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In a recent case, a group of exotic (nude) dancers sued a gentlemen’s club for its failure to pay them minimum wage under the Fair Labor Standards Act (“FLSA”). As explained in more detail below, the Court found that the exotic dancers were employees of the club (instead of independent contractors), and therefore, that the club violated the law by failing to pay the dancers minimum wage. This case is significant because the issue of whether a worker is an employee or independent contractor is a frequent battleground for wage and hour attorneys, and determines whether a worker is entitled to certain legally-protected wages.
As is typical in the adult entertainment industry, the club treated the dancers asindependent contractors. In that case, the club paid each dancer a total of $40 for a 10-hour shift, and it was typical for each dancer to work four 10-hour shifts per week. So, in total, the average pay that the club provided to a dancer for a 40-hour week was $160. Also, it was common for the club to take certain unexplained deductions from the dancers’ pay, including late fees, fines for calling in sick, and stage fees. The club admitted that it did not pay the dancers minimum wage, but it argued that it was not legally required to pay them minimum wage because they were independent contractors instead of employees of the club. Under the FLSA, employees are entitled to minimum wage, while independent contractors are not.
In deciding whether the dancers were employees or independent contractors, the Court used an “economic reality” test, which contains the following factors: (1) the degree of control exercised by the employer over the workers; (2) the workers’ opportunity for profit or loss and their investment in the business; (3) the degree of skill and independent initiative required to perform the work; and (4) the permanence or duration of the working relationship; and (5) the extent to which the work is an integral part of the employer’s business. Under the economic reality test, all factors are weighed, and no one factor is considered to be dispositive of the issue.
Applying the economic reality test factors to the facts of the case, the Court found that the exotic dancers were in fact employees of the club. The club exercised significant control over the dancers, because it dictated how long they were required to dance versus be on a break, and it required them to comply with various rules that were enforced with fines for violations. As for the second prong, the Court acknowledged that the dancers had no financial stake in the business, and the Court rejected the club’s argument that the dancers’ ability to earn significant tips from the club’s patrons amounted to the dancers’ opportunity for profit in the business on the level of being an independent contractor. On the third prong, the Court held that little specialized skill is needed to be a nude dancer; rather, as the club admitted, a dancer’s beauty is the primary qualification for the job. As to the fourth prong regarding the permanence or duration of the relationship, the Court found that the factual record was mixed, with some dancers having a long-term relationship with the club (i.e., five years or more) and others having a shorter tenure (i.e., a few months). The Court held that the fourth element probably weighed more in favor of the club, but it stated that the transient nature of the job of an exotic dancer did not automatically make a dancer an independent contractor. On the fifth and final element, the Court held that the nature of the work, nude dancing, was certainly an integral part of the club’s business.
Weighing all five of the factors in totality, the Court held that the dancers were employees of the club (not independent contractors), and that they were entitled to be paid the minimum wage for all hours worked. In addition, because the Court could find no good faith basis as to why the club failed to pay its dancers minimum wage, the Court ordered the club to pay liquidated damages. Under the FLSA, liquidated damages are an additional amount of damages equal to the employee’s unpaid wages.
If you work as an independent contractor, you may be entitled to legally mandated pay, such as minimum wage and/or overtime pay.
If you wish to pursue legal action to recover the pay to which you are entitled, or if you want to better understand your legal rights, you should contact a St. Louis wage and hour attorney.