You know the cost of misclassifying employees as independent contractors. But can you determine whether or not these exotic dancers were employees?

Here are the facts:

  • The dancers couldn’t adjust their thongs to show tan lines at any time
  • They couldn’t chew gum
  • They couldn’t have a bad attitude
  • Their bodies had to stay in shape
  • They couldn’t wear body glitter
  • Their dresses had to be a specified length
  • Regulations governed the height of their shoes
  • They had to charge a set amount for lap dances and table dances
  • The club kept a set amount of money customers paid for dance vouchers when using a credit card, and
  • The club kept track of the dancers’ comings and goings via a fingerprint scanner.

Are these rules so controlling as to establish an employer/employee relationship?

Not according to the owner of Rick’s Cabaret, a strip club in downtown Manhattan, which is embroiled in a lawsuit in which 1,900 former dancers are accusing the club of misclassifying them as independent contractors and denying them proper employee wages.

The owner claims the club implemented those rules to make sure the club followed the law and kept dancers safe.

But a federal judge didn’t buy the argument. He said the club’s regulations exerted “significant control” over the dancers, even going so far as to encroach on “small aspects” of their lives. He said they had nothing to do with keeping the workers safe.

In ruling that the dancers’ case should proceed to a jury — which will iron out the exact damages — the judge ruled the club must pay the dancers at least $10.8 million. But after the trial, that figure is likely to be much higher.

The case involves everyone who danced at the club since it opened in 2005 through late 2012. The dancers are claiming they should’ve been paid at least minimum wage.

An ongoing problem

This is the latest in a long line of expensive lawsuits brought against strip club owners in recent years.

Back in 2013 the state Supreme Court of Kansas ruled that strippers at Topeka’ Club Orleans were employees and not independent contractors.

The court found that the control Club Orleans’ management exerted over the strippers required them to be classified as employees. That control manifested itself in a number of ways:

  • Dancers had to pay “rent” to use the dressing rooms and stage
  • The women were required to pay extra fees for bouncers and DJs
  • “Rent” was higher during peak hours
  • Women had to pay extra to use private rooms to entertain guests
  • Rules governed how much the women could charge and what they could do in their shows, and
  • Women had to sign in when they started their shift and weren’t allowed to leave the building until their shift was over.

The bottom line for all employers: The more control you exert over independent contractors, the more likely it is they should actually be classified as employees.

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