Cleaning Business Life
Cleaning Business Life, is a weekly podcast co-hosted by Shannon Miller, founder of Klean Freaks University, and Jamie Runco, CEO of Above All Cleaning Company, based in Northern California.
This podcast is dedicated to helping cleaning business owners at every stage, from startup to scaling to 7 figures. Whether you're a new entrepreneur or an established business owner, you'll discover proven strategies, systems, and methods that will help you streamline operations, increase profitability, and grow your business.
Each episode dives deep into essential topics such as:
- Effective business systems and structures that drive growth.
- Product recommendations and tips on using the right tools for the job.
- Expert interviews with industry leaders sharing insights and success stories.
- Q&A sessions where we answer your pressing business questions.
- The **latest trends** shaping the cleaning industry today.
Tune in weekly to level up your cleaning business and stay ahead of the competition!
For additional resources, including Kim's exclusive real estate cleaning packages, visit her website at [purevergreen.com](http://purevergreen.com).
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Want to get a hold of us, please email us at cleaningbusinesslife@gmail.com
Cleaning Business Life
CBL Episode #81: Fan Mail Questions: The Hidden Traps of 1099 Compliance and NEW FTC Rulings for Your Cleaning Business
Can you imagine the chaos of misclassifying your 1099 contractors as employees? Tune in to our latest episode, where Shannon Miller and Jamie Runco from Above All Cleaning in Northern California expose the hidden traps in 1099 compliance and FTC rulings within the cleaning industry. Learn from real-life scenarios that underline the necessity of vendor agreements and the crucial role of ensuring your contractors have their own general liability insurance. We dissect the labyrinthine rules and regulations to help you elevate your standards and dodge hefty fines, all while enhancing your business professionalism.
But that's not all—ever wondered how a small oversight with a yoga instructor could balloon into a fiscal nightmare? Shannon shares a gripping cautionary tale to illustrate the perils of neglecting labor laws, particularly those surrounding non-compete clauses for high-earning executives. We break down the latest regulatory changes and offer strategic advice for navigating these rules effectively, ensuring your business stays compliant and thrives. Join us for an episode packed with essential insights and actionable advice to stay informed and protect your cleaning business from legal pitfalls. Don't miss this opportunity to fortify your business knowledge and secure long-term success!
FTC website
https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes
Up your cleaning game, join over 6000 Cleaning Business Owners most of whom are located here in the United States.
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I wonder if this is being recorded. Okay, now it says recorded, all right. So welcome everybody. It already had said this. It's being recorded. It says weird things. I'm still trying to figure it out, but my name is Shannon Miller, I'm your host of Cleaning Business Life and today I'm joined with Ms Jamie Runco, who is my co-host of Above All Cleaning in Northern California. Yay, woo Yay. Of all cleaning in Northern California, yay. And today we're going to talk.
Speaker 1:We do get fan mail and thank you everyone who sends us fan mail. We love to answer your questions and those questions. Yes, and we felt that this was correlating with the topic and was really relevant because we're seeing it a lot in the groups. And there is no name to go with this fan mail. It just says number six, eight, seven, eight. So if you are number six, eight, seven, eight, I'm guessing that has something to do with your phone number in West Palm Beach, florida. This is for you. It says drum roll please. Yep, that's a good thing about getting cleaners. And how do I inform them to get 1099? There is a process to hiring 1099s and the biggest thing that you need to do is you need to have a vendor agreement that agrees that you are going to do certain terms and conditions with the 1099. The 1099 has to carry their own insurance. That's general liability. You, as the business owner, should also carry your own general liability insurance.
Speaker 2:And why is that?
Speaker 1:You don't want to get dinged from right from it validates them more as a private entity than if they don't have insurance. I have seen it where cleaning business owners have the blanket insurance to cover their 1099s, which actually, technically, is illegal. I know that there are a few of you who will argue with me until you're blue in the face, and that's okay. I'm just talking to the rest of you who will argue with me until you're blue in the face, and that's okay. I'm just talking to the rest of you. You're going to do what you're going to do. I don't you know. I'm just here to give advice. If you don't want to take my advice, that's fine too. It's not going to hurt my feelings.
