Regulation

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."

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ClubParadiseFound.com

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].

Quotesgram.com

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.

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

  1. “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.”
    Unless, of course, doing so helps the bottom line.

    Face it, in many jobs folks are pretty interchangeable. And yeah, you may have a good worker that’ll complain and leave when they feel you’re stealing some of their wages, but you can replace them with a worker that’s 95% as good that won’t complain and will be thankful to have a job at all, even if you’re not honoring your commitments to them. That’s why wage-theft happens. Because managers often can get away with it. And the folks that are most often the victims are often some combination of (A) thankful they have a job at all and (B) unaware of their rights and how their manager is cheating them.

    To make a long story short, there’s a reason fast food places often stiff their employees promised wages and hours, why Trump shorts his contractors, why rich folks play hardball with their handymen and so-on. Because it works and it saves money.

    1. To make a long story short, there’s a reason fast food places often stiff their employees promised wages and hours, why Trump shorts his contractors, why rich folks play hardball with their handymen and so-on. Because it works and it saves money.

      That’s a pretty broad statement to make without any actual substantiation. I’ll accept that there are employers who behave unethically without evidence simply on the basis that employers are people and some people do bad things. What you’re saying, however, is that there’s an epidemic of this behavior, and for that you’re going to need to provide some evidence.

      1. What you’re saying, however, is that there’s an epidemic of this behavior, and for that you’re going to need to provide some evidence.

        You mean his FEELZ aren’t enough? /sarc

      2. Yeah, to the extent I’ve ever noticed any cheating (a long time ago in HS/college retail/fast food jobs), it’s been managers favoring the employees they deal with face to face and are often friends with, over the faceless organization cutting their checks.

        Though I’ve had the good fortune to spend my entire professional career at a small business with about one layer of (fair-minded) management.

      3. “What you’re saying, however, is that there’s an epidemic of this behavior […]”
        Depends on what you consider an “epidemic” I suppose. How many millions of dollars of wage-theft has to happen a year before it becomes an epidemics? That said, I didn’t say a thing about how often wage-theft happens, I just said it happens.

        Which, as you can see based on your own response and those of others, is controversial enough on it’s own. Lots of people seem to think that managers would never cut corners to increase their profit margin.

        But “epidemic”? Sorry, that’s all on you.

        1. So in your world, all people are bad because they are going to cheat you but government is going to fix all of these. Wait, isn’t that run by people..so how can that be good?

          “And yeah, you may have a good worker that’ll complain and leave when they feel you’re stealing some of their wages”

          Yes, because it’s so much cheap to steal a little of their wages and train new people than it is to keep someone that is good at their job.

          I hope the sky is a pretty color on your world

          1. It wasn’t hard to get one of my liberal coworkers to agree that government doesn’t do much right – despite that, he’s still in favor of government doing things for us.

          2. “So in your world, all people are bad because they are going to cheat you but government is going to fix all of these. Wait, isn’t that run by people..so how can that be good?”
            I’m genuinely curious if you actually inferred that from what I wrote, or if you entirely pulled that out of your ass.

    2. And the folks that are most often the victims are often some combination of (A) thankful they have a job at all

      Wait, so they’re “victims” of agreements that they voluntarily entered into and consider to be an improvement over their prior condition?

      1. Well, yeah. In other words, they’re WAGE SLAVES, which is a word idiots use to describe people making a living that doesn’t measure up to some arbitrary standard.

      2. If the agreements that they voluntarily entered into were honored, you’d have a point. But wage-theft happens when those commitments aren’t honored.

        1. So do breach of contract suits.

    3. The only way that the labor class will get anything close to fairness in this country is for them to wrestle away from managers like Gillespie the means of production.

      1. Does that make us commenters the petit bourgeois?

    4. And yeah, you may have a good worker that’ll complain and leave when they feel you’re stealing some of their wages, but you can replace them with a worker that’s 95% as good that won’t complain and will be thankful to have a job at all, even if you’re not honoring your commitments to them.

