The Turning Tide

by Curtis L. Isom, Founder / Editor-In-Chief 

(updated 10/9/2015)

Over last few years there has been a lot of talk about whether or not entertainers in a gentlemen’s club should be classified as employees.  So before I share my views on this issue, I suggest you read some of the following articles:

There are also two articles about the Sapphire Club in Las Vegas, Nevada.  The first is from the 2010 Las Vegas Sun: http://m.lvsun.com/news/2010/oct/02/gentlemens-club-files-counterclaim-against-dancers   This one is frequently used by some club owners and managers to intimidate dancers against filing or joining a lawsuit against a club.  What they don’t share is that argument is now mute when the Nevada Supreme Court declared dancers employees according to this 2014 AOL article: http://www.aol.com/article/2014/10/30/nevada-court-says-strip-club-dancers-are-employees/20986652/

I guess some industry people don’t keep up on CURRENT events.

Now even though some cases may be appealed, I don’t see them winning and this industry is due for a much needed change.  Despite what some club owners, managers, and djs may say or think, in the long run entertainers ARE employees and not independent contractors.  And the courts are seeing that the term “independent contractor” is being misapplied in this industry by most club owners/managers.  When talking about “independent contractors”, the example I hear used the most by club owners and managers is of the hairdresser renting a chair from a salon.  Nice example, but what they omit is that when a hairdresser rents a chair in a salon, the hairdresser is responsible for their own work schedule.  If they miss work, they are not fined because salons usually rents the chair space for a monthly flat rate.  You don’t work, you don’t make money.  Simple as that.

So what exactly is an “independent contractor”?  When it comes to money and “independent contractors”, the place to go is the IRS.  According to the IRS website, the definition of an Independent Contractor states: “The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

To clarify this point, think about adding onto your house.  You hire an independent contractor to come and build your addition.  The blueprints are already done, they just need to be brought to life by the contractor.  You have very little to say in how they go about building your addition just as long as it’s built.  And when they are finished, you pay what you owe the contractor for the work they performed, NOT you getting paid by the contractor to add onto your house.

I know there are some that will argue against this example, but in talking with friends from the IRS, this example is spot on.

The other IRS fact is if you are truly using independent contractors, then you should be sending out 1099’s at the end of your tax year.  1099’s are documents that show how much money a business pays out to any independent contractors.  And since those in the industry know there aren’t any clubs in the industry that produces 1099’s for it’s house entertainers, the “house dancers are independent contractors” argument falls dead on its face.

In the world of gentlemen clubs, the only true independent contractor is a traveling Feature Entertainer.  They contract with individual clubs, usually through an agency, to come in and do shows (work) and get paid for doing so.  House entertainers DO NOT fit the “independent contractor” status because they aren’t paid to come in and work, they have to pay the club to work there.  Therefore, in the world of gentlemen clubs, things like work schedules, house fees/fines, etc…. are excluded from this “independent contractor” status so widely used.  Again, from the court cases presented at the beginning, the courts are recognizing this misapplication as well and are bringing about the necessary corrections.  Corrections I can tell you I saw coming a LONG time ago.

I started going to strip clubs after turning 21 and began learning how the industry worked.  After obtaining my BBA in 1990, I wondered about the obvious misclassification of female entertainers especially after making friends with numerous entertainers who further explained how things worked.  After that point, I thought there might be a better business model to run a gentlemen’s club and treat the ladies with the proper respect they deserved.

The Very Simple Truth is that the strip club industry exist because women, and some men, are willing to get up on stage and disrobe for the public.  To believe otherwise is pure nonsense.  If you want to say I’m “pro-dancer” then you must realize that being “pro-dancer” is actually “pro-business” because I’m focusing on and wanting to help improve the conditions for those on which this industry is based.  Why think the reason that your club exists should be treated differently than the other employees?  I could never understand why entertainers where required to pay “house fees” and lose money they worked to earn.  Another thing about paying “house fees”  – If there are no customers in the club, the entertainers are still required to pay house fees?  Why?  If you’re the club /owner or manager and you can’t get customers in your club because you don’t advertise, your club looks like a dump, your staff is unprofessional, etc…. why is that the entertainers fault and they should have to pay for your mistakes?  Yes, the entertainers are what customer are there for, but this is a BUSINESS and it’s the club owner’s and manager’s RESPONSIBILITY to find ways of bringing in customers.  Relying primarily, or sometimes solely, on the entertainers to get customers in the door is a mistake and why some clubs are floundering.  And making the entertainers pay for the shortcomings of your business management plan is just plain ignorant.

And some club owners and managers wonder why they can’t keep quality dancers.

So for one who is always “pro-business”, these reclassification lawsuits over the last few are what this industry needs.  Seriously.

I also hear/read people complaining that reclassifying entertainers as employees will kill the industry which is utter bullshit.  There are states that this reclassification has happened and clubs are still in business.  Their profits may have dropped, but that’s because the dancers are keeping more of their well earned money.  Yes, some clubs will fail, but those should have probably been closed anyway for other reasons.  I see this reclassification as a much needed readjustment to this industry so it’s ran even more like the business it should be.  So the argument against reclassification of entertainers to employees is becoming nothing more but white noise.

