Failure to Treat Exotic Dancers as Employees a Liability

Historically, owners and managers of strip clubs have adhered to a business model that classifies exotic dancers (often called “strippers”) as independent contractors rather than employees.  By classifying dancers as independent contractors, employers are able to reap the financial benefits of having dancers work for them (and, as a result, turning a profit) while simultaneously avoiding having to pay the dancers for their work, paying into social security, and potentially paying unemployment insurance and workers compensation.  This business model, however, may be quickly eroding.

In November, 2012, a federal court approved a roughly $13 million settlement in a nationwide class-action lawsuit against 16 strip clubs which were classifying their dancers as independent contractors.  Stephanie Hoops, Spearmint Rhino Exotic Dancers Settle Suit For Nearly $13 Million, The Huffington Post (November 11, 2012 1:32 PM) https://www.huffingtonpost.com/2012/11/14/spearmint-rhino-exotic-dancers-settle-suit_n_2128458.html.  Moreover, recent court decisions have nearly unanimously ruled that exotic dancers are employees, not independent contractors.  See Hart v. Rick’s Cabaret International, Inc., 2013 WL 4822199 (2013); Clincy v. Galardi South Enterprises, Inc., 808 F.Supp.2d 1326 (2011); Thompson v. Linda And A, Inc. 779 F.Supp.2d 139 (2011).  That notwithstanding, there are still many strip clubs which continue to classify their dancers as independent contractors.

The key to determining whether an exotic dancer is an employee or an independent contractor begins by looking at federal and state law.  The federal Fair Labor Standards Act, and its state-legislation counterparts, defines employee broadly so as to extend its reach to most people who are employed.  When there is controversy, the courts will look to other factors, such as the degree of control exercised by the employer over the workers, the permanence or duration of the employment relationship, and the extent to which the work is an integral part of the employer’s business, in addition to others.  Using these other factors, the courts have repeatedly found that exotic dancers are employees.

Despite the relative clarity of this distinction, many strip clubs are continuing to try to evade the reach of the statutes by arbitrarily classifying their workers as independent contractors.  When inappropriately labeling exotic dancers as independent contractors, unscrupulous employers can capitalize on a number of financial advantages, such as those listed earlier in this article.

In addition to the unlawful classification of their workers, strip club owners and operators have been known to engage in a number of other exploitative practices.  For instance, some will charge the exotic dancers stage fees, locker fees, or even “encourage” the dancers to pay other workers (such as the “house-moms” or “bouncers”) for their assistance.  What this is, in effect, is a fee-to-work.  And to add insult to injury, some strip clubs will even require the dancers to pay back a percentage of their tips.

While these practices may be diminishing, there are still obstacles to overcome before they are gone.  For one, some exotic dancers prefer to keep their working lives private, and worry about the ramifications to their personal lives should their occupation become public.  Another fear, as is many times the case in employment law, is retaliation by their employers.  Fortunately, with respect to the latter concern, the law provides remedies for employer retaliation.  The good news is that recent court decisions and settlements provide reassuring hope that these unlawful practices are on the demise.