Are you really an independent contractor?
It would seem not according to the guidelines from Oregon that are based on guidelines by the IRS. I pulled this off of a website from the board of labor and industries, and if you are having problems with your club being too pushy, too expensive, or just plain unpleasent you my want to print out the similiar guidelines for your state and distribute it to dancers at your club just to inform them that it doesn't have to be as bad.
The Economic Realities Test
No single factor is determinative, however the following are used to gauge the degree of the worker's economic dependency on the employer:
* The degree of control exercised by the alleged employer.
* The extent of the relative investments of the worker and the alleged employer.
* The degree to which the worker's opportunity for profit and loss is determined by the employer.
* The skill and initiative required in performing the job.
* The permanency of the relationship.
Note: The above test is used by the U.S. Department of Labor the Oregon Bureau of Labor and Industries for minimum wage and/or overtime claims, or for discrimination claims.
Independent Contractor Status According to ORS 670.600
Unlike the economic realities test above, the Oregon statute demands that all requirements below be met if an individual is to be classified as an independent contractor by the Employment Department, the Oregon Department of Revenue, the Workers' Compensation Division, or the Construction Contractors Board. These requirements include:
* The worker must be free from the direction and control of the person using the services.
* The worker must obtain an assumed business registration and any licenses required by law.
* The worker must furnish the tools and equipment necessary to perform the work.
* The worker may hire or fire employees to perform the work.
* Payment for the services is made on a project basis or periodic retainer basis.
* Construction contractors must be registered with the Construction Contractors Board.
* The worker must have filed appropriate business tax returns for the previous year if the individual was in business in the previous year.
* The individual must represent to the public that an independent business exists to provide labor or services. This could be accomplished if at least four of the following circumstances exists:
* The work is performed at a location separate from the private residence of the individual; or at a specific portion of the residence that is set aside for the business.
* The individual purchases commercial advertising or business cards, or has a trade association membership.
* A telephone listing and service separate from the residence is used for the business.
* Written contracts are used to specify work requirements.
* Labor or services are performed for two or more different persons within a period of one year.
The individual assumes financial responsibility for defective workmanship. This could be established by performance bonds, warranties, liability insurance, or errors and omission insurance.
The 20-Factor Test
The Internal Revenue Service (IRS) uses the following guidelines to determine employer control of the employee:
* Do you provide instructions as to when, where and how work is performed?
* Did you train the worker in order to have the job performed correctly?
* Are the worker's services a vital part of your company's operation?
* Is the person prevented from delegating work to others?
* Is the worker prohibited from hiring, supervising and paying assistants?
* Does the worker perform services for you on a regular and continuous basis?
* Do you set the hours of service for the worker?
* Does the person work full time for your company?
* Does the worker perform duties on your company's premises?
* Do you control the order and sequence of the work performed?
* Do you require workers to submit oral or written reports?
* Do you pay the worker by the hour, week or month?
* Do you pay for the worker's business and travel expenses?
* Do you furnish tools or equipment for the worker?
* Does the worker lack a "significant investment" in tools, equipment and facilities?
* Is the worker insulated from suffering a loss as a result of the activities performed for your company?
* Does the worker perform services solely for your firm?
* Does the worker not make services available to the general public?
* Do you have the right to discharge the worker at will?
* Can the worker end the relationship without incurring any liability?
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I find this very interesting, and thought that others would too. I don't mean to be a trouble maker, but sometimes somone needs to speak up.
Re: Are you really an independent contractor?
I have argued this issue before both with my phone sex job and to a boss i dance for. You are correct. There is a fine line there, as IC's have to get the job done, but can't be told what hours to show up and leave. That was one issue my boss and i agreed on. But i have no problem, because i work 2 clubs where i can come and go as i damn well please. One i am an employee (not the hospital, but dancing). Great topic, and while going through a hard time with an ex, and getting a restraining order i brought the subject up. I did not want to purse it however. Lots of Mumbo Jumbo was throw in between IC and employee. Pamela ;) And we DO work under employee rules as IC's. He was kind enough to tell me that much. With no charge. Lol
Re: Are you really an independent contractor?
