Skin, Yes. Skim, No. Club Cannot Take Exotic Dancer's Tips

Recently a California jury awarded 249 exotic dancers $6.5 million for unpaid wages.  The jury found that their employer, Paradise Showgirls, violated the Labor Code that prohibits a Club from taking a portion of the dancers' tips or requiring a divestment of payments for services. The exotic dancers are employees, not independent contractors, and thus need not contribute any portion of what they earn to defray the Club's overhead. 

What are Protected Classes?

The law prohibits employers from making decisions regarding employees based upon protected classes. But what is a protected class?

Protected classes are certain categories of specific, personal characteristics. For example, gender is a protected class. That means, an employer may not make decisions regarding employees based upon the employee’s gender. An employer cannot fire, demote, or take another adverse job action against an employee because the employee is a woman or because the employee is a man. In fact, the employee’s gender may not be the reason the employer takes any adverse action at all.

The  laws recognizes the following protected classes:

  • race,
  • gender (or sex),
  • national origin,
  • religion,
  • disability,
  • age (over 40 only),
  • pregnancy,
  • citizenship,
  • familial status, and
  • veteran status.

Additionally, California’s Fair Employment and Housing Act (“FEHA”) law expands the list of protected classes to include medical condition, sexual orientation, and gender identity. See, Gov. Code, §§ 12940, 12945, and 12945.2.

Some cities in California expand the list even further. For example, Santa Cruz and San Francisco both make it illegal to discriminate in the workplace against someone based on their weight. Santa Cruz also includes “physical characteristic” in its protected classes.


Harassment is unfair conduct targeting an employee or a group of employees based upon a protected class. Harassment can be verbal, physical, or visual (such as posters, cartoons, or drawings). See, Cal. Code Regs., tit. 2, §7287.6(b)(1)

For example, if employees frequently refer to a back co-worker as “boy” or use racial slurs, then that is harassment.

Independent Contractor

An independent contractor is a person who an employer hires to complete a project. The employer does not have control over how the project is completed. In California, a person hired to do something for the benefit of another is assumed to be an employee unless the employer proves otherwise. See, Labor Code, § 3357.

For example, if a small donut shop hires a web designer to build a website for the business and agrees to pay a set amount for the project, then the web designer is an independent contractor and not an employee.

As discussed here and here, whether someone is an employee or an independent contractor involves a number of factors.


An employee is a person hired by employers to do something for the employer’s benefit or for the benefit of the employer’s customers. An employer has the right to control how the employee does their work is done by the employee. See, Labor Code, § 2750.

As discussed here, whether someone is an employee or an independent contractor involves a number of factors.


An employer cannot fire, demote, refuse to hire, or take other job actions concerning employees based on the employee’s

  • race,
  • religion,
  • color,
  • ancestry,
  • disability,
  • gender,
  • veteran status, or
  • any other protected class.

For example, if a clothing store decides to give raises only to non-Latino employees because it wants the store’s appearance to match a changing community, then that would be employment discrimination.

Another example, if a large car dealership decides to fire the one employee who refuses to work on Saturday because of his religious beliefs, then that would be employment discrimination.

See, Government Code, § 12940.


Retaliation involves an employer taking adverse employment action against an employee because the employee opposed any workplace harassment or discrimination forbidden by law, or because the person filed a complaint, testified, or assisted in any proceeding

See, CACI 2505 and Government Code, § 12940(h).

Business Necessity

An employer faced with an allegation of discrimination resulting from disparate impact can defend against the allegation by claiming business necessity. To use this defense, the employer must prove that there was a real business purpose behind the workplace practice or policy that resulted in discrimination. There must also be no other way to achieve the same business purpose without having a discriminatory impact. This defense does not exist for employers facing claims of disparate treatment.

See, CACI 2503 and City and County of San Francisco v. Fair Employment and Housing Com. (1987) 191 Cal.App.3d 976, 989-990.

Adverse Employment Action

California’s law protects employees not only from so-called ultimate employment actions such as termination or demotion, but also from any adverse employment action – i.e. the entire range of employment actions that are likely to have a substantial negative impact on an employee’s job or career.

Although offensive or rude comments or even repeated social slights by an employer or co-workers may not be viewed as sufficient to negatively impact an employee’s job or career, the law is designed to have a broad reach in order to protect employees against employment discrimination.

Minor or trivial actions by employers or co-workers that, from an objective perspective, are likely to do no more than upset an employee are considered insufficient to negatively impact an employee’s job or career. The antidiscrimination laws were not designed to protect against such minor or trial actions. See, Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1053–1055

Severance Pay

Severance pay is an extra amount paid to an employee upon the ending of the employee’s employment in addition to wages due, vacation pay, or bonus owed to the employee. In California there is no legal requirement to provide severance pay to an employee unless the employer agreed to pay it.

