My guess is that most people picture the world of exotic dancers as a lucrative one. Apparently, that is not a good guess. In a lawsuit filed in December 2016 dancers in a Florida club alleged that the owners had improperly classified them as independent contractors and had not paid them either the minimum wage or overtime. Minimum wage? That certainly does not go with the image of exotic dancing I had.
What are the issues?
In this particular lawsuit two dancers claimed they were improperly classified as independent contractors. All they made in income was what they were paid in tips by the patrons of the club. As independent contractors they were not paid a minimum wage or overtime when they exceeded 40 hours of work. As I have written before, in Naked Independent Contractors? Courts say “NO”, more and more courts are starting to agree with the dancers that they are not independent contractors. According to an article in the Atlanta Journal-Constitution “Dancers’ work hours, time and manner of dancing, attire and customer interaction with customers was regulated by the owners, and dancers were required to attend meetings at the club without being paid for their time there…” Their contention is that they should have been considered and paid as employees. That is the same argument being made by the dancers in Miami.
According to Payscale.com the range for exotic dancers goes from a low of $22,000 to a high of $180,000. As independent contractors they pay all their own taxes, have to handle all their own expenses, and pay fees to the clubs which utilize their services. The dancers contend they do not have control of their schedules or the “tools” of their trade, thus they are missing the “independence” necessary to be an independent contractor. Given decisions in other venues it is likely the courts will take the same point of view here that dancers are not independent and must be treated as workers, much as wait staff if treated in a restaurant.
The warning for employers
The purpose of this post is not necessarily to warn owners of strip clubs, though they should pay attention. I doubt many of those clubs have HR guidance. My purpose is to warn companies that classify other workers as independent contractors. The misuse of the independent contractor status has been under close scrutiny for the past eight years. Although there will be a Republican controlled administration it is unlikely that this scrutiny will diminish to any great extent any time soon. If the government, both Federal and local governments are paying attention to exotic dancers it will not take much effort to get them to pay attention to “more respectable” occupations.
Follow the rules
The IRS and the USDOL both have rules for what constitutes an independent contractor. Generally, these rules fall into three categories. These are:
- Behavioral control. The more restrictive you are on what someone work on and where a person works the more they are an employee. Requiring someone to be some place at a specific time, having them clock in and out, requiring them to attend meetings the more they appear as an employee.
- Financial relationship. How you pay someone has an effect on their status. Paying by the hour, paying on their attendance, looks like an employee. There is no penalty for not working.
- Generally, an independent contractor can work for someone else. You are more interested in the results of their work than the time spent on the work. The longer someone works for you the more they look like an employee.
If you are not following these rules then you are in danger of being tagged as a violator and suffering the penalties associated with these wage violations.