By Rick Shulman, Member of the Firm
Employment lawyers across the country are “fully employed” litigating the issue of employee vs. independent contractor in a wide variety of industries and contexts. The stakes for employers are often high, as a determination that a particular group of workers is properly characterized as employees rather contractors has far-ranging consequences in terms of obligations under the federal Fair Labor Standards Act, as well as under state statutes such as New Jersey’s Wage and Hour Law, in terms of minimum wage requirements, the payment of overtime, and the deduction of expenses from the workers’ wages. One industry in which this issue is under close scrutiny, nationwide, is the employment by clubs and other establishments of so-called “exotic dancers.”
A recent decision of the United States District Court for the Northern District of Ohio is illustrative. In Brandi Lester v. Agment LLC, Case No. 1:15 CV 886 (N.D. Ohio April 20, 2016) the Court granted the Plaintiff dancers summary judgment, classifying them as employees of The Brass Pole, and not independent contractors. Following a detailed and fact-sensitive analysis, the Court concluded that the majority of the relevant factors under a six-part economic realities test weighed in favor of employment, and not independent contractor status:
1. The length, permanency and exclusivity of employment. In Lester, the fact that The Brass Pole required its dancers to perform only at its establishment, and not in competing locations, weighed in favor of employment, notwithstanding that the named plaintiffs had worked for The Brass Pole for only a matter of months.
2. The degree of skill required. While The Brass Pole contended that the fact that how to dance, how to dress and the selection of music evidenced a reasonable degree of skill and creativity, the Court was persuaded by the fact that there was no specialized training or prior experience required before the commencement of employment to conclude that no substantial degree of skill was required to perform the job, thereby weighing in favor of an employment, and not an independent contractor, relationship.
3. The worker’s investment of capital in equipment or materials to perform the job. Although it was undisputed that the workers invested both time and money in selecting and purchasing their costumes, investing in their personal appearance, weight control and muscle tone, designing their choreography, and in “leasing” space for private dances with customers, the proprietor’s substantial investment in the premises in which the business was operated, in facilities for food and alcohol, and its costs in maintaining other non-revenue producing employees, weighed strongly in favor of finding an employment relationship.
4. The worker’s opportunity for greater profits and revenues based upon individual skill. Although it was clear that the dancers had some control over their income in terms of the number of hours they chose to work, the individuals they chose to render “special services” to and the negotiated price for such services, the Court didn’t dance around the fact that defendant had a far more significant role in attracting patrons to the club, through, among other things, its location, hours of operation, its maintenance of the facility, its inventory of food and beverages and its expenses for advertising. It therefore held that this factor weighed, as well, in finding an employer-employee relationship.
5. The degree of control over the work performed. One of the most important of the factors, and while there was some evidence within the record as to a degree of control by plaintiffs as to their hours, appearance and performance choreography, choice of patrons and ability to “personally advertise” their services, the Court concluded that The Brass Pole’s ability to proscribe employment at other facilities, its system of “fines” for certain violations of work rules, its establishment of certain “minimum fees” for services and other requirements with respect to how to dance, what to wear (or not wear) and other performance “requirements” supported Ms. Lester’s position that the exercise of control was pervasive, and that the dancers were more like employees than independent contractors.
6. Whether the worker’s services were integral to the business. Since there was no evidence that customers came primarily to the club for its “other offerings, including beer, liquor and frozen burgers from Sam’s Club,” rather than to see and be entertained by the dancers, this factor also weighed in favor of an employment status.
The Court in Lester therefore concluded, as had courts in Maryland, Pennsylvania, Florida, Georgia, Alaska, Indiana, Texas, Oregon and Michigan previously, that the plaintiffs should be (re) classified as employees, and therefore entitled to the statutory protections relating thereto. While this author’s research has not found a similar decision in New Jersey, can a similar result be far behind?
Rick Shulman
Contact Rick at rshulman@pricemeese.com should you have questions about this article.
