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New rules for contractors have unexpected consequences for strip clubs
- WaxProlix 7y agoLaw of unintended consequences, maybe? California did something pretty bold, and only time will tell if it was a good idea or not. Seems like there's a lot of fallout though, so far. Anecdotally, I know a few people whose small businesses were impacted by the change; neither knew it was even an issue until one was sued by a contractor they'd been working with for a few years. I wonder what kind of due diligence the State went through when making this broad-sweeping change.
- watwut 7y agoHard to say. Is there a reason to treat adult industry as any other industry? I can see the wish for higher level of privacy, but beyond that? Apparently, there are lawsuits that precede the Uber issue: > However, as a result of the lawsuits and ongoing demands by the suing dancers and their attorneys
- deleted 7y ago[deleted]
- ken 7y agoEnforcing their own regulations? It's always been an open secret that companies love to mis-categorize workers in order to avoid paying taxes.
- CydeWeys 7y ago"This whole business will be completely ruined. 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." Sorry not sorry that you have to actually start paying taxes on your income like the rest of us. Some of these quotes are really helping to make the case for the law.
- SomeOldThrow 7y agoI think the businesses are ruined—they probably legitimately don’t make enough money to pay a living wage and the necessary benefits with their current business model. I don’t see this as a problem in the long term for the strippers—unauditable cash will still rule. And frankly, let’s start with taxing other places, this really doesn’t strike me as a place of conspicuous tax avoidance compared to, say, the board room.
- AmericanChopper 7y agoI think tax evasion was the phrase you were looking for. Just about everybody participates in tax avoidance.
- deleted 7y ago[deleted]
- gizmo686 7y agoBy "current bussiness model", do you mean current prices? I do not see anything in the bussiness model that precludes raising prices. The issue seems to be that current prices are based on the assumption of tax evasion. I have nothing against sex work, but it does not strike me as an industry worthy of tax breaks.
- SomeOldThrow 7y ago> I do not see anything in the bussiness model that precludes raising prices. I was defining the business model by success with current regulations. I refuse to speculate about market effects beyond the possibility of any change aside from the regulatory change. > I have nothing against sex work, but it does not strike me as an industry worthy of tax breaks. Yea I never voted to fund defense contracts either. Yet, those fucks are getting paid. Not much to do about it but vote and revolt.
- rolltiide 7y agoBut that doesn’t explain why their comp is fixed at the minimum wage of $15/hr This article is a year old.
- crooked-v 7y agoThe "traditional" standard here is for strippers to obviously be employees but get called contractors to evade paperwork, taxes, and required employee benefits, which is exactly the kind of situation these new standards are intended to prevent. I don't see anything "unexpected" about the result.
- LanceH 7y agoNot disagreeing, but the article mentioned the element of being an employee and getting assigned work rather than getting to pick and choose. The tax situation could be cleaned up without making them employees.
- taberiand 7y agoSounds to me like the dancers should form a union to fight against those kind of employer requirements.
- EdwardDiego 7y agoYep, it's very common. "You're an independent contractor, but if you sleep with any of our customers for money[1], we'll 'fine' you $2000, and you can't work for anyone else" [1]Prostitution is legal in my country.
- gizmo686 7y ago> if you sleep with any of our customers for money[1], we'll 'fine' you $2000 This sounds like a refreshingly constrained non poaching clause. It is quite common for independent contractors to be forbidden from establishing a direct bussiness relationship with the customer's customers.
- brandmeyer 7y ago> “The BSC-managed clubs now have matching payroll taxes, unemployment compensation, workman’s compensation, Healthy San Francisco costs, Affordable Care Insurance costs, and SF sick leave pay for several hundred new employee entertainers in addition to the hourly wage,” he wrote. Translation: "Our business was profitable only when we got to avoid following the same rules that all other employers have to follow." That goes for both the entertainers and the establishments. Sounds like this is the expected result to me. In a free and fair market, price is a genuine signal of relative scarcity. CA has removed a particular factor that skewed prices in some labor markets. The result should be a correction in those markets.
