Women who work as lap dancers have to put up with a lot. Squirming, near naked, on the lap of a fully dressed stranger is not the easiest way to make a living. But what really bothers many dancers is that their only pay is via tips from customers. They receive no hourly wages, and, what's more, they have to pay substantial booking and stage fees to theaters and clubs for the privilege of working at all. For many years, even full-time dancers have been classified by club owners as “independent contractors,” depriving them of the workers' compensation, unemployment insurance and Social Security benefits to which employees would be entitled.

But such practices could change for good, from Palo Alto to San Pedro, as a result of the tentative settlement of a San Francisco class-action lawsuit. Under settlement terms, more than 500 current and former dancers will receive a total of $2.85 million from the Mitchell Brothers' O'Farrell Theater, one of the city's glitziest, most successful and most renowned erotic emporiums. The payments will serve as compensation for lost wages, overtime pay and benefits as well as reimbursement for stage fees illegally collected between March 1991 and June 1998.

Although the O'Farrell Theater has made no admission of wrongdoing, the settlement commits its operators to treat all dancers as employees, which means supplying a base salary and paying for workers' compensation and unemployment insurance as well as Social Security and payroll taxes. The theater also must stop collecting the stage and booking fees that had angered dancers and inspired the legal action in the first place. The theater has complied with these terms since July 1, even though the settlement will not become final until after a September hearing to review the pact.

With the July settlement, the Bay Area lap-dancing emporium joins other, more conventional businesses such as the Los Angeles Times, which have faced litigation or government pressure to stop them from wrongly classifying workers as self-employed independent contractors. In the case of the L.A. Times, the faux contractors included full-time reporters and photographers, and the pressure came from the Internal Revenue Service, which was more interested in lost tax revenue than the fate of the journalistic drones.

For the O'Farrell dancers, the impetus for change was the class-action lawsuit filed in 1991 by dancers Ellen Vickery and Jennifer Bryce, who were later joined by seven other dancers as “named plaintiffs” in the case. At the time, dancers had to subsist solely off customer tips, typically $10 or more per lap dance. The settlement will benefit any dancer who worked at the theater between March 1991 and April 1998 who did not specifically surrender rights to participate in the suit.

The size of the O'Farrell settlement, and the prominence of the theater, make it likely that the agreement will shake up an industry in which most dancers are still designated as independent contractors. It follows recent court and labor-commission rulings in California, Oregon, Alaska and Texas, all of which have declared exotic dancers to be employees.

In a 1995 decision, nine dancers in Portland, Oregon, were certified as employees by the Oregon Bureau of Labor and Industries, and awarded $45,441 in back wages, plus attorney fees and court costs. In a second 1995 decision, a contract dancer at San Francisco's Market Street Cinema was declared an employee by a San Francisco Superior Court and awarded $52,600 for back wages, illegal stage fees and penalties.

“To the best of my knowledge, there has not been a court decision anywhere in recent years where the dancers were considered independent contractors,” said Phil Yoder, publisher of The T&A Times, an industry newsletter. “The IRS has said they are employees and will fine you if you misclassify them.”

Other changes also are brewing. Collective action to challenge abusive working conditions is intensifying as many college students and better-educated single mothers join the ranks of erotic dancers.

Dancers in North Hollywood, Anchorage, Philadelphia and Pittsburgh have taken steps toward organizing unions, some with the active support of organizers from the Lusty Lady Theater, a San Francisco peep show at which employees voted to be represented by the Service Employees International Union (AFL-CIO). The 1997 union contract for Lusty Lady workers guaranteed work shifts, and protected dancers from arbitrary discipline and termination. It also provided for automatic hourly wage increases, sick days and a grievance procedure. A second contract, expanding these benefits, was negotiated earlier this year. (Ironically, even before these milestones, the Lusty Lady was something of an industry maverick, a “women-run” business that granted employee status to dancers long before other clubs began to be pressured by legal action to follow suit.)

Although it's a major breakthrough for erotic dancers, the O'Farrell settlement stops well short of being a panacea for sex-industry workers. The potential for employee abuse remains even when dancers are classified as employees, noted one former male exotic dancer in Los Angeles. A club, for example, could pay minimum wage and attempt to confiscate money that customers pay for lap dances, said Arthur, who requested anonymity. Dancers could end up earning less than they do now, he added.

The Market Street Cinema in San Francisco adapted to the new legal landscape by deciding that money paid for lap dances doesn't belong to the performers at all. Instead, dances are technically sold by dancers on a commission basis, enabling management to keep a portion of what customers pay without illegally withholding tips.

Most L.A. operators contacted have adopted a wait-and-see attitude in the wake of the O'Farrell settlement over concerns, they said, that legal issues remain unresolved. “We'd like to see one set thing for everyone, no matter which way it goes,” said David Woodrow, manager of the Sunset Strip in Hollywood. His club treats dancers as independent contractors, he said, because “that just seems to be the easiest system for us right now. But we'll go with whatever the decision is.”

The Century Lounge near Los Angeles International Airport just converted to an independent-contractor system, for what manager Gene Lombardi characterized as competitive reasons. According to Lombardi, “99 percent” of clubs do it that way.

The owner of Lacy Street Cabaret in Lincoln Heights defended the contracting system. “I don't think the government should dictate what a job is worth,” said Kevin Wasko. “As independent contractors, the harder they work, the more money they make. The [less] they work, the less they get paid. It's based on performance, so it's more beneficial . . . There's a higher quality of service.”

But the Jet Strip, in the Lennox area, has gone the other way. “For their own protection, dancers should be classified as employees,” said manager James Wallace. “If they get injured or laid off or pregnant, they're entitled to unemployment or workers'-comp insurance or disability. It also makes them tax-paying residents and takes them off the underground economy.”

LA Weekly