Mary Kay Inc. just released a new agreement for beauty consultants, and it’s interesting. The agreement has been largely the same for decades, with small updates here and there. This new agreement, however, makes some big changes to how MK does business with its representatives. It is essentially a complete rewrite that seems designed to strengthen Mary Kay’s position on independent contractor status, reduce legal risk, and address modern issues like social media, earnings claims, privacy, arbitration, and third-party software.

Let’s talk about some of the biggest changes. Right out of the gates, Mary Kay changes how they refer to consultants. This used to be an “Independent Beauty Consultant Agreement.” Now it’s a “Purchase and Sale Agreement.” The old agreement simply said consultants were independent contractors. The new agreement repeatedly emphasizes that consultants are independent purchasers and resellers, not people performing services for Mary Kay. It now states things like:

• you operate an independent resale business
• you determine when, where, and how you sell
• Mary Kay does not set work hours, schedules, quotas, or minimum activity
• meetings and training are optional
• recruiting is optional
• Mary Kay does not control your methods of operating your business

Mary Kay also makes sure to say directly: “This is not an employment opportunity.” That language did not exist in the prior agreement. To ensure that your status as an independent business owner and not an employee, the agreement specifically says consultants control pricing, timing, location, and business methods. It also says that Mary Kay doesn’t require attendance at meetings, doesn’t require recruiting, doesn’t require use of company tools, and allows third-party tools to be used.

As always, Mary Kay has consultants agree that they will only purchase products from the company. Did you know that selling between consultants and directors is prohibited? Yes, doing so has always been a violation of your agreement, but people do it anyway.

One new provision that has sales directors up in arms is that the agreement prohibits sharing of InTouch or consultant accounts with third parties. This includes people and apps. So a director can’t have her assistant access her Mary Kay accounts? She can’t use any sort of app to gather unit information from the director’s account to assemble a newsletter, webpage, or promotional item?

Another interesting part is the reference to selling for other companies. Most people believed that representing other MLMs was prohibited in some way. It wasn’t. It simply wasn’t mentioned in the old agreement. It was more social pressure from directors and consultants that stopped women from representing other companies… You were told that you had to be 100% MK if you wanted to be successful. The new agreement comes right out and says consultants can work with other companies.

The new agreement speaks a lot more about earnings claims. The old agreement never specifically mentioned earnings claims, it just generally said that consultants should be truthful about MK products. (Notice it didn’t even say that you had to be truthful about the “opportunity.”) The new agreement specifically prohibits improper earnings claims, lifestyle claims, unsubstantiated income claims, presenting Mary Kay as a job, fake reviews, incentivized reviews, and suppressing reviews.

There is new language discouraging inventory loading.  “Neither you, nor your Team, should purchase Products you don’t reasonably intend to resell or use to generate commissions. No commissions are paid solely for recruiting or Team building.” (We’re not a pyramid scheme!!!!)  I guess Mary Kay is focusing on the plausible deniability… “But we told them not to order things they couldn’t sell.” (All the while pushing contests and promotions that the company KNOWS will get consultants to over-order products.)

As always, anyone becoming a consultant agrees not only to abide by this version of the contract, but to be bound by future revisions to the contract. This isn’t how it works in normal businesses. In normal businesses, two parties agree on terms of a contract. One party can’t just change the contract and force the other side to be bound by it. But MLM is different, and MK has all the power. You, consultant, have none. If Mary Kay wants changes, they make them, and you can take them or leave them.

A huge change that should not be ignored is the arbitration clause. The old agreement had nothing about arbitration. Now, if you have a dispute with Mary Kay, you have given up the right to take the company to court, and you instead have to go through binding arbitration. Arbitration benefits the company that wrote the contract, not the consultant. You give up your right to ever be heard by a judge or jury, and instead agree to have your claims handled in secret through the arbitration process. Courts are public, arbitration is private.

In summary, the biggest changes in this new agreement seem designed to:

• Strengthen Mary Kay’s argument that consultants are independent businesses rather than employees.
• Add modern rules for social media, online reviews, and privacy.
• Give Mary Kay more flexibility to change operational rules without rewriting the agreement.
• Increase protections for company systems, trademarks, and data.
• Greatly reduce litigation risk through mandatory arbitration and class action waivers.

Do you think this new agreement will have any REAL impact on consultants or directors? Will it impact recruiting in any way?