S.F. Strip Clubs See Performer Exodus as Paychecks Enter Equation

S.F. Strip Clubs See Performer Exodus as Paychecks Enter Equation

SAN FRANCISCO — Lawsuits alleging improper classification of workers and a recent California Supreme Court labor law ruling are impacting some adult dancers in San Francisco, many of whom once relied on daily cash payouts to survive, according to a report.

The San Francisco Examiner today published an article on the “unexpected consequences” of new policy changes facing adult performers — particularly those who live in the Bay Area city — who perform live and on-stage.

More feature dancers, previously considered independent contractors, now are walking out of club doors with biweekly employee paychecks and not with cash in hands after their shifts end.

The move to convert adult dancers to employee status is causing an exodus, with many strippers leaving those establishments, according to the report.

Lawsuits filed nationwide alleging improper classification of adult dancers have heightened awareness and forced many club owners to implement standardized paychecks. So has a California Supreme Court decision that came out of a lawsuit brought by two drivers for Dynamex, a same-day delivery and logistics company that converted its drivers to independent contractors in 2004.

Under the high court ruling, workers may now be considered employees if they perform work within the usual course of the company’s business.

“If you are running a strip club, you would think that the dancers are performing work within the usual course,” said David Peer, a labor attorney who has written about the Dynamex ruling. “If the club owners want to play it safe, they should certainly be paying minimum wage and following the wage and hour rules that most organizations follow when they hire an employee.”

Harold Lichten of Lichten & Liss-Riordan, a law firm representing Uber drivers who claimed the rideshare company misclassified them, told the Examiner, “When you improperly characterize someone as an independent contractor you don’t have to pay social security tax, unemployment tax, minimum wage or overtime.”

Lichten said that new policies at some clubs should come as a benefit to those dancers. He noted that it is financially beneficial for companies to “misclassify people because they were saving so much money at the workers’ expense.”

But for many performers, they’re still in shock.

A former Penthouse dancer, identified as Jane, said she was swept in panic when she got her first employee paycheck.  

“All the other girls were also freaking out,” Jane told the Examiner. “Me and my friends decided right then that we were done. That was the final straw.”

Another performer, Darla, also recently cut ties with Penthouse Club. She told the Examiner, “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.”

One of the largest club operators in San Francisco is BSC Management, which operates the majority of adult clubs in San Francisco — 10 out of 12. The only exceptions are the Mitchell Brothers O’Farrell Theatre and the Crazy Horse.

According to Axel Sang, BSC’s marketing director, all of the clubs’ dancers were formerly contractors but are now “club employees being paid an hourly wage and commission on dance sales.”

“The BSC-managed clubs now have matching payroll taxes, unemployment compensation, workman’s compensation, Healthy San Francisco costs, Affordable Care Insurance costs and San Francisco sick leave pay for several hundred new employee entertainers in addition to the hourly wage,” he told the Examiner.

Sang estimated that 200 dancers have quit their jobs since the policy change to paychecks.

“A substantial reduction in the number of entertainers performing as well as the substantial increased payroll and other costs makes it very difficult to generate profits,” Sang told the Examiner.

Sang said BSC is not paying dancers more than minimum wage because they “are paid commissions on dance sales which in most cases far exceed the hourly wage.”

But performers told the Examiner said the commission structure for private dances also been significantly erased.

“Dancers said morale has plummeted at clubs across The City,” the Examiner wrote. “Many are unhappy with how management announced and rolled out the change, but fear losing their jobs if they complain.”