Bare Minimum: Stripping Pay for Independent Contractors in the Share Economy

William & Mary Journal of Women and the Law, Apr 2017

My study explores a small but revealing corner of the share economy, where an individual’s private resources are bartered for limited use by others in exchange for compensation. Strip clubs create value for owners by commoditizing sexual labor. Clubs avoid employment in favor of independent contracting with dancers. They pay no wages or benefits; patrons pay dancers with fees and tips. But clubs extract entry fees from dancers who work; require them to rent dressing rooms and stage time; and compel them to share tips with DJs, emcees, house moms, bouncers, and bartenders. My research identified seventy-five federal and state court rulings on wage claims by exotic dancers. In thirty-eight cases, courts ruled that dancers were employees; only three courts ruled that dancers were independent contractors. Courts often awarded dancers minimum wages, overtime, and liquidated damages. My research relates more generally to labor in the share economy. Strip clubs epitomize a trend away from wage based employment in favor of independent contractor agreements for a transient and rootless workforce. The share economy model for work takes advantage of the poor bargaining power of individuals, while failing to pay workers minimum wages, overtime under federal and state law, employment taxes, and mandated employment benefits.

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Bare Minimum: Stripping Pay for Independent Contractors in the Share Economy

William & Mary Journal of Race Bare Minimum: Stripping Pay for Independent Contractors in the Share Economy Michael H. LeRoy 0 0 Michael H. LeRoy, Bare Minimum: Stripping Pay for Independent Contractors in the Share Economy, 23 Wm. & Mary J. Women & L. 249 (2017), https://scholarship.law.wm.edu/wmjowl/vol23/iss2/5 - MICHAEL H. LEROY* SUMMARY My study explores a small but revealing corner of the share economy, where an individual’s private resources are bartered for limited use by others in exchange for compensation. Strip clubs create value for owners by commoditizing sexual labor. Clubs avoid employment in favor of independent contracting with dancers. They pay no wages or benefits; patrons pay dancers with fees and tips. But clubs extract entry fees from dancers who work; require them to rent dressing rooms and stage time; and compel them to share tips with DJs, emcees, house moms, bouncers, and bartenders. My research identified seventy-five federal and state court rulings on wage claims by exotic dancers. In thirty-eight cases, courts ruled that dancers were employees; only three courts ruled that dancers were independent contractors. Courts often awarded dancers minimum wages, overtime, and liquidated damages. My research relates more generally to labor in the share economy. Strip clubs epitomize a trend away from wage based employment in favor of independent contractor agreements for a transient and rootless workforce. The share economy model for work takes advantage of the poor bargaining power of individuals, while failing to pay workers minimum wages, overtime under federal and state law, employment taxes, and mandated employment benefits. INTRODUCTION A. Labor in the Share Economy B. Research Overview I. THE BUSINESS MODEL FOR STRIP CLUBS A. What Is the Share Economy? B. The Business Model for Strip Clubs II. RESEARCH FINDINGS FOR DANCER LAWSUITS A. Sample of Cases B. Statistical Findings C. Fair Labor Standards Act: How Courts Applied a Six Factor Test for Employment * Professor, School of Labor and Employment Relations, and College of Law, University of Illinois at Urbana–Champaign. [Vol. 23:249 1. Degree of Control 2. Opportunity for Profit and Loss 3. Investment in Equipment or Materials 4. Degree of Skill 5. Permanence 6. Integral to the Business INTRODUCTION A. Labor in the Share Economy Uber and Ritz Cabaret—a strip club1 in downtown Baltimore— have more in common than meets the eye. Neither company employs its primary workers.2 Instead, each requires workers to sign independent contractor agreements.3 This allows the companies to avoid employment taxes, including Social Security and Medicare.4 They sidestep legal obligations for worker’s compensation, an insurance system that pays medical expenses and income support for employees who are injured on the job.5 They also shirk an employer’s duty to pay unemployment taxes.6 Because federal labor law does not apply to independent contractors, dancers are impeded from bargaining through a labor union.7 Uber and Ritz Cabaret do not pay 2017] for health benefits, either.8 My study focuses, however, on a more fundamental duty that these firms avoid in bypassing the employment relationship: federal requirements for minimum wages and overtime pay,9 and state laws that protect against wage theft.10 B. Research Overview This study is part of my ongoing research on jobs that are unlawfully structured as independent contractor relationships. My goal is to identify all federal and state cases from 2000–2015 in which workers were unlawfully denied wages and work-related reimbursements because they were misclassified as independent contractors. I measure (1) the types of jobs and industries for this work, (2) whether plaintiffs or defendants won rulings, (3) legal tests that courts applied and how these factors weighed for or against finding employment, and (4) court remedies. At this early juncture, I find that many jobs are misclassified along lines that clubs use in this study.11 Whether work involves construction, ridesharing, healthcare, or other industries, companies give people a degree of control over the time they work.12 But these jobs also inflate control-of-schedule into illusory forms of self-enterprise.13 This study explores a small but revealing corner of the share economy—the sexual labor market. I analyze and present data on seventy-five federal and state court cases involving dancers who sued their club for unpaid minimum wages and overtime, and unlawful pay deductions. Only one case had male dancers.14 Initially, I eliminated cases involving dancers from my study.15 But these cases continued to appear with conventional jobs in my research. I saw similarities in how plaintiffs—dancers and rideshare operators, for example—are deprived by contract of rights that inhere in the employment relationship.16 The commonalities in business models for strip clubs and rideshare companies are especially striking and unexp (...truncated)


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Michael H. LeRoy. Bare Minimum: Stripping Pay for Independent Contractors in the Share Economy, William & Mary Journal of Women and the Law, 2017, pp. 249, Volume 23, Issue 2,