- goldstone26 7y agoReading the article, it seems like the primary complaint is that, since the business has to pay things like social security, payroll taxes, worker's comp, etc. that they then have to withhold this money before they pay the workers, rather than have the workers withhold this themselves? It sounds a lot more like the complaints are "I was making $X before because I was underreporting my income, but now that the business is on the hook for all this, I'm being forced to comply and am finding that the work isn't profitable enough anymore". Which translates to me as everyone else, who was paying into all these public tax pools, was essentially subsidizing the dancers. I guess you could argue that some of the stuff, like workman's comp, some people might want to just pocket the money that otherwise would've gone to insuring the risk of being injured on the job. Which I think is maybe irresponsible, since otherwise the burden just ends up getting shifted, again, to the general public (worker injured without worker's comp then ends up on food stamps, or ends up getting their medical debt written off, etc). So we should probably require people to directly pay into these things, like we require people to maintain liability auto insurance. And I suppose you could also say that maybe the businesses are taking the opportunity to pocket some extra profit, but hopefully the invisible hand of the free market would compete that back down as employees and customers move around based on new pricing/comp.
- unlinked_dll 7y agoQuotes from Darla: > "This whole business will be completely ruined. 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" >“Not one of those girls had a check for two weeks over $300. There was a lot of upset. A lot of girls packed up to leave that night. I was one of those girls,” Darla said. 1. Pay your taxes like everyone else. 2. Form your own LLC to contract talent out, call it whatever you like and no one is going to look at your pay stub to know what you do 3. The reason the performers had poor pay was because the club owner was paying them poorly. Ask for more money, because clearly the clubs are losing it by not paying their employees appropriately. Weirdly enough, this regulation seems like it should spur some classic market capitalism in the strip club business. It appears that the labor is in short supply and demand is rising, so you'd think they'd ask for more than minimum wage!
- rolltiide 7y agoI really wonder what is going on here - I think any salary negotiations failed because the dancers are much more fungible than they believed The clubs set the pay at the base minimum of $15/hr and dancers I talked to said the tipping system has also been upended. So a lot of dancers left and BSC has a regional monopoly. I dont really hear any discussion about what happened when asking for a higher salary. Looks like different women applied and got in. Maybe talented dancers left but good enough ones replaced them, customers aren’t that discerning even if the prior dancers were more entertaining.
- rossdavidh 7y agoThe fact that 12/14 strip clubs in the area are owned by one business, suggests that we don't have a completely freely operating labor market, here.
- kelnos 7y agoEssentially what's happening is that now the club owners have to pay a bunch of taxes they managed to avoid paying before. The dancers themselves were likely not paying as much in taxes as they were supposed to, but now, with paycheck withholding, they're probably paying more in taxes than they used to. The clubs, in order to compensate for all the "new" taxes, are only paying minimum wage, and are taking larger cuts of private dance fees from the dancers than they were before, and are in some cases tacking on new fees dancers have to pay, like "private room rental". Dancers might be getting better benefits under the new rules (health insurance, sick days), but might not, since some of these benefits require minimum weekly hours worked that the dancers mostly don't meet. Dancers are also feeling pressure to be less choosy about what things they're willing to do for different customers, since "it's their job". Really what it boils down to is that these are not sustainable businesses at the prices they currently charge customers, unless they also avoid paying a bunch of taxes. If they want to keep their dancers from quitting, they'll likely have to raise prices enough to get a similar amount of cash into the hands of their dancers, while also meeting their tax obligations. Not sure if that increase in cost will decrease demand to the point where it just won't work.
- AmericanChopper 7y ago> Really what it boils down to is that these are not sustainable businesses at the prices they currently charge customers That’s not the most obvious take away imo. I’d say it’s obvious that the strippers were doing a fair bit of tax evasion, but having known a few strippers, a successful stripper would still be making good money even with meeting all their tax obligations. The issue the clubs now face is that they can’t properly cover the risks of paying salaries to employees who’s revenue is entirely tip based. It’s really just a completely predictable outcome of a government trying to protect people from their own decisions with regulation. As a contractor myself I dread the day the government finally gets around to saving me from the working arrangement that I have benefitted so greatly from adopting.
- djsumdog 7y agoIf these places weren't filing 1099s before now, I highly doubt many of these workers were meeting tax obligations.
- dghughes 7y agoWhere did all the money go? If the dancers made hundreds of dollars as independent contractors wouldn't it have been tips from customers? Wouldn't the dancers still get the same amount but now also $15/hour plus benefits?
- rossdavidh 7y agoSee the article; the cut which the clubs take, has gone up.
- adrr 7y agoAnd also they had to pay taxes on their income now.