Speaker 1:But there are several of you who are very passionate, who don't want purging to happen. That's the biggest thing that happens in the cleaning industry is purging and it's moving the industry up so that we all have standards and we have professionalism and a certain amount of propriety and that we're treating each other with respect. So those types of things should happen, and that happens as our industry moves up. We were established as essential in 2020. We're actually considered in 2024 a line item on someone's household budget. We're no longer considered a luxury service. Yay.
Speaker 2:Yay, we are. It's needed, it is. It's a line item on your budget sheet. Remember this, fellas and gals ladies and gals. Sorry, my guys and gals, guys and gals, but but in doing that you also don't want to get dinged for classifying a 1099 as an actual employee. Classifying a 1099 as an actual employee meaning you know you're supplying them everything.
Speaker 2:You're driving them around, yeah, or giving them a schedule to follow you. Just, it's all good and dandy until you have somebody looking at you, like the labor board and people. These people scare me more than I would say even the IRS, wouldn't you agree?
Speaker 1:I agree, and how that usually happens is you'll just pop up on the radar and the labor board will be like oh, we got so-and-so, they're trying to collect unemployment and you weren't clear and you didn't make them sign a vendor agreement and, as far as labor board's concerned, you're going to owe them a fine. And then they're going to say I want to see everything, everything from the last three years, and you better be prompt about it, and it better be within X amount of days, and this and that have to happen. And it's like you just want to vomit because you're just like did I do something wrong? Right? Most of us unintentionally misclassify. So there's a very clear, definitive misclassification or not? So the 1099s need to carry their own insurance. That's number one and you'll have. They'll say I don't need to do it. I can't tell you how many times Jamie and I have seen something in a Facebook group where we just talked about it. Yesterday there was a vintage mint green, beautifully put out bathroom from the fifties.
Speaker 1:Some cleaner that they hired took toilet bowl cleaner all over the tub and it bleached out the final layers of the coloring of the toilet. I think that you might be able to correct it, but it will never be the same because it'll have a coating on it and that was because someone didn't know what they were doing and the person who they hired probably didn't have insurance, I'm assuming.
Speaker 2:Yeah Well, right, you got to know what you're doing. Whenever you walk into these people's houses or places of business, you have to know what uh products can go where right, and the toilet bowl cleaner doesn't go in anywhere but the toilet.
Speaker 1:Don't make me get on my soapbox if I hear it one more time so another thing to help you classify a 1099s is they have some of their own clients and you're probably going what. And my mentality is if they have some of their own clients, they have more probably going what. And my mentality is is if they have some of their own clients, they have more skin in the game to show up. And that's the whole agreement that you have with your 1099. That's why they signed paperwork says you know, these are my clients. If you wish to purchase one or if you guys want to work out a deal, I'm happy to broker that and take advantage of that finder's fee that you're going to charge.
Speaker 1:But there's ways to work around the influx of business and there are a few of you out there who are like well, I got this, this is my client and I'm not giving it up. You have to decide where the dividing line is. So they need to have their own insurance, they need to supply their own supplies, they need to drive their own vehicle, they need to feed themselves and know they don't have to. So those are the big ones. So making sure that you're clear on what that is and then pay. They should be paid higher than everybody else who is earning a wage because they are paying for their own gas.