So if a club decides to reclassify it’s entertainers as employees, I have a few suggestions.  They are in no particular order, some of these are common sense, but I have added a few twists:

  • A) All dancers are paid the prevailing wage rate of those in the area working in the food service industry (waiters and waitresses) which is usually less than minimum wage.  If you pay minimum wage, then there is a lesser or no incentive for the entertainers to “hustle” the room and make MORE money.
  • B) All entertainers have scheduled hours.  You miss your hours you are require to make them up with in the same week or the next.  They shouldn’t be penalized by paying fines for missing work because that just takes away more of the money they earned when they are working.  If entertainers are reclassified as employees and continue missing work, then they leave themselves open to being fired without recourse.  If you choose to be in this business as an entertainer, then it’s YOUR RESPONSIBILITY to uphold your end.
  • C) All entertainers are required to leave their phones secured in the dressing rooms.  Nothing is more unappealing than seeing an entertainer more interested in spending time on their phone than working the room.  Very few entertainers I’ve seen can properly “hustle” in a room.  Same goes for eating, even if your club serves food, do it in the dressing room. If your club is lacking customers, the entertainers should still be using that “free” time to keep their stage skills sharp.  Not sit around doing nothing.
  • D) To go along with point “c”, all entertainers will attend training held by well known and established entertainers or others from the industry.  This training not only covers how to work a room, but stage presence, and how to develop shows.  I’m not talking about creating new Feature Entertainers, but better ENTERTAINERS.  Most entertainers I see on the stage now don’t understand they are there to ENTERTAIN the audience, not just get up on stage, do some moves, and take their clothes off.  This is why some clubs suffer: they are willing to have just about anyone who is willing to get up on stage and take their clothes off.  No standards for having quality entertainers which that fault again falls directly on the club owners and managers.
  • E) Clubs should also be willing to educate the entertainers, all employees for that matter, on how to keep track of work related expense to help decrease the amount of taxes they have to pay.  As an accountant, it amazes me how many clubs neglect this simple gesture.  I have helped numerous entertainers with what they can keep track of (both state and federal) in the way of work related expenses.  One of my clients for two years didn’t have to pay taxes because of the detailed records she kept.  She was also able to file amended tax returns and received additional refunds.  Not that hard people.
  • F) Tipping:
  •      1. All stage tips are the entertainer’s alone.
  •      2. All private dance and VIP room fees are split 80/20.  That’s 80 percent entertainer, 20 percent club, which seems to be what that rate is now in clubs in my area and others I’ve been to.  The least I could see the split going on private dance and VIP room fees is 50/50 between the club and the entertainer.  If you’re having a hard time accepting this idea, think about VIP dances as getting desert.  In a restaurant, desert is an upsell item and additional work required if the waitress/waiter is successful is selling you one.  In a gentlemen’s club, VIP dances are just like desert which require additional work, so why shouldn’t the entertainer get the additional money?  I know this isn’t going to be a popular idea, but in the long run this compromise benefits both the club and entertainer.  And your customers which should be your #1 priority!
  • G) All entertainers are required to get regular health check-ups.  This not only protects them, fellow employees, but the customers as well.  I don’t know how many people haven’t considered the amount of human contact there is in this business.  Nothing like hearing or watching an entertainer cough their head off.  Or customers for that fact.  There are FREE clinics everywhere where these health check-ups can be done.  You can’t control what your customers do, but you can control what your employees do.

Now these are some of the basics from the business model I have in mind which has the potential to make a gentlemen’s club money if worked properly.  And if you choose to reclassify your entertainers as employees, you can’t just “pick and choose” what employee rights you want to follow, it’s all or nothing.  Trying getting away with violating an employees rights just gets you sued and possibly your club closed down.  So do it the right way.

I also want to point out that dancers as employees idea has worked.

The Lusty Lady, San Francisco’s only employee owned peep show, was unionized and became employee-owned in 1997 and was in business till it had to close it’s doors September 2, 2013.  The reason the Lusty Lady closed wasn’t because the employee-owned idea didn’t work, it was strictly due to what I term as unethical business practices.  The building owner, who also owns the Hustler Club in the same building which housed the Lusty Lady, wanted to expand the Hustler Club into the Lusty Lady’s space.  To obtain this goal, the owner raised the building rent (tripled from what it was in 2001) to a point where the Lusty Lady coop couldn’t keep up and was forced to closed.

I guess the owner of the Hustler Club didn’t like the competition.  Or the possible ideas it could put into the heads of the Hustler Club’s entertainers.

I also know there are entertainers that don’t want to be reclassified as employees because they want to avoid the “red tap” of paying taxes.  I understand that, but I feel the advantages to entertainers being reclassified as employees gives the entertainers more protection under the law than the current status of being an “independent contractor”.  This Is something the clubs are afraid of.  They don’t want to be held accountable for their inappropriate actions against the entertainers.  Especially since most states have “whistle blower” protection which basically brings penalties against employers for firing employees for speaking up against something wrong.  Independent Contractors don’t necessarily have this protection.  There are club owners, managers, and even dj’s that understand this which they use to take advantage of the entertainers then use scare tactics to intimidate the entertainers from any sort of legal recourse.  This type of club owner, manager and dj are the scum of our industry that need to be exposed and removed.  No matter how popular they may be.

Violating someone or their rights is just plain WRONG!  No if’s, and’s, or but’s about it.

Again, and it can’t be stressed enough, this industry is based on the women and men who are willing to strip for the public and therefore deserved to be protected under the laws of the United States.  To provided this protection, the reclassification of a gentlemen’s club’s house entertainers from “independent contractor” to employee should be embraced and supported by this industry.  If not, then the tide of lawsuits will continue until the industry is forced to do so.

So you can be ahead of the reclassification game, or you can be eventually forced to play along.  Either way, the tide is coming.

Finally, I know there are those in the industry that will argue against what I’ve stated here and I welcome those comments here for everyone to see.  Be constructive and respectful..  Not just say, “You’re wrong” or “You don’t know what you’re talking about” because they just show how much you’re not willing to be open to other ideas.

 

(Editor’s note: the 10/9/15 update was to include the mention of the IRS 1099’s.)

 

 

 

 

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