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Thread: "House Fees"--not legal?

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    Default "House Fees"--not legal?

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    Last edited by Page; 03-31-2010 at 09:13 PM.

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    Default Re:"House Fees"--not legal?

    Page, independent contractor status is meaningless when it comes to paying to work and tipping out the staff in any club you work at around the country.

    Number one, every city and town has rules that the club must follow. Every club that has a DJ and bouncers will require it's dancers to tip them out a set amount.

    And there is no way a club could afford to pay all the dancers they employ daily unless the dancers give them money via a house fee or per dance money to cover it.

    House fees are the norm for this business. Girls pay anywhere form $10-$200 per night on them. The main thing to concern yourself with is the clubs earning potential for a dancer who works the floor well versus what is paid to work.

    How much are your house fees and required tip to the DJ and bouncers? How much do they collect from VIP room and Champagne Room dances?

    I would ask the club and dancers who have been there over a year if the club sends out 1099 forms in January. Do you report to them a certain amount of income per night which they report to the IRS?

    Upscale clubs fees will be higher but for a pretty girl who is a good floor worker and who has great selling skills the income potential should outweigh greatly what you pay to work.

    And if you aren't a dancer who tips the DJ and bouncers more than the minimum they won't overlook your dances or do as much for you so you should tip more than the minimum whenever possible.

    How is the club? Is it busy and are dances easy to sell?

    The fact that they have a schedule will allow you a greater chance of making money than the clubs that let anyone who shows up work.


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    Default Re:"House Fees"--not legal?

    I am by no means an expert on this but the Department you want is the Labor Standards Office.
    their site is http://www.coworkforce.com/LAB/
    The Labor Standards Office administers laws governing wages, minimum wage, working conditions, the Youth Employment Act, the Labor Peace Act, and the Colorado Works Program.

    PLEASE READ:
    The Labor Standards Office will assist in the recovery of earned compensation. However, this office does not have legal authority to order the payment of wages. Please read the full disclaimer for further information.

    For further information, or if you have questions call (303) 318-8441 or 1-888-390-7936.

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    Default Re:"House Fees"--not legal?

    Court rulings in many states have upheld the principle that "Employers" do not have the right to charge employees for the right to work. This has been successfully applied to strip club "house fees" i.e. a fixed amount of money which must be paid by the dancer to the club in order to be allowed to work.

    However, this does NOT apply to private dance money. If a club is considered an "Employer", then it is the club which actually 'owns' the private dance being sold. Therefore clubs can legally require dancers to perform private dances without additional money being paid to the dancer on the basis that doing so is a condition of the dancers' employment. In practice, however, clubs treat private dances as a "commission sale", paying the dancers a portion of the "sale price" of every dance they sell.

    If a club is considered an "Employer", then yes the club is responsible for paying a 7.5% matching share of Social Security taxes on dancers declared incomes. "Declared" is the operative word here, because the club only pays this tax on earnings the dancer is paid via the club's payroll system (weekly check or whatever). However, because of this, most clubs which treat their dancers as employees discourage dancers from reporting the full amounts of their tip and private dance income to avoid having to pay the 7.5% matching tax (and whatever other state taxes like workmen's comp which are charged as a percentage of reported income). This leads to a situation where the club is basically forcing the dancer to under-report her income to the club and therefore to the IRS in violation of the tax law, which is discussed in two other threads.

    PS - since it is technically illegal for a club to charge an 'employee' dancer stage fees and tipouts, these are technically NOT tax deductable as an employee business expense. Based on California legal precedents, an 'employee' dancer who pays a house fee to the club or who pays tipouts to the DJ and bouncers is technically electing to make (non-deductible) charitable contributions.

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    Default Re:"House Fees"--not legal?

    Melonie, if it is technically illegal, why do clubs get away with doing it?
    ... because they can !