You actually have a great point, paris, and one important since tax season is here. I am so lazy to do my own homework regarding this, and this is the first year I've not had a "legitimate" side job that offered benefits, etc., and could be my filed wages.
I'll admit, that the whole thing confuses me, but your breakdown helps!
Re: Are you really an independent contractor?
The whole issue of independent contractor versus statutory employee classification for dancers is becoming a huge "catch 22". For comparison to Oregon, the new California law simply states that if you are a dancer you are by definition a statutory employee. This of course snowballs because filing with a certain status to comply with a state law also requires that your federal return be filed using the same status. But if you work in two or more states and the state laws conflict you wind up filing split status and risk all sorts of unwanted IRS attention.
My accountant tells me that if a dancer works at multiple clubs and also does peripheral business activities like modeling, website, webcam, phone sex etc. it "paints a picture" of a girl in business for herself which the IRS will readily accept, and so will state tax departments regardless of what state employment law says. However, if a dancer works at only one club, the door is open for her being classified by the IRS as a statutory employee - particularly if the club pays the dancer directly in any form i.e. an hourly rate, or x dollars per stage set performed, or y dollars for cashed in "funny money", or z % "commission" on private dances she has sold. This possibility is exacerbated even further if state employment law states or interprets such a dancer as a statutory employee.
In regard to "working under employee rules", there is a lot of leeway before the rules become so restrictive that they force a statutory employee interpretation. If your status is challenged, my accountant says that you can use the argument that independent contractors work under "covenants" all the time, where the general working hours are set by the business engaging the contractor, where basic workplace rules and policies set by the business apply to contractors as well as employees, etc.
So, which would you rather be?
At times, like when looking at those self-employment tax numbers, I think I'd rather be considered an employee. If I have to be considered an IC, I wish I had all the "benefits" fo being one, like being able to make my own schedule.
Re: Are you really an independent contractor?
Lose the IC status and many clubs will close.
Our income would greatly suffer from the IRS getting into each and every dollar we earn and taxing it each week. The IRS would prefer to get their cut each week instead of four times per year.
You could see the day when all your lap dance money would have to be turned in and a paycheck was issued once a week or even every two weeks. The only money you would take home nightly would be a direct tip. Credit card tips would be taxed and the club has the option to do this nightly or if they feel it is to much hassle to put those tips on your pay check.
The grass is not greener on the employee side of this debate.
Do not forget the non-competitive clause that could be invoked. Many clubs try to do this now without any legal right but once you become an employee you could find yourself agreeing to dance in one club and if you quit not being allowed by law to work in a 200 mile radius for up to six months after you leave.
Or if you worked as an employee and booked a private party while you were in the club As an employee of the club, they were paying you for your time in the club and are entitled to the fruits of your labor. So they could legally force you to turn over the entire amount of the party fee and pay you an hourly wage for your time. And Wait there is more… They could also guess what you made in tips and add that amount to your check to be taxed.
Once again is that grass green or is it astro turf????
Re: Are you really an independent contractor?
Don't get me wrong... I don't want to be an employee. But I do want to be treated like an independent contractor. If I have a fixed schedule that I have to work, if I am not permitted to work at competing clubs, if I have to dance to the music provided, and not allowed the artistic freedom to perform in a manner that I prefers (read special costume rules, forced to do merchandise features etc.)
In most clubs I work there is a commission to be paid to the dancer for lap dances or VIP shows. As well as rent paid to the house and tip out to the other employees of the club who are not under my direction. This takes a lot of the control away from the IC making it seem that I am not an IC. I just would like to be treated as an IC in more than just name.
Re: Are you really an independent contractor?
Anais, the self-employment tax for independent contractors is 15%, of which 1/2 can be claimed as an expense and deducted against gross income reducing overall income taxes. This tax is charged to IC's in lieu of Social Security. On the other hand, as a statutory employee, your Social Security withholding amounts to a 7 1/2% tax, which CAN'T be deducted. Net result the difference in after tax dollars is about 5% in favor of statutory employees. But on the flip side, statutory employees are not allowed to write off anywhere near as many business expenses which usually wipes out the 5% and then some.
