Learn From Lap Dancers: Employees or Independent Contractors?
They weren't paid by the clubs. Instead, they relied upon tips from customers. They rented stage time, lockers, and facilities from the Orleans Club in Topeka, Kansas. The rental rates varied during peak hours and use of the VIP and Champagne rooms required an extra fee. They even paid fees for the DJs and bouncers, according to the Kansas City Star.
Ladies, sometimes it ain't easy being independent.
Yet, somehow, the Kansas Supreme Court ruled that the nude dancers at the Orleans Club were not independent contractors. Why? The club derived significant benefits from the dancers' presence. The club's advertising touted the nudity and featured the women, the strippers had to clock in and out, as well as stay for their entire shift, and the club controlled everything from rates, content of the ladies' private performances, and even their ability to refuse drinks from customers.
The key was control: even though the pay structure was obviously tilted towards an independent contractor-like arrangement, the amount of control exercised over the exotic dancers moved them back into the domain of regular employees. "Most telling, the house set various rules, and dancers' violations of those rules were punishable by fines and termination."
For the club, this will now require them to start paying for unemployment insurance. The strippers will be also be eligible for unemployment benefits if their employment is terminated. Depending on the number of employees, the club might even have to start providing health insurance once the ObamaCare mandates kick in next year.
Though you likely won't be counseling exotic dancers (do strip clubs have in house counsel?), if your company utilizes the independent contractor system for staffing, you'll likely be called upon to help shape the relevant employment policies.
At least in Kansas, it seems like the biggest factor you'll have to consider is how much control is too much. After all, even independent contractors need guidelines to shape their behavior, hours, duties, etc. Too much control, however, and you could end up an unwitting employer, with all of the costs and responsibilities that such a title entails.