    Besides the reason that PanDah posted, here are a few others -
    #1 - most dancers don't know any better
    #2 - most dancers do not want to risk blowing the whistle on their own club even if they DO know the real story about 'employee' dancer rights
    #3 - even if someone has blown the whistle, state and local DOL officials are reluctant to invest time in money to perform a detailed investigation of a strip club
    #4 - even if the DOL can prove violations along the lines of 'illegal' fees being charged, it often lacks the legal authority to do much about it without going to court
    #5 - for the DOL to decide to invest the resources to take a club into court, it typically requires a violation much more serious than the word of a few dancers who claim they have been charged an extra $20 a night by the club for which payments they cannot produce receipts.
    #6 - even if the DOL was willing to back the dancer(s) in a court case, many dancers are reluctant to testify considering that other financial questions will likely be asked under oath (i.e. how much money did you typically earn at this club) and other documents may be checked (i.e. how much income did the dancer report on last year's tax return).

    The examples I have seen involving the actual enforcement by a court to stop strip clubs from charging 'illegal' fees have all stemmed from individual court cases involving a particular dancer vs a particular club where larger issues have been involved i.e. wrongful dismissal. These court rulings have stated that, for example, the club must pay the dancer something in compensation for some major violation against her, with the club also directed to stop charging house fees included as a small part of the settlement. These court rulings have actually only applied to the one dancer named in the court action and not to the rest of the dancers working in the same club, but the club's attorney has advised the clubowner that they easily could thus the clubs have stopped charging the 'illegal' fees or have stopped treating dancers as 'employees'.

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    Default Re:"House Fees"--not legal?

    Independent contractor can be charged a stage fee, locker rental, floor rental, etc...
    An employee on the other hand cannot be charged such fees.
    Want to know more?? Then read about the same debate over on www.exoticdancerforums.com

    The last Gentlemens Chain I worked for had the lawyer come in and explain it to the entertainers at the club what was legal and what was not. Even quoted several legal cases that have been tried.

    The independent contractors can be charged on the same basis as a hair stylist renting a chair at a salon.

    Hope this helps.
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    Default Re:"House Fees"--not legal?

    The independent contractors can be charged on the same basis as a hair stylist renting a chair at a salon.
    This is a very close analogy. Also, like a salon owner, a club owner who treats dancers as independent contractors is (supposedly) limited in the degree of control he can attempt to exert over the independent contractors working in his establishment. This varies from state to state of course. Generally, club owners who treat dancers as independent contractors cannot legally force them to adhere to a rigid schedule, cannot dictate how much dancers are allowed to charge for private dances/VIP room time, cannot collect a "percentage" of the dancer's tip or private dance or VIP room income (although they can charge a fee for using the private dance room or VIP room), etc.

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    Default Re:"House Fees"--not legal?

    Speaking of....Mel or Mystery maybe you guys can help me out a little with that.

    Since I am an Independant Contractor, can I use my "house fees" as a deduction off of my taxes this upcoming year?

    I know I will have to get the record on how much I actually paid out of this "rental" service. But it just seems logical I could deduct this. With how much I pay out alone this would be enough to deduct as is.

    But I know you guys both have very good tax advice, which is why I targeted this question to you.

    Kitana
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    Default Re:"House Fees"--not legal?

    Good analysis so far, but missing a few key points.

    IC vs. Employee classification was generally usurped by the IRS about 10 years ago. At least now it is uniform across the country. For the first few years they were reclassifying lots of people to employees. It is MUCH easier for them to track taxes this way. They&#039;ve mellowed a bit recently.

    From nolo press:
    "The IRS looks at a number of factors when determining whether a worker is an employee or an independent contractor. The agency is more likely to classify as an independent contractor a worker who:

    -can earn a profit or suffer a loss from the activity
    -furnishes the tools and materials needed to do the work
    -is paid by the job
    -works for more than one firm at a time
    -invests in equipment and facilities
    -pays his or her own business and traveling expenses
    -hires and pays assistants, and
    -sets his or her own working hours.

    On the other hand, the IRS is more likely to classify as an employee a worker who:

    -can be fired at any time by the hiring firm
    -is paid by the hour
    -receives instructions from the hiring firm
    -receives training from the hiring firm
    -works full time for the hiring firm
    -receives employee benefits
    -has the right to quit without incurring liability, and
    -provides services that are an integral part of the hiring- firm&#039;s day-to-day operations. "

    As you can see, it&#039;s not a simple answer for dancers. When in doubt, the IRS and state almost always will default to employee status.