Le Q is on the right track about statutory employees opening the door to all sorts of conditions of employment. There's an interesting legal precedent to consider - the Disney case. In this case, the court ruled that Disney had every legal right to require that their employees maintain the same physical characteristics which they possessed at the time they were hired as long as that was a stated condition of employment. This means that Disney can now fire any employee for gaining weight, for getting stretch marks, for changing their hairstyle or hair color, for developing face wrinkles etc. This precedent has already been a hot topic of discussion among California clubowners, where the new law now decrees that dancers are statutory employees and where dancer's union activities are drawing attention. As a dancer I really don't like the possibility of being weighed, measured and scrutinized every month with the possibility of being fired on the spot.
Re: Are you really an independent contractor?
Thank you, Melonie for the tax info. I do think I prefer to be an independent contractor. But I share Paris’s sentiment that if I am going to be called an independent contractor and be taxed as one, I wish my club would treat me like one. We have many rules that I’m not sure are legal for the club to enforce upon independent contractors. Schedule, for one, and being fined if you are late. Rules about what we can and cannot wear, what music we can dance to. How to dance (must go nude on stage, but no spreading, etc.) But I don’t know how to approach these issues with the owner who constantly reminds us that we are independent contractors and he can choose to “break” that contract at any time (he can fire us at will).
I also wonder about the dancers at san Fransisco’s Lusty Lady. Why did they want to become employees? What have they gained from this? Thanks, Anais
Re: Are you really an independent contractor?
Well, the 'covenant' arrangement does allow any business employing an independent contractor to set out some rules. For example if WalMart hires a local carpenter to remodel one of those leased out storefronts at the front of the store, WalMart is totally within its rights to require that the contractor start at time A and quit at time B every day. WalMart can also charge a penalty if the carpenter doesn't finish the work by a specified date, on the basis that the contractor's non-performance is costing WalMart money (they can't rent out the storefront to an optometrist or cell phone outfit or whatever until the carpenter finishes his work). WalMart can also require that the contractor's carpenters dress in white coveralls and use tarps in the area they are working so they don't offend WalMart's customers or negatively affect the store's image. Applying your "request" that the clubowner allow you to walk in and walk out whenever you want and not charge a penalty to the WalMart carpenter example, and the other limits on costumes, music, and sleaze factor, you can hopefully see where the clubowner is coming from. These conditions are part of a 'covenant' which you both agree to at the time the clubowner engages your services. You are free to break the covenant at any time, and the clubowner is free to not engage your services in the future at any time. Just like WalMart in the example, the club owner is entitled to determine the hours his club will be open and serving customers (meaning the hours dancers will be there), the image his club projects to the customers (meaning type of costumes, music, crotch shots) etc., and it is within his rights to set down rules for independent contractors which allow him to accomplish this.
But what the clubowner CAN'T do with independent contractors which he COULD do with employees is to REQUIRE you to work every single night of the week even though you don't want to, or REQUIRE you to perform private dances for free with the club keeping the entire private dance price the customer paid, etc, in exchange for your hourly paycheck. As employees, the clubowner could also REQUIRE that every dancer turn in every dollar she earned in stage tips to the house, with the tips then shared equally with other dancers and/or with the house taking a cut. In fact, the new California law and other employee labor laws have set a precedent that as employees there is not supposed to be any direct money changing hands between customers and employees, only between customers and the house (with the employees paid later by the house either on an hourly basis or a commission basis based on sales of private dances or tips received, or some combination). In other words, under the strict letter of the new California dancer's being employees law it is illegal for a dancer to put a customer's money in her pocket. Every dollar is supposed to have to go through the club's cash register, and all money the dancer finally puts in her pocket at the end of the night/week is supposed to be paid to her by the club (with tax withholding and a report to the IRS and California tax dep't too of course). The political reason put forth for this new 'dancers are statutory employees' law was to reduce the possibility of prostitution by not allowing customers to pay money to dancers directly, but the real economic reason is to collect more income taxes and to gain political brownie points for re-election!
