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California strip clubs see exodus of dancers under new ‘employee’ rules, report says

SAN FRANCISCO—A ruling in April of last year handed down by the California Supreme Court about the way a delivery service company classified its employees appears at first glance to have nothing to do with the adult entertainment industry, but now, eight months later, the ruling in Dynamex Operations West v. Superior Court of Los Angeles is having a major impact on California’s strip clubs and causing an “exodus” of strippers, according to a report this week in The San Francisco Examiner.

The ruling in the case involved Dynamex, a delivery firm, which was accused of improperly classifying its employees as “independent contractors” in order to get out of paying Social Security and unemployment taxes, worker’s compensation, and other requirements for employees.

Classifying workers as “employees” rather than independent contractors is estimated to cost employers between 20 and 30 percent more per worker, according to a report by The New York Times.

But in California, where upwards of 15 percent of workers are believed to take part in the “gig economy”—that is, working as independent contractors on a temporary, freelance basis—the ruling marked a massive shift, as the court handed down a new, stricter definition of “independent contractor,” forcing large numbers of gig workers to become company employees, or quit.

While the ruling caused confusion for workers in a wide variety of fields—perhaps most notably for drivers with rideshare companies such as Uber and Lyft—one group of workers was hit especially hard: Strippers.

Dancers who, according to Examiner reporters Laura Waxmann and Michael Toren, “were used to walking out of the club’s doors with cash each night—often hundreds of dollars—after their shifts ended” suddenly found themselves receiving paychecks, with withholding taxes and other deductions subtracted. But even more importantly, the checks had their real names on them.