Speaker 1:They are using their own car, they are bringing their own supplies, they are carrying their own insurance. You're paying someone 15 bucks an hour because that's all you can afford. And for those of you who are not watching, I just did the whole air quotes so that you can make sure that you're clear. Those 1099 should be making at least $30 an hour broken down at a job rate price. So when it gets really complicated. So if the job is going to take them three hours, then hypothetically speaking, that job might pay $90. At a flat rate price is what the job pays. I always go on the higher end because I'm looking to make a certain percentage off of what each job pulls in for me. So I actually might bump them up to $110 because $90 might not be worth it for someone to stop what they're doing. Come over and take your job. 90 bucks might not be worth it for someone to stop what they're doing, come over and take your job. Or I might even go a little bit higher, to 130, depending on how much I got for the job, so that they're really making good money and they're going to do a good job for you.
Speaker 1:I'm not having to do anything, I'm not showing up. All I have to do is schedule it. The scheduling system does it. After that, the credit card system does it after that I mean I'm just doing the job and does it after that. I mean, I'm just doing the job. So those are things to consider when you are deciding to pick the 1099 model, and this is a nice segue into the FTC ruling. That has happened in 2024. I felt it was valid to bring it up today and we'll move the rotation around for the podcast so that this podcast episode comes up sooner rather than later. But it's really important. That needs to be addressed because there was actually a deadline that happened just recently for the ftc ruling. So if you're not familiar with who the heck the ftc is, it's the federal trade commission, right? They're a big entity in the united states and this.
Speaker 2:this also happened, um, this, this, um. This came out april 23rd of 2024, but it went into effect august 20th. As far as the district courts are concerned, this is nationwide. This is just not in. This is a nationwide thing and I felt that this was very needed to be talked about, because we are still seeing a lot of people bringing up non-competes and there is a way around. You have to as a I go the W-2 route, so that means that I pay. You know work comp, but whenever I first started, I did have a non-compete for my W-2s that they could not, for my W-2s that they could not open up their own business after a year of leaving me my company.
Speaker 1:Right and that was standard in the industry. That's what that is and that standard has changed a lot and we want to make sure that you're aware of the change that happened on April 23rd, so you no longer want to make your W-2s. If you're cleaning techs or W-2s, sign and non-compete and if you have make sure that they are aware that this rule has gone in right and you had until September 4th of 2024, 90 days after the April date.
Speaker 1:After the April date so, and then the ending date is August 20th. For the official like you have to comply, and then September 4th was the date that you had to tell everybody if you still had W-2s who were hired under non-compete. By the way, you're no longer required and I have to give you this formal piece of paper. Can you sign it Right? So, just for compliance, you want to make sure that you are doing this, and they estimate that the final ruling ban on non-competes will lead to new business formation growing by 2.7% per year, which is a good thing for all of us, not just our industry. We always want our economy growing Because if we're not growing, then we're in trouble.
Speaker 1:And then it says it's resulting in more than 8,500 new additional businesses created each year, which is great, and the final rule is expected to result in higher earnings for workers, with estimated earnings increasing for the average worker by an additional $524 per year. It actually will be more than that, but they have to give some sort of metric for standard growth, right.
Speaker 1:And it's expected to lower healthcare costs by $194 billion over the next decade. I don't even want to go down that rabbit hole, yeah, so the final rule is expected to help drive innovation, leading an estimated average increase of 17 to 29,000 more patents each year for the next 10 years under the final rule. So we're looking to innovate in our country and part of that is to eliminate the non-competes. We're not the only industry that makes other people sign a non-compete. So if you have a W-2 and you are made to sign a non-compete, I'm making you where you are no longer obligated under the contract to fulfill your end of that contract that you sign. So make sure that you understand what that is and that you're not enforcing something that's no longer forcible.
Speaker 1:And to deal with that amendment I, in my contract bundle that I sell, I had to go in and rewrite and remove the non-compete element to the employee contract. You can still have an employee contract. To the best of my knowledge. I am not an attorney, I just. But based on what I've read and tried to educate myself, so I believe that everything I have is legal. I have an attorney who is going to look it over for me, who is familiar with labor law, but because this is so new, nothing has come out.
