What Exotic Dancers Can Teach You About Independent Contractors
What the law says about employment status
A group of exotic dancers may have some important lessons for anyone employed as an independent contractor.
Six former dancers for a club chain in Maryland sued the club owners, claiming that they were misclassified as independent contractors when they should have been employees. The women prevailed in court and were awarded damages and back pay.
Let’s take a look at how this case played out and then talk about what it means to other self-employed individuals.
Who Was in Control?
Dancers at the Fuego Exotic Dance Club and the Extasy Exotic Dance Club, both owned by Jackson Street Entertainment, say they had to pay to work. The women were required to submit an entrance fee in order to dance at the clubs. Then, because they were considered independent contractors, they did not receive an hourly wage. Rather, their entire compensation depended on tips.
The club owners also had all the dancers sign a contract titled “Space/Lease Rental Agreement of Business Space,” which stated that the women were effectively leasing club space in order to provide entertainment.
The women who worked at Fuego and Extasy felt the arrangement was unfair, so they sued the club owners for violating their rights under the Fair Labor Standards Act and state wage and hour laws.
The club owners argued that the women were not employees because the clubs exerted little control over their schedules, how and when they performed, and whether or not they worked at other clubs.
The women claimed otherwise. They alleged that the clubs determined their schedules, and that they had to sign in once they arrived for a shift. The women were held accountable to certain club rules and were disciplined or fired for non-compliance. The clubs also set the fees for various services that the women performed.
The court sided with the dancers. A judge ruled that the women had been improperly classified. The club owners were ordered to pay $265,000 in back pay and damages.
(The case discussed here is McFeeley v. Jackson Street Entertainment.)
6-Part Test to Determine Status
So where is the line between employee and independent contractor?
The Department of Labor (DOL) has a six-part test that it uses to determine a person’s employment status. It looks at the following factors:
- How much control the company has over the person’s work. For example, does the individual make independent decisions and/or control his or her own work? Or does he or she report to a boss and follow instructions? Who determines when, where, and how the person works?
- Does the individual have any opportunity for additional profit or loss based on his or her managerial skills? Or is the person held to a set fee schedule determined by the employer?
- Does the person have an investment in the operation? Does the worker provide his or her own equipment? Does the person employ subcontractors or helpers?
- Does the service provided require any special skills?
- What is the degree of permanence of the work agreement, i.e., is the work ongoing and consistent over a period of time or is it temporary and/or project-based?
- Is the person providing a service that is an integral part of the company’s business?
Contact Us for a Free Consultation
If you feel that you’ve been improperly classified as an independent contractor, it’s a good idea to speak to an attorney.
Email us at email@example.com, or call (267) 273-1054 for a free consultation.