The most litigated issue under the Fair Labor Standards Act (FLSA) is whether an employee is an independent contractor or not. In this article, I would like to briefly discuss the issue of whether or not dancers should be classified as independent contractors.
In the 1980's, Alan Markovitz, now owner of the world famous Flight Club and The Penthouse Club near Detroit, owned a strip club called Tycoons. The girls charged for private dances and they earned that money and were also paid an hourly wage. He did away with the hourly wage and charged the girls a small daily fee as private contractors who were given an opportunity to dance at the club. The girls initially revolted and went on strike but they eventually caved in when they saw how much money everyone could make. With that change, Markovitz revolutionzed the entire strip club industry.
For twenty years dancers enjoyed the fruit of this system. It seemed to be a win-win scenario for both club owners and dancers. However, in recent years, the argument over whether strippers should legally be considered employees or independent contractors has been fueled by several highly-publicized cases of strippers suing clubs over unpaid wages and stage fees/tip outs.
There have been several court cases involving the issue of strippers being mis-classified as independent contractors. In deciding whether the dancers are employees or independent contractors, the courts typically use an "economic reality" test, which contains the following factors:
Does the club exercise significant control over the dancers (for hours and scheduling)? Does the club dictate how long they were required to dance versus be on a break? Does the club require dancers to comply with various rules that were enforced with fines for violations?
In case after case, the courts have typically ruled with the dancers and have found the clubs to have mis-classified the dancers under the rules of FLSA. But nothing seems to change. Despite all the cases filed (spurred on my greedy lawyers in hopes of a windfall class-action case?) and either wins or settlements that favor the dancers - the result is that clubs operated under the existing paradigm.
Are the clubs in the wrong? Probably. Are some dancers un-happy? Probably? Do the MAJORITY of dancers want to be classified as employees? Probabably not. It's an interesting debate. Though the clubs likely are guilty of mis-classification of the dancers, the system currently in place seems to be working for all. Though things could change in the future.
The way dancers talk about clubs and the way clubs talk about and to dancers is the same way I talk about my employer and the way my employer talks about and to me. The clubs are misclassifying dancers because they can get away with it. As it is now some clubs fire dancers for all of the reasons that you listed and some don't. Some clubs have revenue splits for dances and some don't. The only thing that could potentially be new is sharing tips between all of the employees instead of each dancer keeping her tips, although with the dancers being required to tip out the bouncers, DJ's, house mom's, etc. they're already splitting their tips with other employees.
There would be a few huge changes if dancers were classified as employees.
Because dancers would not have to pay house fees, dancers would not risk going in to work and leaving with less money than they had when they went in because it was a slow night. Waitresses always earn something every day they go in to work while dancers are gambling every day they go into work because on a slow night a dancer will pay out more than she earns.
Because the owners wouldn't be able to charge the dancers house fees as independent contractors any more, the owners would make up for the lost money by keeping more of what customers pay for dances. Every club is different, but the end result would be the good dancers who rake in a ton of money would earn less and the poor dancers would earn more because they don't do that many dances.
Dancers would be eligible for unemployment compensation, and the UI system is stacked in favor of the unemployed. Even if you're fired from your job with cause, such as for using drugs or stealing from your employer, in many cases the employee wins the UI hearing and the employer has to pay UI to the former employee.
Dancers would be covered by workman's comp insurance. Ask the dancers on here how many times they've gotten bruised or wrenched something at work while they were on stage and then had to work for the next week with a limp or take a couple of days off because they couldn't work and you'll see what a huge deal this is. They'd be able to go to the doctor and it would be covered under workman's comp too and despite what you may hear about workman's comp being abused, if you want to recover 100%, workman's comp does not skimp one penny on your medical care because $100,000 in medical care is a lot less expensive than 20 years of being on workman's comp.
Finally, dancers would pay taxes on a significant amount of their income. Since they're tip based employees they wouldn't be reporting everything or paying taxes on everything that they earn, but they would be paying a significant amount of money in taxes which they aren't paying now.
It doesn't matter if it's better or worse for dancers to be employees as opposed to independent contractors. What matters is what the law says, and the way the laws are written most dancers should be classified as employees. If that ends up happening, there will be some pretty significant changes in the work conditions for dancers, some good and some bad.