      This might be the case if you’re trying to hire someone to sweep the floors. However, if you’re looking for specific skills and you find someone good, you’re not going to fuck them over based on the premise that if they leave someone nearly as good will just stroll in to replace them. Time spent finding and training new employees costs money.

      And even if that is the case and you keep fucking over employees that are replaced by someone “95% as good.” you will eventually have a staff full of employees 5% as good as the original people you fucked over when you started.

      1. “This might be the case if you’re trying to hire someone to sweep the floors. However, if you’re looking for specific skills and you find someone good, you’re not going to fuck them over based on the premise that if they leave someone nearly as good will just stroll in to replace them. Time spent finding and training new employees costs money.”
        Yep.

        And wage-theft happens most often in low-skilled industries. That’s kind of the issue.

        1. Then get an education. It’s free in the US to anyone who wants to apply themselves. Most people in low-skilled jobs don’t want to pursue better skills and are mostly content with their own mediocracy. They shouldn’t be robbed of their due pay, but they do have a way to improve their own situation if they took the initiative.

          1. Most of the people you describe feel they should be paid a lot more to do nothing of value. It’s about self esteem. They FEEL they deserve more. When you propose they learn a valuable skill or work hard to stand out, they accuse you of being a slaver.

            1. “I deserve $15 an hour.”

              “You’re selling your labor, and it’s not worth $15 and hour.”

              “Yeah, but I need $15 an hour.”

    5. It’s like a big business stiffing a little business when it comes time to pay the bill. They do it because they can. It happens all the time. You don’t see politicians grandstanding about it though.

    6. “Face it, in many jobs folks are pretty interchangeable.”

      I am betting you have never run a business.

    7. To make a long story short, there’s a reason fast food places often stiff their employees promised wages and hours, why Trump shorts his contractors, why rich folks play hardball with their handymen and so-on. Because it works and it saves money.

      You’ve gotta be 12-yrs.-old or something. Rich folks don’t play hardball with their handymen. A $100/hr. executive wouldn’t spend an hour chintzing a handyman out of a full day’s labor. The ‘nothing to lose’ factor falls squarely in the handyman’s lap. Additionally, for every chintzy homeowner paying a handyman, there’s at least one contractor twice as chintzy ripping off an owner/builder.

      Only the extremely mentally handicapped are as unaware of their rights as you assert the average employee to be. Even the laziest, most uneducated moron knows that he can flatly refuse to show up for work and/or go elsewhere.

      1. “You’ve gotta be 12-yrs.-old or something.”
        Let’s assume for a moment that you’re right.

        I’m 12-years old. And I’m well-read and educated enough to be aware of the history of wage-theft including how it’s been done over human history, ranging from Medieval practices to the industrial revolution and right up to Mr. Trump shorting contractors and forcing them to court where he bargains them down to a fraction of what he owed them.

        And upon hearing about this entirely new and novel concept of humans with power being dicks to humans without it, your first instinct was to launch an Ad Hominem attack, lie about what I said (“assert the average employee to be”? Not once did I talk about incident rates. That’s all on you.) and then with your shiny new strawman insist it doesn’t happen.

        So to put it simply… I may be 12 years-old, but you should learn to be more subtle with your logical fallacies if a 12 year-old can pick ’em out.

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  2. Just think, strippers adult entertainers may someday have their own union, complete with protections for seniority and poor performance.

    1. Here come the lousy union whore blowjobs…………

      1. By the terms of their union contract, all they have to do is kneel in front of you, and you have to imagine you’re receiving a great blowjob.

        1. And no complaining because the old grandma with seniority was foisted on you instead of the hawt young new thang…

  3. A fascist state hates small business, and the self-employed one-man business is the smallest business of all.

    The fascist state wants big businesses, big unions, and other big NGOs that it can control. It’s very difficult to control millions of people doing their own thing.