As to the Lusty Lady girls, based on what I have heard from SF girls and what I have seen of the Lusty Lady girls on TV, I think the biggest thing they were trying to achieve was to save their jobs. Not meaning to be derogatory, but the Lusty Lady is mostly a 'peep show' rather than a dance clubs, and the girls that work there are mostly '7's. With so many dancers looking for opportunities to earn decent money without having to provide sex (SF is famous for extras in clubs), IMHO the handwriting was on the wall that the clubowner could easily have found girls who were '8's or '9's to replace the '7's and improve club earnings. But as employees with a union contract in place, these dancers cannot be fired simply because the clubowner would like to hire a more attractive girl to take their place, these dancers cannot have their scheduled hours cut to allow a more attractive girl to work in between, etc. I also think that there was some 'tip sharing' arrangement in the contract which somehow gathered up all of the money all of the girls received and divided it evenly between girls (much like some restaurants do with waitress tips). I think there was also a provision in the contract for seniority, where dancers who had worked for the club for a year got a raise in their hourly base pay and dancers who had worked there for 2 years got a bigger raise.
IMHO this sort of union contract is a sure fire formula for a future business bankruptcy. First, it virtually guarantees that the club's girls will be mediocre in appearance, since any girl who is a '10' is not going to work in a club where her tips are taken away and she's given an equal share of every girl's tips. Second, it virtually guarantees that the club's girls will not be hustlers, since one girl working twice as hard and earning twice as much translates into only a 10% increase for the hustler and the same 10% increase for every other girl in the club who her earnings must be shared with. Third, it virtually guarantees that as every year goes by, the same girls will get older and uglier and will NOT be replaced by younger girls unless the older girls choose to quit (which is highly unlikely since the longer they work at the same club the higher their hourly pay rate will become). You can imagine what will happen to club customers spending habits and club income levels when customers are faced with a club full of the same out of shape mid 20s girls who have all the hustle of a telephone operator week after week, year after year!
Comparing the new law and the dancer's union to another unionized business should tell you something. If you look at the auto industry, for example, yes the auto workers who were employed at the time the union contract was signed do benefit from higher hourly pay rates and greater job security. But it becomes much harder for younger workers to obtain jobs as auto workers because the existing union workers won't leave voluntarily and can't be fired as long as they show up for work and do something. But the quality of the product they offer suffers. This convinces customers to go elsewhere to get a better deal (i.e. Japanese or Korean Cars, or non-union clubs with girls that are '10's and girls that hustle). As customers go elsewhere, earnings suffer resulting in layoffs and cutbacks and eventual bankruptcy (or takeover by a big corporation who changes all the rules and fires the old workers!).
Re: Are you really an independent contractor?
I have to add to the discussion about the Lusty Lady that those dancers were paid employees BEFORE they decided to strike and form a union. They claim the main reason they decided to form a union was because of one-way mirrors that had been installed in certain booths, making it easy for customers to bring in camaras and film the girls for later sale without their consent; but the club removed those mirrors, and the dancers still went ahead with the unionization. I agree with Melonie's implication that the ladies who had the loudest voices and most complaints in that situation were the ones who were, shall we say, past their prime and wanted to avoid being pushed out to make way for younger, prettier girls. I saw the movie documentary, and those women were certainly not what I'd call prime time dancers. As Melonie said, they seemed to be trying to gain job security to make up for their own laziness in this business, rather than trying to improve their game in order to maintain job security and income.
To take it further, IMO, most dancers who favor unions and employee status are those who have aged and become too lazy to maintain their appearance and hustle. In essence, they should hang up their high heels. I'm certainly NOT saying age is a reason for a woman to lose her job as a dancer, but if a woman doesn't keep up with her appearance and willingness/ability to hustle, she should get out of this biz, rather than shout for hourly wages and dancer unions. We all know we have to maintain our appearance and hustle to continue making money!
As a side note, there is an interesting book called 'The Lusty Lady' by Erika Langley, 1997, about that very club. I read the book a few years ago and enjoyed it.