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Dynamex ruling roils workforce

Adult entertainment clubs a decade ago in San Francisco's North Beach district. (Photo: James Kirkikis, via Shutterstock)

No one at the strip club wanted to talk about Dynamex.

Dynamex refers to a landmark decision by the California Supreme Court, officially known as Dynamex Operations West, Inc. v. Superior Court of Los Angeles, that set standards to determine whether a worker is an employee or an independent contractor. The case stems from a lawsuit filed by a pair of delivery drivers against Dynamex, after the company changed their job status from employee to independent contractor.

That April 2018 ruling is touchy: The bouncer at the Sacramento-area club wasn’t about to talk. The dancers at the club had signed non-disclosure agreements. They weren’t about to share their thoughts.

No one wants to talk about this, one person said. People come to strip clubs to enjoy themselves. They don’t want to read about this stuff.

“It’s not that it affects every dancer in the state. It affects every worker in the state.” — Christian Schreiber

Despite those protestations, people are talking about the Dynamex decision, which affects an array of California workers and reaches far beyond the adult entertainment industry. In effect, the 82-page ruling says workers are presumed to be employees, unless they meet specific criteria, or “tests,” that would classify them instead as independent contractors. The distinction is crucial because employees typically are eligible for additional benefits, while independent contractors are not.

The April ruling affects hair stylists, beauticians, barbers and exotic dancers – just to name a few. One Dynamex critic estimates the court decision has displaced over 2,000 adult entertainers.

Some dancers have sued their employers over their status and lost wages. Those dancers want employee status and say the clubs are retaliating against them by reducing their pay.

But the Dynamex ruling, while felt immediately and most visibly in the adult entertainment industry, has the potential to have a massive impact on the gig economy, where workers often have several part-time jobs.

Employment lawyer Christian Schreiber of Olivier Schreiber & Chao, said the Dynamex decision established a three-prong test to determine whether someone is an employee.

If a worker is free from control and direction, performs work outside the scope of usual business and is customarily engaged in an independent trade then he or she is an independent contractor.  The person must meet all three factors. If he or she doesn’t, the worker is an employee, Schreiber said.

That means people are employees if they perform at a club where dancing is part of its usual course of business. Schreiber said independent contractors have been subject to widespread abuse. Employees gain protections like anti-discrimination provisions, workers’ compensation and reimbursement for necessary business expenses.

The misclassification of independent contractors also costs California an estimated $7 billion per year in payroll tax revenue, according to the state Department of Industrial Relations.

“It’s not that it affects every dancer in the state,” Schreiber said. “It affects every worker in the state.”

Foes of Dynamex include adult film performer Stormy Daniels, who allegedly had an affair with Donald Trump. Daniels has said she’d visit Sacramento to protest the Dynamex decision.

State legislators on both sides of the aisle have submitted competing bills on the issue.

In a January suit filed in San Diego Superior Court, dancers sued clubs owned or operated by Deja Vu Services, Inc.

Assemblywomen Melissa Melendez, R-Lake Elsinore, introduced AB 71, which she’s said would protect independent workers and roll back Dynamex.

Assemblywoman Lorena Gonzalez, D-San Diego, has authored AB 5, legislation that she says would codify the Dynamex decision.

Katie Figueroa, an organizer with the Independent Entertainer Coalition and an opponent of Dynamex, said in an email that dancers have fled the state for better working conditions elsewhere. She estimated 40 percent of the dancers at her club have left.

“We do not want to be employees,” Figueroa said. “We made more money, enjoyed lower taxes and had more freedoms as independent contractors. The current situation under forced employment is truly miserable for our earnings and workplace. In our view, paycheck employment is enslavement.”

The test
There’s a history of struggle over employee classification between exotic dancers and the businesses that employ them – a battle seemingly exacerbated by the Dynamex decision.

In a January suit filed in San Diego Superior Court, dancers sued clubs owned or operated by Deja Vu Services, Inc., claiming their employer had retaliated against them by classifying them as employees. The dancers had wanted the employee designation, except now the clubs were implementing significant wage reductions because of it.

The defendants’ actions, the suit states, could impact other improperly classified employees who want their rights but fear they’d suffer wage losses as well.

None say they oppose work protections, but at the same time they don’t want to take home less cash each day.

Additionally, the suit contends the defendants’ move could weaken people’s interest in how workers are classified – “which the Supreme Court recognized in announcing in a strongly worded unanimous decision last year, Dynamex Operations West v. Superior Court … setting forth a stricter test for employment classification than had previously been used in California.”

Differing opinions
Phyllisha Anne – a dancer and adult film star – is a strong supporter of Dynamex.

Founder and secretary of the International Entertainment Adult Union, Anne points to situations like Deja Vu and blames club owners, not Dynamex, for reduced wages. Anne claims that club owners are paying dancers weekly or biweekly and taxing each dance. She called it retaliation.

“They don’t have to do that,” she said.

Anne said she speaks regularly with exotic dancers. None say they oppose work protections, but at the same time they don’t want to take home less cash each day.

Anne chided Stormy Daniels’ opinion on Dynamex. Daniels in a January tweet said she’d protest Dynamex in Sacramento, saying legislators should give workers a choice. Daniels has since issued a statement saying that while she’s given her opinion and continues to support those who want the option of having independent contractor status, it’s time for others to weigh in on Dynamex.

Anne called well-known Daniels the 1% of dancers.

“She has no clue,” Anne added. “Nor does she care.”

Figueroa stands on the opposite end of the issue. She said Dynamex has eliminated tax deductions dancers had as contractors, forced them into a mandated working schedule and given clubs power they previously didn’t wield.

“Individuals are not able to make it on three side hustles.” — Lorena Gonzalez

Before Dynamex clubs would require dancers to pay a nightly fee, around $50, or collect dance sales and distribute them to the dancers, who received 70 percent of the proceeds. Now clubs collect all the money from dances and pay their workers an hourly wage, Figueroa said in an email.

“Many dancers have already left to Las Vegas or Oregon where they still allow us the freedom to choose between being an employee or independent contractor,” she added.

Schreiber said the protections employees receive can seem abstract and difficult to appreciate until they’re needed. Figueroa disputes his take, saying she now makes a third of what she did as an independent contractor, has schedule and shift limitations and pays three times as much in taxes.

“As a contractor, I have always got to choose which customers I dance for, and turn down nasty customers regularly,” she added. “Employment relationships give the clubs this control – fact.”

Legislative moves
The two bills filed late last year would affect the Dynamex decision in different ways.

Melendez’s AB 71 would create provisions protecting independent workers while undoing what she called the dangerous precedent set by Dynamex. Conversely, Gonzalez’s AB 5, would codify the Dynamex decision.

“Individuals are not able to make it on three side hustles,” Gonzalez said in a December statement. “That shouldn’t be the norm. That shouldn’t be accepted.”

Melendez’s bill would return California to the standard used before Dynamex. Melendez in a statement said state government is dominated by strong labor union special interests that oppose independent workers.

“Without clear legislative action, the Dynamex case could unravel gig and tech economies and threaten the traditional business models of Realtors, teachers, beauticians, truck drivers, construction trades and countless other professions,” the assemblywoman said in a release.

One of those countless other professions includes exotic dancers.

Melendez’s bill has been referred to the Assembly Committee on Labor and Employment. Gonzalez’s bill hasn’t yet been sent to committee.

 


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