This blog has previously discussed the need for employers to make sure they are properly classifying their employees. Many cases get brought to court over this issue, particularly when the employers classify their employees as independent contractors, even when the employees don’t fit any of the requirements. Another such case has just settled between 15 nightclubs and more than a dozen of their exotic dancers.
The nightclubs, including Spearmint Rhino, allegedly classified their dancers as independent contractors. Not only did they allegedly not pay the dancers any wages or salary, but they allegedly required the dancers to pay a “stage fee” and to pay a certain amount of their tips in “rent”. Additionally, the dancers were allegedly required to contribute to a tipping pool which included employees who would not normally receive tips, such as managers, checkers, disc-jockeys, and bouncers.
Rather than being able to control their business, clients, and work environment (as an independent contractor would), the dancers relied on the nightclub owners for everything. The club required dancers to work a certain number of shifts per week, the shifts needed to be a certain number of hours, and there was a minimum number of drinks they were required to sell. If they did not meet their drink quota, they were punished.
Moreover, one can consider an economic realities test to determine whether an employee might fit the requirements of an independent contractor. This test looks at whether an employee is truly independent or if she relies on others to provide her business. Because the nightclub did all of the marketing to bring in customers, the dancers were entirely dependent upon the club for their business and, therefore, were not economically independent and did not fit the requirements of independent contractors.
The defendants allegedly attempted to have their employees sign contracts to give up their FLSA and California Labor rights. However, this cannot legally be done. Even if the dancers signed contracts to that effect, they cannot be enforced in a court of law.
In addition to suing for unpaid minimum wages, the lawsuit was also filed to recover minimum wages for meal breaks, which the dancers were never given.
A federal judge recently approved a settlement of $12.9 million. Additionally, the clubs are now required to pay wages to their dancers, to properly classify them as employees, and the dancers are no longer required to pay stage fees to the clubs.
The attorneys at Chicago Overtime Law Center have decades of experience litigating wage and hour cases including overtime, breaks, vacation pay, and tips. Our offices are conveniently located in Oak Brook Terrace and Chicago, Illinois and we handle cases throughout Cook, DuPage, Kane, Will, McHenry and Lake Counties. If you believe you have been denied overtime wages, contact a Elgin Unpaid Overtime attorney attorney today at 312-869-4095 or fill out our online form.