Quid Pro Quo Harassment

When an employer or supervisor requires an employee to engage in sex to keep their job or receive some job benefit like a raise or promotion, that’s quid pro quo harassment. California’s FEHA law (Fair Employment and Housing Act) prohibits quid pro harassment and permits the employee to sue both the employer and the harasser.

See, Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 607. See, CACI 2520.

As one court explained:

“A cause of action for quid pro quo harassment involves the behavior most commonly regarded as sexual harassment, including, e.g., sexual propositions, unwarranted graphic discussion of sexual acts, and commentary on the employee’s body and the sexual uses to which it could be put. To state a cause of action on this theory, it is sufficient to allege that a term of employment was expressly or impliedly conditioned upon acceptance of a supervisor’s unwelcome sexual advances.”

(Mogilefsky v. Superior Court (1993) 20 Cal.App.4th 1409, 1414, internal citations omitted.) 

Disparate Impact

Sometimes an employer has some policy or practice that appears to be fair to everyone but, in the real world, has negative consequences for certain employees only. If the employees who suffer are members of a protected class, then the policy is said to have a disparate impact and it is illegal.

For example, if a clothing store has a policy that they only hire employees who are over 6 feet tall, then this would have a negative impact on women because they are less likely to be 6 feet tall than men. or other protected classes getting jobs. If the policy has no legitimate business purpose, then it is employment discrimination.

See, CACI 2502 and Government Code, § 12940

Constructive Termination

Sometimes an employer knows it is wrong to fire an employee, so the employer makes the employee so miserable that the employee has no other choice but to quit. In those cases, the employer has constructively terminated the employee. The law treats employees who have been constructively terminated as though they had been fired even though they quit.


“[C]onstructive discharge occurs only when an employer terminates employment by forcing the employee to resign. A constructive discharge is equivalent to a dismissal, although it is accomplished indirectly. Constructive discharge occurs only when the employer coerces the employee’s resignation, either by creating working conditions that are intolerable under an objective standard, or by failing to remedy objectively intolerable working conditions that actually are known to the employer. We have said ‘a constructive discharge is legally regarded as a firing rather than a resignation.’ ”

(Mullins v. Rockwell Internat. Corp. (1997) 15 Cal.4th 731, 737, internal citations omitted.)

Hostile Work Environment

A hostile work environment is one in which the harassment has become so frequent or horrible that the victim’s working conditions are changed for the worse. For there to be a hostile work environment, the harassment has to be aimed at a protected class.

For example, if a supervisor at a tech company frequently makes comments about women being bad at coding, or perhaps sends emails with cartoons making fun of women, then a hostile work environment may exist. If, however, the supervisor is angry and hostile to all of the employees, both men and women, then, even though it is unpleasant, the work environment is not, from a legal perspective, “hostile.” 

Wrongful Termination

An employee is wrongfully terminated if he or she is fired for an illegal reason. The reason may be illegal because it violates an established law or because the firing goes against a public policy.

A firing may constitute a wrongful termination because it violates the law prohibiting discrimination based on protected classes. Even if the firing violates no law, it may still be considered a wrongful termination and, therefore, illegal if it goes against an established policy of the state. For example, firing an employee because they were selected for jury duty is a wrongful termination because the California Constitution supports people serving on juries.

See, CACI 2430

Disparate Treatment

Disparate treatment means “different treatment.” Disparate treatment is illegal when it is aimed at an employee or independent contractor because of their membership in a protected class.

Most often, illegal disparate treatment results in an employee not getting a raise, being passed over for a promotion, being assigned an undesirable shift or job duties, or being fired because of a characteristic they have which belongs to a protected class. For example, being male or female is a characteristic of the protected class gender; being Muslim, Catholic, Jewish, or Hindu is a characteristic of the protected class religion.

See, CACI 2500 and Government Code, § 12940


One who hires others to do something is an employer. An employer can be a person or a business. An employer has the right to control how an employee performs their work. The employer does not have control over how independent contractors complete their work.

See, Labor Code, § 2750.

Are You an Employee or an Independent Contractor?

It depends. Does your employer retain the right to control the how you perform your work? If yes, then you are an employee. If no, than you are an independent contractor. If maybe, then the Court will consider these additional questions:

  • Are you engaged in a distinct business?
  • Is your job usually done with or without supervision?
  • What skills does your job require?
  • Do you supply the tools, instruments and the place of work?
  • How long do you work?
  • How are you paid? By time or by the job?
  • Is the work part of the regular business of the company?
  • Did you or the company believe you were creating an employer-employee relationship?

These questions usually raise complicated and detailed answers. A judge or jury will weigh the answers to these questions to determine whether a person is an employee or independent contractor.  As discussed here, the answer makes a difference as to how employment laws may be enforced.

Does it Make a Difference if You are Called an "Employee" or an "Independent Contractor"?

 Yes! The law provides greater protection for an employee than an independent contractor. Anti-discrimination, anti-retaliation and rest break laws protect employees not independent contractors. State agencies such as the Division of Labor may enforce the laws for employees; but independent contractors must seek remedies from the Court under contract law.