    IC status has major tax benefits for high earning dancers. House fees are definitely deductable, as is just about everything. If you have good accountant, you should be able to deduct travel costs and hotels if you work in several cities. The list goes on and on.

    If you are not a high earner, however, employee status is probably better. You get a regular paycheck, you have unemployment insurance coverage you can collect on if you get laid off, and an important consideration for dancers, you are covered by worker&#039;s comp insurance if you are injured on the job. (Really wild pole dancing). You are covered by a laundry list of protections that unions have fought hard to get enacted into law. See:
    http://www.nolo.com/lawcenter/ency/i...AB18960A6EAB0E

    The law has well established and extensive protections for employees.

    Nolo is a great resource on issues like this.

    Regarding your specific questions on house fees and taxes, California enacted a statute to cover this issue.

    http://caselaw.lp.findlaw.com/cacodes/lab/350-356.html
    [see section 351]

    California courts ruled that dancer "house fees" are an employer mandated deduction of tips, and hence illegal under this law. Likewise, that "tax/house fee" shell game sounds like a typical scam to skim money owed to entertainers or waitresses. The details you gave are a bit vague, but it smells bad.

    The best possiblity for you is that this is a relatively new club, and the owners are unaware of Colorado well established code or case law that make this scam clearly illegal. The state labor resources mentioned by Monty will help if this is an open and shut case.

    Also try actually calling the IRS on the phone, and tell them what is going on. If you&#039;ve never spoken to anyone at the IRS you will be amazed at how nice and helpful they are now. They had some sort of personality surgery for the lot of &#039;em a couple years ago.

    Next I&#039;d call around to a few employment lawyers in Denver. If this is indeed an illegal practice in Colorado, they can sue the club on behalf of all the current dancers and former dancers, making it a potentially nice contingency fee for the lawyer, should they be able to recruit enough plaintiffs. They will not take it on you behalf alone.

    Your absolute last recourse would be to form a union, or join an existing one as a group and strike. Dancers in SF did this a few years ago.




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    Default Re:"House Fees"--not legal?

    Quote Originally Posted by kitana link=board=6;threadid=13444;start=msg182786#msg182 786 date=1096312686
    Speaking of....Mel or Mystery maybe you guys can help me out a little with that.

    Since I am an Independant Contractor, can I use my "house fees" as a deduction off of my taxes this upcoming year?

    I know I will have to get the record on how much I actually paid out of this "rental" service. But it just seems logical I could deduct this. With how much I pay out alone this would be enough to deduct as is.

    But I know you guys both have very good tax advice, which is why I targeted this question to you.

    Kitana
    Yes without a doubt you can deduct "house fees" paid to the club as long as you file Schedule C and are considered to be an independent contractor business. However, from a legal technicality standpoint, you cannot deduct tipouts paid to DJ&#039;s, bouncers, housemoms etc. unless you also report these miscellaneous payments to the IRS via form 1099-misc. To deduct these tipout payments requires that you know the real name, real address, and SS# of the DJ, bouncers, housemom etc. in order to file the IRS form. Filing the IRS 1099-misc form will also let the IRS officially know that these people received income from you, forcing them to declare this income and pay taxes on it.

    Legally speaking, when for example a DJ is an independent contractor rather than an employee of the club, the DJ works as an independent contractor to each dancer, and payments to the DJ from the dancer are a business expense and can be deducted (as long as the 1099-misc reporting rules are followed). Legally speaking, if a DJ is an employee of the club and dancers tip him, this money is a gift and therefore not tax deductible (since the club requiring that dancers pay money directly to a club employee would be illegal).

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    Default Re:"House Fees"--not legal?

    I said this and then I said that...
    Last edited by VenusGoddess; 10-10-2004 at 06:39 PM. Reason: Too much info...

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    Default Re:"House Fees"--not legal?

