Independent Contractor Court Ruling Hits Strippers in Paycheck

SAN FRANCISCO—A ruling in April of last year handed down by the California Supreme Court about the way a delivery service company classified its employees appears at first glance to have nothing to do with the adult entertainment industry, but now, eight months later, the ruling in Dynamex Operations West v. Superior Court of Los Angeles is having a major impact on California’s strip clubs and causing an “exodus” of strippers, according to a report this week in The San Francisco Examiner.  The ruling in the case involved Dynamex, a delivery firm, which was accused of improperly classifying its employees as “independent contractors” in order to get out of paying Social Security and unemployment taxes, worker’s compensation, and other requirements for employees. Classifying workers as “employees” rather than independent contractors is estimated to cost employers between 20 and 30 percent more per worker, according to a report by The New York Times. But in California, where upwards of 15 percent of workers are believed to take part in the “gig economy”—that is, working as independent contractors on a temporary, freelance basis—the ruling marked a massive shift, as the court handed down a new, stricter definition of “independent contractor,” forcing large numbers of gig workers to become company employees, or quit. While the ruling caused confusion for workers in a wide variety of fields—perhaps most notably for drivers with rideshare companies such as Uber and Lyft—one group of workers was hit especially hard: Strippers. Dancers who, according to Examiner reporters Laura Waxmann and Michael Toren, “were used to walking out of the club’s doors with cash each night—often hundreds of dollars—after their shifts ended” suddenly found themselves receiving paychecks, with withholding taxes and other deductions subtracted. But even more importantly, the checks had their real names on them. “This whole business will be completely ruined,” said “Darla,” a dancer who recently quit work at a San Francisco club, in the Examiner report. “The whole point about being a stripper is you go in, get fast cash, no one knows how you’re getting it, it’s not documented and it’s not taken from you.” The history of whether dancers are independent contractors or employees has long been the subject of litigation in virtually every state in the country, with most such lawsuits being decided on a case-by-case basis—but the California ruling may be the only statewide decision on the topic. The strip club chain BSC Management, which owns 10 of the 12 strip clubs in San Francisco, told The Examiner that about 200 dancers have quit work at the chain’s establishments since they were reclassified as “employees” and began receiving an hourly wage plus commissions in a paycheck with “matching payroll taxes, unemployment compensation, workman’s compensation, Healthy San Francisco costs, Affordable Care Insurance costs, and sick leave pay” deducted, according to BSC’s marketing manager Axel Sang. “A substantial reduction in the number of entertainers performing as well as the substantial increased payroll and other costs makes it very difficult to generate profits,” Sang told Waxmann and Toren.  “I can go work at McDonald’s for $15 an hour, and not take off my clothes, and not put up with the crap I put up with as a dancer,” the ex-dancer “Darla” told the newspaper. While in theory, dancers could qualify for health insurance under the new rules, in practice, according to the report, few dancers are able to work sufficient hours to qualify as “full time,” making them ineligible for insurance. FOTO:FORTEPAN/Nagy Gyula/Wikimedia Commons