Independent Contractor vs. Employee -- Exotic Dancers Recover $1.55M in Misclassification Case

Independent Contractor vs. Employee Exotic Dancers Recover $1.55M in Misclassification Case

Clincy v. Galardi South Enterprises, Inc. was brought by a group of exotic dancer/entertainers who alleged that they had been misclassified as independent contractors rather than employees. The Defendants required that the dancers pay a fee to the club for the privilege of dancing as an independent contractor.

The trial court explored the question of whether the dancers were employees or independent contractors under the FLSA and ruled that the dancers were employees rather than independent contractors.  Prior to the trial on the second issue, the defendants settled the action. They agreed to pay a $1.55 million settlement to the class of strippers.

Ultimately the employee versus independent contractor issue is a complicated one.  Courts often rule based on a variety of factors including (1) the nature and degree of control over the work, (2) the employee's opportunity for profit or loss depending on her skill, (3) who pays for equipment, (4) whether the services require special skill, (5) the permanency and duration of the working relationship, and (6) the extent to which the services are integral to the business.

In this case, none of the plaintiffs were paid any direct wages by the club in which they worked.  Instead, they paid defendants for the right to perform in their club.  The plaintiffs’ each were required to sign independent contractor agreements as a prerequisite to beginning work for the defendants.  Defendants claimed that the dancers were independent contractors because they were paid directly by customers and did not receive paychecks.  They also claimed that the club did not profit from the dancers and that the dancers did not necessarily drive the club’s business.  However, based on evidence that the defendants set the prices for tableside dances and the amount of gross receipts dancers were required to turn over in the form of “house fees” and disc jockey fees, as well as the fact that the defendants set specific schedules for the dancers, created rules of conduct (subject to discipline), check-in and check-out procedures and otherwise controlled the method and manner in which plaintiffs worked, the court held that the defendants were plaintiffs’ employers under the FLSA.

The take home point is this – just because your employer calls you an independent contractor, that does not necessarily make you and independent contractor.  This is true even if your employer makes you sign an “independent contractor” agreement.  If you think you may have been misclassified as an independent contractor, contact us for a free initial consultation.

Click Clincy v. Galardi South Enterprises, Inc. to read the entire opinion.