    And, make no mistake: Hillary’s vision for America is a fascist state. She’s not after genuine socialistic state ownership of the means of production, but rather state control. By asserting state control rather than ownership, the fascist can dictate what is done and how and by whom, but can always deflect the blame for any failure of the fascist policy to the greedy capitalists who retain ownership, and some of the benefits derived therefrom, of the means of production.

    1. I call this Socialism 2.0

      1. Something something… “third way”…

      2. You know, i’ve had a lot of people (or at least socialists) try to explain to me how socialism isn’t like fascism, and it’s always seemed to be just a distinction without a difference in every way that matters.

        1. ^^^THIS^^^

    2. As best I can tell, we are a fascist nation in all but name. It’s a glad-handing variety of fascism more interested in carving out privileges than leading the nation to war, but the feds are unrestrained in their authority to direct the conduct of businesses and individuals on a granular level. All that’s left at this point is contriving an excuse to remove the velvet glove. I don’t know that Clinton is any more interested than Obama; she’s an opportunist, not the ideologue Obama is. But it’s only a matter of time, and she’ll continue strengthening the federal presence.

    3. If you start thinking about property as a set of permissions about control of a resource, the difference between placing capital under rigid political control (as in capitalism) and asserting ownership over capital (as in socialism) begin to vanish.

      The only real difference is in personality: fascism is an established, older gang wanting to bump off or buy off its rivals and reign supreme, whereas socialism is about a younger, hotheaded upstart gang wanting to do the same.

      Fascism has enough sense to let people who know what they’re doing continue to do it — if it takes over another gang’s territory, it only needs to eliminate real problems, and it knows when to use a bribe rather than a threat; socialism thinks it can do anything on its own, and wants to earn respect through blood and fear.

      1. as in fascism, not capitalism.

  4. As long as there’s a legal distinction between employee and contractor, there needs to be a way of distinguishing between the two (it’s the same principle that applies to capital gains vs ordinary income, as long as there is a tax difference, you need a way of defining what is and what isn’t a capital gain).

    And the standard ought to be whether a driver, or a dancer, meets the criteria, not whether the company calls itself a member of the so-called ‘sharing economy’.

    1. Yes and those differences have always been well defined in the tax code. Ninety-nine percent of real estate agents have been independent contractors since about forever. And the interesting thing about real estate agents is that they can only work for one company and be supervised by one broker. Probably 70-80% of loan agents working for mortgage companies have been independent contractor for as long as there have been mortgage companies. The distinction in the law has always been if the independent contractor can set their own hours, and is only supervised to the extent that they need to assure compliance with legal regulations and business rules. The definitions have been there for decades and there is nothing new about the ‘gig’ economy.

  5. Why don’t we go all in and just declare all Americans “employees” of the Federal Government? I mean, there’s “substantial evidence” I’m working for them.

  6. This giggity economy thing is beginning to sound a lot like the “piece work and day labor” economy.

    1. Piece work and day labor for hipsters.

  7. Easily solved. The self-driving car, like the automated kitchen, demands no overtime. It doesn’t unionize. It requires no workplace insurance or health insurance mandate. It never complains about long hours. It doesn’t sue. It doesn’t try to use state law to get an unjust windfall.

    All these laws will do is hasten development and deployment of robotic tech that will demolish every single one of these jobs — “employer” or “independent contractor” notwithstanding.

  8. demands no overtime. It doesn’t unionize. It requires no workplace insurance or health insurance mandate. It never complains about long hours. It doesn’t sue. It doesn’t try to use state law to get an unjust windfall.

    …Yet.

    1. No kidding. Once the Robots Are People, Everyone! movement takes off…

      1. Mechanical lives matter?

  9. People are too stupid to know what’s good for them. That’s why we need the government.

  10. For this analogy to work, wouldn’t these strippers come to your work or home to do their business? It seems a stretch to compare them to internet enabled cab drivers who make their own schedule.

  11. I am an IT contractor because I cannot land a full-time job. That industry and market evolved into that model, and it took my a considerable amount of time to get over the fact I was never going to have a traditional full-time job again.

