The Lawletter Vol 46 No 3
An exotic dancer was an "employee" of an adult entertainment club under the Fair Labor Standards Act ("FLSA"), even though a written agreement disclaimed an employment relationship, a federal district court sitting in Florida recently held in Schofield v. Gold Club Tampa, Inc., No. 8:19-CV-3097-VMC-TGW, 2021 WL 533540 (M.D. Fla. Feb. 12, 2021). The summary judgment evidence showed that the economic reality of the relationship was one of employer and employee given the degree of control over the dancer's work exercised by the club, among other factors.
An exotic dancer who worked at an adult entertainment club brought suit against the club owner and its operator ("club"), seeking a ruling that she had been misclassified as an independent contractor, that she was the club's employee, and that she was thus entitled to employee's protections under the FLSA. The evidence showed that the club's DJ used a list of dancers present at the club on a given shift to set up a rotation for performances on the stage. Each dancer would perform for about two and a half minutes to music she had preselected. In addition to watching dancers on the stage, club patrons could purchase a lap dance in an open booth and/or time with a dancer in a private "VIP room." An employee called a "VIP host" would schedule such activities and collect the money before any activity took place.
The club did not pay the dancers any form of compensation. An agreement signed by both parties described the relationship as one of "Licensor-Lessor" and "Licensee-Temporary Space Lessee," and it stated that "no employee/employer relationship exists between the [parties]." The dancers kept whatever tips they made for dancing on stage, for lap dances, or in the VIP rooms. The dancer in this case moved for partial summary judgment.
In order to determine whether an employer-employee relationship exists under the FLSA, courts look to the "economic reality" of the relationship between the parties and whether that relationship demonstrates dependence by one upon the other, the Schofield court noted. Labels used by the parties are not dispositive. The factors considered by the courts include (1) the nature and degree of control over the worker, (2) the worker's opportunity for profit or loss, (3) the worker's investment in equipment or materials, (4) whether the service rendered requires a special skill, (5) the degree of permanency and duration of the working relationship, and (6) the extent to which the service rendered is an integral part of the alleged employer's business.
Noting that the district courts in the Eleventh Circuit have uniformly held that exotic dancers are employees of the clubs in which they perform, the Schofield court determined that the economic status of the dancer in this case was inextricably linked to conditions over which the club had complete control, such as advertising, customer flow, overall club atmosphere, and facilities' maintenance. Although the dancer set her own schedule, decided whether to dance on the stage or pursue the more lucrative private dances, chose her own choreography, costume, and music, and determined for which customers she would perform, she did not exercise any meaningful control over the business.
The court then explained that in applying the profit-or-loss factor, the focus should be on the worker's contribution to managerial decisionmaking and investment relative to the company's contribution. Because the club was primarily responsible for attracting customers and setting minimum fees for services, it exercised significant control over the dancers' opportunity for profit. The only risk of loss a dancer could incur was the nightly lease fee of $10 to $20, depending on when she arrived for work. The club's risk of profit and loss thus far exceeded that of its dancers.
Next, the court determined that the dancer's investment in equipment and materials—costumes, make-up, hair—was indisputably minimal compared to that of the club. Further, although the club asked potential workers about their prior experience, it did not require dancers to have any formal training, certification, license, or any experience at all; thus, no special skill was involved. The factor of the degree of permanence tipped in favor of the club, but it was entitled to little weight given the inherently "itinerant" nature of exotic dancers' work. Finally, the service of the dancers was unquestionably essential to the club's business for, without it, the club would have been just an ordinary restaurant and bar. With five of the six factors weighing in favor of the dancer, the court held that she was an employee of the club within the meaning of the FLSA. Her motion for partial summary judgment was granted.