"A Legal Victory For Strippers Is Bad News For Silicon Valley's '1099 Economy"
Did strippers just kill the economic boom?
"This week, a judge in New York awarded $10.8 million in damages to New York women who filed a lawsuit against the strip club they worked for, Rick's Cabaret in Midtown Manhattan, alleging that they were improperly classified as independent contractors when they were, in fact, employees.
This is bad for Silicon Valley, which relies on the "1099 economy" (named after the tax form for independent contractors).
...the 1099 economy is almost perfectly calibrated to serve the needs of fast-moving start-ups — lower costs, less liability, the ability to grow and shrink the labor pool quickly ..."
In other words, many of Silicon Valley's most novel business models rely on being able to have cheap, nimble workforces by using contract workers. It's going to be a problem for these businesses if the courts start ruling that these models are illegal
http://www.businessinsider.com/the-freel…
"This week, a judge in New York awarded $10.8 million in damages to New York women who filed a lawsuit against the strip club they worked for, Rick's Cabaret in Midtown Manhattan, alleging that they were improperly classified as independent contractors when they were, in fact, employees.
This is bad for Silicon Valley, which relies on the "1099 economy" (named after the tax form for independent contractors).
...the 1099 economy is almost perfectly calibrated to serve the needs of fast-moving start-ups — lower costs, less liability, the ability to grow and shrink the labor pool quickly ..."
In other words, many of Silicon Valley's most novel business models rely on being able to have cheap, nimble workforces by using contract workers. It's going to be a problem for these businesses if the courts start ruling that these models are illegal
http://www.businessinsider.com/the-freel…
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31 comments
What do you think, Stevie-girl? Short companies with high numbers of contractors on staff because of this?
No wunder the NASDAQ was down yesterday and the futures continued down overnight.
This is one of the best articles on our pending DOOM to date!
I bet politicians will also decide to gut the H1B program while they are at it.
That's some first rate journalism you are quoting. As always, stevie-girl!
Read more: http://www.businessinsider.com/the-freel…"
$1600/employee. Holy fuckin' shit! DOOMED!
1. The issue of whether or not strippers are properly classified as independent contractors has come up before. There was a suit 15 years ago pertaining to the San Francisco clubs.
2. California law is very aggressive, that is the burden of proof is placed on the employer. If they employer cannot prove it, then the contractor will be retroactively classified as an employee, and the employer will have to pay their contribution to Social Security withholding. Some of the things the court and the Labor Dept will look at is how many shops the contractor works for, what supplies and equipment of their own they have to buy, and how much discretion they have in how they do their work.
3. As far as start up companies, I think this is where the real error is in that article. I have no love at all for the venture capitalists. Their approach to building business is horrible.
This deals with people I have worked with:
http://www.amazon.com/Money-No-Object-Ve…
But one thing the VC's don't do is play games with the law. They are concerned about their reputations. When one of their firms goes under, as they usually do, they merge it with something else or sell it. So there is never any default on wages or debts. And these VC's don't set up firms which misuse contractor status. It is rarely used.
The kinds of start ups this article is talking about are really flakey operations, basically bull shit from the start.
SJG