Saturday, August 20, 2011

The Naked Truth About Independent Contractors

A recent Chicago Tribune article reported a lawsuit pending against Michael Wellek the former owner of three suburban Chicago strip clubs.  The lawsuit was filed by Argyro Roula Manis who worked as a dancer at two of his clubs.  She is not only seeking five years of unpaid wages due to mysterious pay deductions and denied overtime claims but also to turn the case into a class action lawsuit involving all the women who worked for Wellek at his three clubs during that period. 

Wellek is currently serving the third month of his 1 year sentence in a minimum security prison in Duluth, MN after pleading guilty to tax evasion and being ordered to pay the IRS over 5 million dollars in restitution.  Aside from rubbing salt in Wellek's already wounded ego, this new case against him raises awareness of one of the fastest growing trends in employment.  No, not stripping.  The rise of the independent contractor.

The main basis of Wellek's defense against Manis is that she and the other dancers in the club weren't directly working for him.  They were self-employed labor working in the space that he provided them.  This allowed Wellek not only to lower his tax indebtedness but also to manipulate the pay he provided to the dancers.  Whether there is any validity to either Wellek or Manis' claims is up to the courts to decide.  One thing, however, is clear.  Independent contractors are far more vulnerable to fraud and breach of contract violations than traditional full time employees. 

Ideally an independent contractor should have a contract signed between them and the person they are engaging to work with.  That contract should stipulate the term of employment, the expectations, and the compensation.  It should also explain the remediation options open to either party if any of those obligations aren't met.  Otherwise it's like living in an apartment without a lease.  You can be evicted or see the rent go up at almost anytime and for nearly any reason. 

The reality is that most independent contractors are either hired on at the last minute or are agressively courted by employers in fields that don't tend to attract full time workers.  Either way, the boss is in a hurry to fill the position and the prospective worker is usually in a hurry to start earning money.  This haste can often lead to bad consequences down the line. 

Structural changes in the United States economy have made the independent contractor, for better or worse, the new normal.  This virus not only killed my first chosen profession--Journalism--but is in the process of undermining Higher Education and gutting what's left of the Unions in this country.  Cheaper is not always better and "flexibility" is a fancy way for employers to say they don't want to pay for your health care. 

Hourly workers in the United States, especially those in Unions, need to start paying more attention to independent contractors.  With a shift in the market, that untethered worker could easily be you.  Unions also need to work harder on behalf of the independent contractor.  Ideally such positions should be eliminated with targeted political pressure but at the very least the conditions of these workers needs to be better regulated. 

Even a Strip Club sometimes can teach us a lesson.  Of course, if anyone asks, you never saw me there. And I certainly did not see you.  ; )

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