Priya Verma sued The Penthouse Club of Philadelphia under federal
and state wage laws. The recent case illustrates a trend I am seeing in my
current research project— companies misclassify workers as “contractors” and
they impose various chargebacks or fines, all of which are subtracted from their
compensation. For dancers, the night club charged a fee for their
dressing room, fined them for not wearing their hair down, charged a “stage
rental fee,” required tips be paid
to the disc jockey, fined them $100 for smoking and $50 for dress code violations, and so on. Think this is
unique to strippers? Hardly. I am finding that many installers of cable
services and delivery workers are misclassified as independent contractors. If
they don’t complete work within a specified time, or their work is not
satisfactory, they are deducted piece-rate pay in “chargebacks.” Besides the
workers who are cheated out of overtime and minimum wage pay, the biggest
losers are Social Security and other government units that collect employment taxes. Who
pays for this cheating? Honest employers. Verma recently won a preliminary ruling in her
lawsuit.
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