black]

Whose name is on the GC? Is it yours or the salon's? And whose phone number does it list?
I rented from a tanning salon a few years ago, and before renting out to me they had their own MT's so they had outstanding massage GC's. Those GC's had the salon's phone number and name. When I rented from them, I had my own GC's that had my name, phone number and it stated that I am located at the XYZ tanning salon. So there were 2 "sets" of GC's going around.
If their "old" GC came in, I would get paid at that time. It was "their" sale and "their" client. If I left and they rented to another MT, they would have her/him do the massage and get paid.
When the receptionist sold one of my GC's, I would get the money right away. Since the GC had my information, the client would have to contact me, not the salon to redeem the GC. They would be able to get a massage from me even if I went elsewhere.
It was not the best place to rent but this arrangement was fair, I did not complain.
Seems like your salon owner is right - IMO. Appears it's her business, she makes a sale and then when the client calls, she "subcontracts" you to perform the massage. If you were to leave, there would have to be another MT to give the massage. And the clients would not have to track you down to get their massage if you were paid at the time of sale. And the owner sells the GC's to get clients to come to her place. So this arrangement seems fair to me.
I am a one person operation but I share space with other MT's. I sell GC's for couples massage and then I pay the other MT when the clients book. I don't pay at the time of sale. I did it once and it was the first and last time I did it. I was worrying that the other MT would leave and just keep the money and then I would have to pay someone else to do that massage with me.

 

[Danii]

Whose name is on the GC? Is it yours or the salon's? And whose phone number does it list?
I rented from a tanning salon a few years ago, and before renting out to me they had their own MT's so they had outstanding massage GC's. Those GC's had the salon's phone number and name. When I rented from them, I had my own GC's that had my name, phone number and it stated that I am located at the XYZ tanning salon. So there were 2 "sets" of GC's going around.
If their "old" GC came in, I would get paid at that time. It was "their" sale and "their" client. If I left and they rented to another MT, they would have her/him do the massage and get paid.
When the receptionist sold one of my GC's, I would get the money right away. Since the GC had my information, the client would have to contact me, not the salon to redeem the GC. They would be able to get a massage from me even if I went elsewhere.
It was not the best place to rent but this arrangement was fair, I did not complain.
Seems like your salon owner is right - IMO. Appears it's her business, she makes a sale and then when the client calls, she "subcontracts" you to perform the massage. If you were to leave, there would have to be another MT to give the massage. And the clients would not have to track you down to get their massage if you were paid at the time of sale. And the owner sells the GC's to get clients to come to her place. So this arrangement seems fair to me.
I am a one person operation but I share space with other MT's. I sell GC's for couples massage and then I pay the other MT when the clients book. I don't pay at the time of sale. I did it once and it was the first and last time I did it. I was worrying that the other MT would leave and just keep the money and then I would have to pay someone else to do that massage with me.

I rent from a tanning salon and what you posted above is exactly how we take care of it as well. The owner has his record book and I have mine. When a GC purchased from the Salon is honored, I date it in my book and give him the certificate. When he pays me, I highlight it in my book and he does the same in his. The verbal agreement was that he would pay me for any unredeemed certificates after 6 mos. There were only 9 GC's not honored last year, and since he's been so good about not going up on my rent from the initial start up until I got on my feet, I've left it alone. I can be smart sometimes. lol

 

[TillieDillie]

Lucky you that he was going to pay you for unredeemed GC's!
The owner of "my" tanning salon wanted to charge me $5 for every load of laundry! Cheapskate.
After I moved out I got a call from a man who was holding their old, expired GC. He told me that the salon (their corporate office) gave him my name and told him to tell me to give him the massage and THEN they would pay me back half. At which point I said no thanks. They did not rent my room out and didn't have another MT.

 

[maran subramaniam]

Lucky you that he was going to pay you for unredeemed GC's!
The owner of "my" tanning salon wanted to charge me $5 for every load of laundry! Cheapskate.
After I moved out I got a call from a man who was holding their old, expired GC. He told me that the salon (their corporate office) gave him my name and told him to tell me to give him the massage and THEN they would pay me back half. At which point I said no thanks. They did not rent my room out and didn't have another MT.

I don't blame you for not doing the massage either.

I do my own laundry and we work well together on the marketing. I know I am lucky. I thank my lucky stars every day that I landed where I did.

 

[Tshilidzi]

Gift Certificate Dilemma

I have the same dilemma as jjweb. Things to note:
1) My state DOES NOT have an expiration date statute
2) I am an independent contractor who has a perceneforum.xxxe split agreement
3) The gift certificates are generic and do not have the salon information on it
4) Gift certificates in question are ones that were specifically noted as "massage"

I get paid when the massage is rendered -- this makes sense. However, the contention are the ones that have "expired" -- we had agreed on a 6-month expiration date.

From this thread, it looks like it goes both ways. What are the arguments FOR receiving compensation for expired massage gift certificates?

 

[phoenix]

Gift Certificate Dilemma

What are the arguments FOR receiving compensation for expired massage gift certificates?

Just a sense of entitlement. Do you get paid for the appointments you DON"T DO on any given day?

ICs get paid when they work, period. Until you perform the work, you are owed nothing and entitled to even less. Don't do the work, you don't get paid.

FYi - the recent Credit Card Bill creates a minimum 5 year expiration window on all GCs Whomever collects the $$ must carry the liability on their books for a minimum of 5 years, so no one is pocketing anything. AT the end of the 5 years -- or your state's period, whichever is longer -- your state's escheat laws kick in, which often requires the GC's funds being turned over to the State's unclaimed property division.

The GC may not have any name on it, but the client has a receipt indicating who received the funds in exchange for the promise of the future service for that value.

 

[Patient Paws]

Gift Certificate Dilemma

I'm an IC, never an owner, but our policy is, we get the money when we do the work and I am fine with that. I can't imagine the nightmare it would be otherwise. The buyer may choose a package or service for the recipient but basically it's still only a gc for the amount sold and they are free to use it on any service or product we sell. We've had wives buy a package for husbands that includes a gent's mani and pedi and when he comes in, he doesn't want his feet worked on, so opts instead for a balance on his gc so that he can come back again for another massage. So in the case of getting paid when the gc is sold, the nail tech would have to cough back up the money she was given 3 months ago when the gc was sold, and then who would hold it until he actually comes back in for his 2nd massage? We have people that switch hour massage to half hour facial and half hour massage. I don't want my coworkers having to try to find money to pay me my half, considering they've probably already spent it. What if someone quits? Or is sick that day and someone else does the massage? I can't imagine the amount of haggling and hard feelings it would create. And I myself wouldn't want the feeling of knowing that I might have to pay someone else money I'd already received if for some reason, they end up doing the massage.

I don't buy the gift cards or pay the lease on the machine that activates them, I don't pay the electric that runs the machine or the phone line it's attached to, I don't have a contract with them. The owner does, and it's her right to set the policy which, in pretty much every place I've ever heard of, you get the money when you do the work.

EDA: When we had gift certificates, we had a 1 year expiration date on them. But occasionally we'd get someone that had misplaced it and found it after. Seems like every year around Christmas, we get one or two people that put them away in a Christmas box and just found it when they got the tree down from the attic. We never refuse to honor them. It makes for goodwill in the client's eyes.

 

[Benjamin]

Gift Certificate Dilemma

What would happen if the client decided to use the GC for another services and you have already been paid? I highly doubt the owner would tell a new potential or even a regular client that can't use the money towards product for example