North Beach Strip Clubs Facing Unexpected Consequences from New Rules

Dancers employed at Penthouse Club received their first employee paychecks in November 2018. When they were handed their checks, many of the 30 dancers at the popular North Beach strip club felt a surge of panic and shock. Some decided immediately that they were finished with their job.

Dancers in establishments like the Penthouse Club in North Beach were traditionally engaged as independent contractors. They were accustomed to leaving the club each night with cash (often hundreds of dollars) after they completed a shift. When clubs started enforcing the California Supreme Court ruling from April 2018 that set new standards for employee classification, everything changed. The gig economy was shaken to its core, but the new standards also affected some unexpected areas where workers were traditionally not classified as employees: hair salons, adult entertainment industry businesses, etc.

When the changes swept through local clubs in San Francisco, it resulted in a mass exodus of employees who were not happy with the effects of their new employee status. One single mother who has worked as a dancer at the Penthouse Club described her problem with the change by citing that the entire point of that type of work was being able to go in for a shift, earn quick cash without documentation and keeping all of it. She was one of the dancers who cut ties with the club after they adopted the new standards.

Club owners respond to employee complaints by stating that the new changes are actually costing them as well. As a result of lawsuits and ongoing demands by dancers who sued for employment violations, clubs have been compelled by Court order to eliminate the independent contractor option – dancers will be required to be club employees paid hourly wages and commissions on dance sales. It’s estimated that 200 dancers quit in response to the change. Club management indicated that it dramatically affected overall business and business profitability costing the clubs several million annually with matching payroll taxes, unemployment compensation, workman’s compensation, Health San Francisco costs, Affordable Care Insurance costs, sick leave pay, etc.

The changes were brought about after a California Supreme Court decision on a case brought by two Dynamex drivers. The ruling on the case stated that workers may now be considered employees if they complete job duties during the usual course of the company’s business. This would apply to dancers working at a strip club so club owners who want to play it safe should be paying minimum wage and comply with wage and hour law.

The changes left many dancers scrambling to make ends meet and seeking other employment as the new pay structure offered minimum wage plus commission on dance sales, but the commission pay structure was also altered leaving many of them with significantly less take home pay.

If you need to find out how to seek justice for wage and hour violations or if you are misclassified in the workplace, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.