In a lawsuit entitled Newark v Executive’s Den, filed in federal court in the Northern District of Ohio, dancers at a go-go bar, so-called exotic dancers, are suing their employer in a class action for failing to pay them the minimum wage and for, allegedly illegally, taking a portion of their nightly tips. The plaintiffs allege that the class could contain between 50-75 members. The club, called Executive’s Den, is charged with calling the dancers “independent contractors” rather than employees. The derivative allegations are that the club failed to pay them minimum wages and overtime compensation.

One of the criteria for showing an employment relationship is “economic dependence.”  Herein, the plaintiffs claim that they were economically dependent on the club because the club set their fees and schedules, mandated that they solicit drink orders from customers and set a nightly order of performance on the club’s center stage in a rotation. Thus, the crucial focus of the case will be on the (usually first) prong of “control” in the independent contractor analysis. If the dancers were not free to make their own decisions vis-à-vis their employment, they could well be classified as employees.

The tip issue revolves around the allegation that the club directed that the dancers pay a “club fee” from their nightly tips. The problem for the dancers and the trigger that might have sparked the lawsuit is that the dancers had to pay these fees, whether they earned five hundred dollars or ten dollars for their night’s endeavors.  In other words, the workers still had to pay the house back, which essentially, allege plaintiffs, is paying your boss for the “privilege” of working there.  The dancers seek liquidated damages for their unpaid wages under the Fair Labor Standards Act (“FLSA”) and treble damages under Ohio law, as well as the return of all tip dollars. The named plaintiff seeks a class defined as all dancers employed by Executive’s Den in the three years prior to the complaint being filed.

Whether working on a construction site or gyrating around a pole in a club, if individuals are found to be “employees,” rather than independent contractors, then they are entitled to all statutory protections, such as time and one-half overtime under the FLSA.  There are many factors which go into the calculus of determining who is and who is not an independent contractor.  It is a totality of the circumstances test, but under any construct, state or federal, whether the workers’ compensation law, the unemployment law, or an anti-discrimination statute, the initial focus is on control.  If the putative employer succeeds in defending that front, the focus switches to whether the person is in an “independently established business.”  Employers should note that states are cracking down on these classification issues, because if workers have been misclassified, the particular State will derive revenues from unemployment contributions and other contributions and taxes that have not been made or paid.