    I started contracting about 4-5 years ago and have never made more money in my life. I am highly educated and have more then two decades of work experience. Those are marketable skills, and once I figured out how to get myself into that market, it’s been the gravy train ever since.

    The fact that Clinton is vilifying that model really pissed me off, and it puts my current lifestyle in jeopardy. There was a legal case between Microsoft and some contractors in the late 1990s that really screwed up the contracting industry. In short, rather then being content working as a contractor in perpetuity, most companies will only hire independent contractors who are class S or C corporations. This has state-level tax implications. You can’t just have an LLC anymore to land and hold gigs.

    So fuck Clinton for putting my career and lifestyle at risk because a bunch of liberals who know nothing about markets or the economy are bitching about shit.

    1. I’m a full-time worker in the IT industry myself, but some of my co-workers have switched to the contractor model for family reasons. One of them has a new child with a lot of health problems, and so needs the flexibility that being a contractor provides.

      I’d like to see Clinton tell this man to his face that she is going to disrupt his work arrangements “for his own good”.

    2. Clinton is putting lots of people’s careers and lifestyles at risk. Welcome to the club. You can join a cryfest with about 25% of the country after she’s elected.

    3. Yeah, it’s a pain, but start an S corporation. S corporations are a little more trouble (the corporation has to file a return), but it’s still a pass-through entity (the corporation pays no income taxes — only the owners do)

  12. Bravo on the abstract euphemism in the headline, BTW.

    1. These cheating charlatans churlishly choking the chicken choking economy should chill.

  13. I would take independent contractor over employee type work ANY day. There are so many advantages in the tax code for independent contractors that the only real culprit here is the Federal government. The government wants us all to be employees because they don’t want strippers to be able to deduct the cost of skimpy costumes and pole dancing lessons as a business expense, and they don’t want consultants to be able to deduct the cost of one room in the house as a home office, and they don’t want us to be able to have more than one employer at one time, plus the self-employed don’t pay union dues, or unemployment insurance, or many other taxes that are only inflicted on captive employees. Hillary just wants us all to pay the government, not feed ourselves.

  14. I’m just here to point out that picture is from Paradise Found in Syracuse. It’s like 5 minutes from my house. Quality strip club!

  15. The government is just driving Uber to bring self-driving cars into existence faster. And strip club owners to bring in self-stripping robots.

  16. If every new and innovative businesss [sic]…

    Do you not even bother to run the articles through a spell-checker at least?

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  18. Democrats are dedicated to crushing everything that can be crushed. If someone cured cancer tomorrow and it was outside of government control and they couldn’t tax it they’d throw inventors in prison for life.

  19. i find it disconcerting that any court would acknowledge strippers are real people.

  20. To my mind I think the EMPLOYED should be the ones who make this call. This world is so fucking stupid. If someone agrees to work without whatever benefits some other people receive, but is given other benefits to do so, how the hell does anybody think it’s unfair? If I was offered “So you can be an employee and get medical, 401K etc and we own your ass… Or we can pay you 10 grand a year more, and we’ll give you a lot more flexibility on the days you take off. What do you want?” and I choose one over the other, it’s just nuts that people want to stop that.

    I don’t know how we ever got to the point to where employment is anything more than a contract between the person paying and the person being paid. It’s nuts.

    Maybe I just feel this way because I’m an evil business owner. I’ve had jobs before, and I’ve given people jobs. I’ve even worked as a contractor. I don’t know why people think any of this is anything other than what is decided between the two parties on a case by case basis. It’s fucking insane.

    1. “I don’t know why people think any of this is anything other than what is decided between the two parties on a case by case basis. It’s fucking insane.”
      Read up on the history of unions. However you feel about modern unions, they were formed because in negotiations between the “two parties on a case by case basis”, the employee was dicked over by the employer. A lot.

      To make a long story short: employment is more complicated then that because of bad-faith actors.

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