Speaker 2:Right, right, and we just want to. We want to get you guys one step ahead of the game and make sure that you, at least, are starting to hear that this non-compete is out there and there are alternatives. If you feel that which I alternatives, if you feel that which I, looking back on that I'm just thinking wow, I really think that's kind of a jerky thing to do honestly now prevent purging, yeah, but purging I just, especially in the cleaning industry.
Speaker 2:I feel that we are now embracing all of each other. We are competitive, but we're not Collaboration. Yeah, we definitely collaborate, but there are alternatives. If you're you know, there are some alternatives to the non-compete, and I think this is something that you should probably already be doing, which is you know your trade secret laws and having a non-disclosure agreement, right, nda, right.
Speaker 1:Right, and a lot of that too is for us to benefit. And you can still make your new client sign a contract non-compete with them, and that will help prevent the stealing of the my employees. Right, Because you invest a lot of money in training. You invest a lot of money in grooming employee safety meetings, workplace finance meetings all of these meetings. You've groomed this individual to be a wonder woman, superstar, cleaner, and then your helmet A leader. Hey, would you like to make a little extra cash on site? I know that you'll be cheaper than Jamie, so you can still make them. It still can be. You can still make your clients sign it and it's a do not purge clause, and if they decide that they want to purge the cleaning tech, they can pay you a fee, and I actually have gotten the fee before and it's $2,500.
Speaker 2:Yeah, it's about what it ends up being If you look at it. That's about how much you have invested into this person anyways, Um, you know. So, yeah, there are alternatives. Again, make sure that you are keeping up on these things. I still see a lot of misguided information that are in these groups and it's you know, Shannon, and I will just, I will fight you on this, Because it's not like a no at all, it's just we want you to be aware so that you don't get dinged because, Shannon, tell them about how you have been dinged by the labor board. They do not wait for their money. They don't. You know they're. They're way different than the IRS. They they can seize everything they can. If you own a house, they can seize it. So it's very important that you know this law, Right.
Speaker 1:Definitely it's um it. And usually how it happens is you know, you weren't clear and then someone um goes down and tries to get benefits from the state and then they go. Well, I don't have her paying into the system because they'll check Right. And my experience was with another business owner in another industry and she hired in this and I ran into her at Costco and we talked about this and she's nine months pregnant. I got my two kids in the cart. I'm like, hey, I haven't seen her. And she's like, oh, you got that special. Oh, I have to walk over there. And she's nine months pregnant. I'm like, here, take mine, I'll go back and get the other ones. So I gave her, I don't know, cookies or graham crackers I don't remember it was we were talking about. I go. How did it work out with? I don't remember this person's name? She had hired in a. She was a yoga instructor. She had hired a yoga instructor and it didn't work out.
Speaker 1:The yoga instructor said that she owed more money than what she owed because they got paid by the class instead of by an hourly wage. But it was a gray area. She didn't have it clear. So the state of Arizona stepped in and said because she went to the state and said this person's refusing to pay me and instead of being like a $300 thing, which is what she refused to pay, it ended up being a $20,000 deal. And so she brought it to her attorney and her attorney looked her straight in the face and said pay it. And she goes. It's 20 grand and he goes. If you do not pay it, the state will come after you and it'll be more than the $20,000 they want you to pay.
Speaker 1:So she had to come up with the cash to pay this employee, who was not really an employee, who worked. I think she worked two days and it was like an hour and a half and an hour and a half, so it was like three hours of pay even an hour and a half and an hour and a half, so it was like three hours of pay. The yoga instructor wanted to pay for the whole day because she'd hung out and she's like you're not obligated to stay here, you're only blah, blah, blah. And then the yoga instructor's like I did stay here, you made me stay, and so it became all over like $300, right? So instead of paying $300, she ended up having to pay the 20 grand, plus her attorney fees, to get herself out of the whole thing.
Speaker 1:So make sure that you are cautious in what you're doing so that you don't get yourself in trouble and they will take everything whatever the date is. They'll just pick a date and it's whatever is current right. So if it's May 30th, they'll want to go back three full years. They want to see everything. They want to groceries on your business card.