- briffle 7y agoI think the point of the article was that they used to get hundreds of dollars in CASH. they then had some fees they had to pay to the club, etc.. and they were contractors, so they got a 1099 for the transactions the club had on its record. Now that they need to pay a wage, ALL cash comes to the club, and then they get a percentage of it back as commissions. This means ALL of the cash is now accounted for, making their tax liability much, much higher, because its actually getting reported .
- SolarNet 7y agoThose benefits have to come from somewhere. As do the social security and unemployment contributions.
- RcouF1uZ4gsC 7y ago> Some dancers also feared being classified as employees would mean not being able to pick and choose which customers to serve. > “I think they should control their own sexuality, they should control their own bodies,” he said. “The difference there being, of course, if you’re an employee, you don’t have a choice who you perform for, as an independent contractor you get to choose how you perform, whom you perform for, and what level you’re comfortable at.” Is a stripper allowed to discriminate on protected characteristics? Can she say that she doesn’t want to strip for Asians, for example? Or will she run afoul of the anti-discrimination laws?
- xhgdvjky 7y agoI am not an expert but I think they officially offer very basic services and anything extra is at the dancer's discretion. but since nothing extra is officially offered, it's hard to make claims about it
- GhettoMaestro 7y agoI've seen strippers refuse to give black guys lap dances. The black guys got pissed and left.
- newshorts 7y agoWouldn’t economics dictate the lower supply of dancers be paid more money? Sounds like the clubs will need to raise those wages a bit. Also, the dancer can now unionize which means they can bargain for fairer pay. This whole piece comes off as a victim plea from the clubs’ owners who’ve been skimming dancers. Time to pony up fellas.
- kryogen1c 7y agoLook, i get the "sorry not sorry welcome to life like the rest of us" attitude. its true - but there is more truth. certainly there are skeezy strip joints that take advantage of women without options and do more harm than good, but others could have been a way out. we just locked all the parachutes because some (probably most) people were joyriding with them, but this does greater than zero harm. _some_ people needed those parachutes and couldve changed their life. im not saying this change is wrong. if you kill your enemy you would kill him again given the chance, but he was still someones son. something good was lost here. edited a half dozen times before any replies because my brain is mush
- DevKoala 7y agoI feel there is a strong argument to decouple social security and benefits from employment; the current legislation feels like a bad model design. I am confident that when it was first conceived, people sought to do well for individuals. Now, a month doesn't go by without a similar dispute affecting a new industry. The argument is always between individuals that want to become employees, and individuals that want to stay as contractors. It is a shame that among our political candidate options nobody is really rethinking the system with an engineering mindset. To even begin to grasp the current model and its implications feels like jumping into a legacy project without hope, and that isn't right. It should be simpler.
- djsumdog 7y agoHealth insurance is still hopelessly broken. A "gig economy" cannot work with such fundamentally broken services. I wrote about this a while back, having both worked in health insurance and having lived in other countries: https://battlepenguin.com/politics/returning-to-america-and-the-unaffordable-care-act/ https://battlepenguin.com/politics/returning-to-america-and-... I do not like the private model at all, but at a minimum, I agree with you and I think the ACA would have only worked if it forced employers to give employees vouchers to then have everyone buy insurance from a common marketplace. Obama's promise that people could keep their existing insurance was a terrible idea. It does keep people in America perpetually working. No one can afford to really take time off for themselves even if they have the savings, because if they're not working enough hours to get health care and get sick, that's it. You're fucked. You have to use that other American Healthcare site: Gofundme.
- PopeDotNinja 7y agoI wonder if strippers could be classified as sales people. There are plenty of companies that pay sales people on 100% commission. If saying "hi honey, want a dance?" isn't sales, I don't know what is. It's been a long time since I worked in sales, so I'm not sure if this would work.
- tdfx 7y agoThey're too honest about the product for it to be considered a sales job.
- Ruxbin 7y agoTo my understanding strip clubs got looped into this because their business and employees were classified much differently than your typical business. They aren’t open 24x7 and overwhelming majority of girls work part-time - that’s it. The problem you have is with companies like Uber and other who have for nearly decades have abused contract work but strippers were classified as the same. It’s too bad they got lumped and really shouldn’t have been but we’ve had enough major corporations screwing the middle class evading taxes.
- oliwarner 7y agoOne stand out quote: > 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 I can't imagine why a government might have a problem with that. Starting to think cash-in-hand workers were the target all along.