Choking the Giggity Economy: If Strippers Are Employees, Can Uber Drivers Be Far Behind?

New York court rules aren't independent contractors, despite facts that could also point to "contrary result."


In a 2015 speech at New York's New School, Hillary Clinton swore to end what she derisively calls "the gig economy" by "crack[ing] down on bosses who exploit employees by misclassifying them as contractors."

She had darlings of the sharing economy such as Uber and Lyft in mind. These companies, which are hugely popular with both workers and customers alike, provide not just a new model of delivering services more cheaply and efficiently but a new model for part-time employment. After passing various background requirements, drivers decide when they work, where, and for how long; they function as independent contractors and thus don't get sick leave, health care, and other benefits that go with being technically designated an "employee" under various state and federal definitions. But like all disruptive businesses, Uber, Lyft, Airbnb, and others unsettle incumbent firms and their political protectors that don't like competition. Strongly invested in 20th-century models of HOW STUFF GETS DONE, Clinton doesn't like it one bit and equates any variance from past-century employment models with exploitation. You can do anything you want, that mind-set says, as long as you don't do anything different from how we've always been doing it.

That said, she's unlikely to use a recent New York state appellate court ruling to bolster her case against the gig economy. A New York appellate court has ruled that strippers at the go-go club Paradise Found are in fact employees and not contractors. The specific issue at hand in the court case was the covering of unemployment insurance premiums.

From the AP account:

The four Appellate Division justices have rejected the challenge to rulings of Unemployment Insurance Appeal Board by Greystoke Industries, operator of Paradise Found in Dewitt [a town near Syracuse].

They cite "substantial evidence" to support the finding that it exercised sufficient control over the dancers to establish an employment relationship, despite evidence that could support "a contrary result."

They note that the dancers could set their schedules and provide their own music and costumes.

More here.

This ruling follows other cases that have ruled that dancers are traditional employees. Two years ago, dancers who worked at a New York City club were granted $10 million in back wages. The court ruled that charging the dancers "an appearance fee" and then letting them keep most of the money they made didn't abrograte minimum wage and other responsibilities for the club owner.

It may be more than a short Uber ride from stripping to the sharing economy, but the distance is actually smaller than it might seem on first glance. Just as technology is changing how we live, there's every reason to believe that new and more-fluid relationships in the workplace will develop in the workplace too. Businesses struggle to keep labor costs down so they can stay in business. But speaking as a manager myself, I know that businesses are also desperate to attract and keep good workers; you don't stiff people who are helping to make you succeed. You negotiate to keep them happy and keep your business functioning. That might mean letting certain people work from home or set their own, unconventional hours; paying people as contractors if that's what they want; reducing hours and overall pay if they only want a part-time gig; and more. The point is that our world is becoming more and more personalized, individualized, and responsive to different people's needs and wants.

When it comes to jobs, the best way for that to happen isn't to layer the workplace with requirements and regulations that were created in a very different world under very different circumstances. If every new and innovative businesss must not only struggle to find a profitable market but also adhere to government dictates created 50, 60, or 70 years ago, well, good luck with economic growth and innovation.

In this short video clip, Whole Foods co-founder and co-CEO John Mackey discusses how labor regulations make it more difficult to do business in a way that ends up punishing employers, employees, and customers of forward-looking businesses (disclosure: Mackey is a donor to Reason Foundation, the nonprofit that publishes this website). Keep in mind that Mackey doesn't run a shop like Paradise Found. He runs a business that has influenced all supermarkets in the country, even traditional ones, and he's done it by being responsive both to customers and his workers. And he's had to fight just about every step of the way to be free to try new ways of doing things.