Speaker 2:They were like a parasite going through and if you can't see me, I am literally with my fingers. They are just everywhere, but in your business.
Speaker 2:It's very I imagine that it's very uncomfortable, I just won't even go down, I won't even. I won't even give that a thought. So I always make sure that everything is dotted T's are crossed. I do have papers everywhere, but I, you know, I do have everything signed and I also have a lot of people looking out for my best interest whenever it comes to this. I have my coach and mentor making sure that. You know I have a huge team looking out making sure did you do this? Did you do that? Team looking out making sure, did you do this? Did you do that? You know I have an accountant. She's great.
Speaker 1:Once you get bigger, you'll start having your team to help you navigate through all this Right, and it can be very confusing and there's a lot of things where you have to pause and nobody really wants to pause and do what they're doing because you know you want to make money.
Speaker 1:I totally get that. It looks like the only non-compete clause that's still in effect is, under the final rule, existing non-competes for senior executives can remain in force. So employers, however, are prohibited from entering into or enforcing new non-competes with senior executives, are prohibited from entering into or enforcing new non-competes with senior executives. So if they're already a senior executive and they're on board with your company and they're making over a certain dollar amount it says $151,164, then you can still enforce that non-compete. But anybody new who comes in as a senior executive is no longer applicable to that ruling and they can, they can, compete against you. So that is an interesting add on to the non-compete and just make sure that you're aware of what that is. So if you have a senior executive and you're pulling in that much bank, you might you know, might want to consider that no one else knew can. You can make them not sign a non-compete because they just it won't be viable.
Speaker 2:Yeah, yeah, yeah, I was reading that as well.
Speaker 2:So um right I didn't realize that it was 151,000, but, still um, there, there are people and there are cleaning companies that do, uh, have senior executives that are making that much um out there. We all see them. So, um, I'm we're pretty good friends out there with them, even though it's through social media, and you know we learn a lot from these people. And, um, just make sure that you're checking your laws. It is the most. It is boring, but you have to. You have to. That's part of doing the, that's part of doing business, right.
Speaker 1:It's part of. It's not boring when you get popped.
Speaker 2:Exactly or whenever you get that.
Speaker 2:It's boring up until that point point you're like ah, or, or you know, the eye roll of okay you, you think nobody will ever. Oh well, they wouldn't do that to me. Oh, yes, they would. That person would never do that to me and I'm, I'm here to tell you, I'm living proof that yes, they will. I've had it done to me. I even told Shannon whenever I was oh, this person will never do it to me. And she sat in the background and just you know, there's some lessons that you just have to learn the hard way and learn yourself. And I had to come back and say, guess what, shannon, she did that to me. So just know that, not everybody. They're great friends now, great employees now, but you know, anything can happen, the relationship can sour, and just you want to make sure your I's are dotted and your T's are crossed, especially whenever it comes to the FTC.
Speaker 1:Right.
Speaker 2:Especially.
Speaker 1:Pretty heavy if they come down on you and you'll end up having to shutter because they'll be over your list.
Speaker 1:So that's basically what we wanted to cover and make people aware that there are these new laws that are taking effect. As I come across things, I will often post them inside the group, the maids network. Sometimes I'll make a public post, sometimes you guys will even get it in my email. It just depends on what's going on. I believe I did send an email out saying, hey, september 4th is the final deadline. I don't remember if I did or not, or at least I made an announcement is the final deadline? I don't remember if I did or not, or at least I made an announcement. No, you did, you did. It's ultimately up to you to educate yourself, to figure out what rules are coming into effect and what rules are not, and we're seeing the whole dynamic of the workforce change. I mean, it's like from four years ago. It's entirely different.
Speaker 2:Right.