    Ay Dios Mio! VG - you&#039;re not only on a public board, you&#039;ve posted your PICTURE too! Don&#039;t underestimate management - they&#039;re largely aware of sites related to the industry and, even if the owners of your particular club aren&#039;t, other girls in the club almost certainly are - and whether you know it or not, there&#039;s probably someone in there that has a problem with you!
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    Default Re:"House Fees"--not legal?

    Eh...not dancing anymore.
    Last edited by VenusGoddess; 10-10-2004 at 06:38 PM. Reason: Ehhhhh...

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    Default Re:"House Fees"--not legal?

    K... but I wouldn&#039;t be putting that in print either! LOL. Anyway, re IRS, just sit tight - odds of them coming after you are small, there is a statute of limitations and, if worst comes to worst, the IRS is not the terror everyone thinks they are - for the most part, they&#039;ll accept a reasonable settlement if you&#039;re really in a bind and/or at least work out payment over time. Of course, if you&#039;re willing to spill the beans on system at club, they might be even more generous...
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    Default Re:"House Fees"--not legal?

    The new owner of my club&#039;s wife is a senator or congressperson of Illinois. He thinks that he is above the law and can get away with anything
    Now I see why you might be an extra avid Kerry supporter. Assuming that your clubowner&#039;s wife is a Democratic senator, a Democratic administration in Washington would tend to put a damper on any IRS agendas against Democratically connected targets ! A Republican administration in Washington would tend to do just the opposite !

    If you did want to seriously burn this clubowner, I&#039;m sure that the state RNC would be EXTREMELY interested in anything you had to say !

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    Default Re:"House Fees"--not legal?

    Never mind!
    Last edited by VenusGoddess; 10-10-2004 at 06:38 PM. Reason: Too much info... :D

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    Default Re:"House Fees"--not legal?

    A Republican senator in the Chicago area ? I&#039;d be worried too !

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    Default Re:"House Fees"--not legal?

    Quote Originally Posted by VenusGoddess link=board=6;threadid=13444;start=msg185590#msg185 590 date=1096650077
    I would hate to be the one to blow the whistle as I do have some really good friends that have worked/work there. I don&#039;t want to get anyone in trouble...but, I always got really annoyed when the stance from the owner was always, "My wife&#039;s got connections...we&#039;ll never get raided/audited/etc." So, he feels safe to just do as he pleases.
    Famous last words....

    If the U.S. Attorney for his district ever decides to come after him, he&#039;s going to be in for a very rude awakening! There&#039;s little "influence" that can be wielded over them and they have far more power and free reign than most people realize.
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    Default Re: "House Fees"--not legal?

    The truth is Dancers are part of the unaccepted part of society. For church groups and politicians not helping Dancer rights looks good in the newspapers and t.v. news.They talk about human rights issues, but that only applys to people that have acceptable ( morally) jobs.What happens when a homeless, drunk man gets run over crossing the street ? Nothing ! If all the unacceptable people out there died tonight, very few people would care.This is the truth about being human.To bad we all can't have our rights protected. No one should ever have to pay to work or be treated like slave or sex labor, unfortunaly it will always work that way.Until we all refuse to work under those conditions.

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    Default Re: "House Fees"--not legal?

    No one should ever have to pay to work or be treated like slave or sex labor, unfortunaly it will always work that way.Until we all refuse to work under those conditions.
    so true - especially in light of the recent election results.

    As to refusing to work under those conditions, unfortunately where dancing is concerned the 'supply and demand' situation today is vastly different than it was 10 years ago. Back then really beautiful girls who were willing to dance nude were a rare commodity, and were able to command respect and fair treatment from clubowners. Today there are fewer clubs to start with, and no shortage of young girls who are willing to dance nude for a few dollars (or do much more than just dancing !), thus dancers have zero leverage with clubowners in regard to working conditions. This boils down to clubowners being able to set stage fees and private dance/champagne room percentages, and dancers being left with a choice of paying them or quitting, with another dancer eagerly waiting in the wings to take her place and pay the fees/percentages the club asks.

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