
New rules for contractors have unexpected consequences for strip clubs - dsr12
https://www.sfexaminer.com/news/new-rules-for-contractors-have-unexpected-consequences-for-the-citys-strip-clubs/
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kelnos
Essentially 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.

~~~
CydeWeys
I doubt that most strip clubs will be unprofitable now. What I think is closer
to the truth is that they were previously _obscenely_ profitable, thanks in
part to exploiting dancers and evading taxes, and will now be "merely"
profitable along the same lines as any other service-based small business like
a bar or restaurant.

~~~
dominotw
> were previously obscenely profitable

How can that be. Wouldn't that simply increase the supply of strip clubs, from
more getting into something thats that profitable.

~~~
wmf
I'm going to guess that it's hard to get a license to operate a strip club in
San Francisco so it may be more of a regulatory and lobbying game.

~~~
dominotw
> hard to get a license to operate a strip club

So they are solving issue they themselves created with more laws. Heh.

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goldstone26
Reading 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.

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brandmeyer
> “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.

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crooked-v
The "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.

~~~
EdwardDiego
Yep, 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
> 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.

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WaxProlix
Law 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
Hard 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

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RcouF1uZ4gsC
> 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
I 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

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DevKoala
I 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
Health 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-...](https://battlepenguin.com/politics/returning-to-america-and-the-
unaffordable-care-act/)

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.

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kryogen1c
Look, 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

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PopeDotNinja
I 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
They're too honest about the product for it to be considered a sales job.

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Ruxbin
To 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.

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oliwarner
One 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.

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dghughes
Where 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
See the article; the cut which the clubs take, has gone up.

~~~
adrr
And also they had to pay taxes on their income now.

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newshorts
Wouldn’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.

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CydeWeys
"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.

~~~
rolltiide
But that doesn’t explain why their comp is fixed at the minimum wage of $15/hr

This article is a year old.

~~~
CydeWeys
That's not at all uncommon for jobs that make a lot of money in tips. The
minimum wage for servers is $2-something, for example.

Even more so than servers, strippers are a tip-based job.

~~~
rolltiide
I’ve heard anecdotally (from strippers wanting tips) that their tip based comp
has gone down. Like what they get to keep from dances and private rooms had
been cut in conjunction with the reclassification

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unlinked_dll
Quotes 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
I 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
The 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.