Speaker 1:So make sure that you're compliant with whatever it is, because you really don't want these entities. Once you, once you have them coming in, and then they're always there looking for things. You're just, you're on the radar Right, so you never want to be on the radar and then subsequently you don't have any issues.
Speaker 2:That just makes things nice. So thankful for for someone like you to be on it, to be able to tell all of us that you know. I don't see a lot of other people saying, hey, hey, you can't do that no more and I don't. I don't know if, um, we, a lot of people do the W-2 model. You also know how to do both sides of it, the W-2 and the 1099s. So very thankful, very, very thankful for somebody with the knowledge that you have and that you share all this knowledge, all this knowledge and I think that's a great segue to also talk about, possibly, um, your um structure scale profit cleaning Academy and the uh scholarship that you're doing.
Speaker 1:Yes, um. So for those of you who are not aware, every year um is year is my way of giving back. I sponsor 100% free scholarship for the Structure Scale and Profit Cleaning Business Academy. It is my signature course. It's absolutely free. There's no financial exchange whatsoever. It's priced at $2,300. It's actually the whole package is getting repurposed and it's going to go into a membership starting, I believe, on the 29th of this month.
Speaker 1:But that particular product will be given away to one person and it's all based on how you tell me your story. And right now. I checked it the other day there were 250 people who have applied. It's absolutely free. I'm not expecting anything, I just want to. I want you to. The only requirement is that you're in your business full-time. That's like population it could be. You can be anywhere in the United States and it has to be your full-time gig. And because I want, if you're a part-time gig, then you're not committed to doing all of the things that are necessary. And I'm not saying that you're not worthy, it's just that's what I'm looking for when I want to work with somebody to get them up and going so that they can get things moving along Right.
Speaker 1:So, that is available. You can apply for it. I'll put the form in the show notes, but it's a Google form. Yes, you have to fill out the Google form. Yes, you have to give me your name. Yes, you have to give me your name. Yes, you have to give me your email. Yes, you have to give me your phone number. Yes, and tell me a good story on why you deserve it.
Speaker 1:That's the only prerequisite, and it's it does take a lot of effort. My husband had to help me read last year and more than likely he'll have to help me read this year, because I believe we only had like 175 people.
Speaker 2:Yeah, uh, it wasn't, it wasn't this much. I am so happy to see that this is taking off on the ground, because I will tell you that I have taken the course not once, but twice, and, um, I, I've been with Shannon for about two years now and just from last year we've grown 181%. Right, it was 181% and.
Speaker 2:I'm just so blown away. I'm like I just it's really look into this scholarship and if you don't get chosen for the scholarship, I highly suggest that you go and take this course and Shannon's really easy to work with and just talk to her.
Speaker 1:So and there, is also a second scholarship for this Academy. So if you're brand new it's for all the newbies out there and you want to put structure in your business. It is a $300 scholarship for the spotless Academy and it gets you 12 months. Every month there is a brand new lesson that is put in and I believe right now there's 22 hours of content inside that course.
Speaker 1:So, just something to consider. If, if you know cause I know that things are tight with a lot of people in the economy it's again, it's reciprocity. I give a lot, I think it's important to give back. I believe I'm still the only cleaning business coach that does that. A lot of the other programs are a lot of money and I'm not saying they're not worth it. I've taken some of the higher end programs myself. I just feel that you need to have the structure with proven systems in place that work for cleaning businesses, especially house cleaning businesses. So if you have any questions about that, by all means, please reach out. You can go right to my website and that's Clean Freaksaks university being with a K. Yeah, I think that's about it.
Speaker 2:On the 1099 thing yeah, yeah, make sure we read those laws and and you know that's part of being a business owner we gotta be, uh, one step ahead of everybody else. We're the ones that are leading the ship and we want to make it really just. It's a great, great field to be in, great field to be in, and just keep up. Mine too, mine too.
Speaker 1:All right, thanks for joining us. If you guys have any questions, reach out. We always look forward to chatting with you. Take care, thanks, bye.
