Strip Club Wage Dispute Lawsuits
Common Legal Issues Facing Strip Clubs
More often than ever, strip club owners are facing lawsuits involving requirements of the Fair Labor Standards Act as applied to the entertainers who perform there.
One of the most common legal issues confronting clubs is whether their dancers should be classified as "employees" or "independent contractors." "Misclassification" cases (e.g., lawsuits alleging employers have designated and paid their workers incorrectly) are on the rise in federal courts across the country. Although misclassification cases are certainly not exclusive to gentlemen's clubs, they have increasingly been a popular target of wage and hour lawyers looking to sue for failing to pay dancers minimum and overtime wages.
It is important to recognize that these cases are being brought by dancers notwithstanding some form of an "independent contractor agreement" with the club at which they perform. Such lawsuits are often brought by an individual or small group of entertainers. Other times, they are asserted on behalf of both the named entertainers, and also "all others similarly situated." This means that the legal action may apply to all other entertainers who were potentially misclassified by the club over the past 2-3 years and not afforded the protections of the FLSA.
Are Exotic Dancers Employees?
Economic Realities Test
Generally, whether an exotic dancer should be classified as an "employee" or "independent contractor" is a legal question, the answer to which is driven by a variety of factors. In the context of gentlemen's clubs, courts have established the so-called "economic realities test," a multi-factor balancing-test designed to help courts analyze the "economic realities and dependencies" which exist between entertainers and the club. This test considers the:
- Degree of control exercised by club
- Extent of the relative investments of the worker and club
- Degree to which the worker's opportunity for profit and loss is determined by the club
- Skill and initiative required in performing the job
- Permanency of the working relationship between the worker and club
The "economic realities" test creates a problem for strip club owners in two ways. First, it is heavily weighted in favor of finding the entertainer to be an "employee" rather than an "independent contractor." Second, it purposefully ignores the rights of the parties to enter into contracts which seek to define the nature and scope of the business relationship between them (e.g. independent contractor relationships), ultimately substituting the legal judgment of the court for the business judgment of the parties.
The issues involved in stripper wage dispute cases are complex, and always accompanied by important factual and legal considerations. The attorneys at Schulten, Ward & Turner, LLP have extensive experience in all types of FLSA cases, including independent contractor determinations, minimum and overtime wage disputes, and other employment issues related to strip clubs.