A recently federal wage and hour lawsuit was filed on behalf of a strip club dancer against The New Dollhouse, formerly the Crazy Horse, alleging violations of minimum wage and overtime compensation laws. According to the lawsuit, the club treats the dancers as independent contractors, and not paid employees. The suit further alleges: “Over the past two decades, the United States of Labor and courts across the country have recognized that dancers are employees, not independent contractors, and, accordingly, are entitled to protection under various state and federal wage and hour laws.”
This case raises several significant issues in wage and hour law that affect many industries, including when is a worker considered an employee vs. an independent contractor? Federal labor law – the Fair Labor Standards Act (FLSA) – provides that all employees must be paid minimum wage. In addition to other protections, the FLSA also provides that all non-exempt employees are entitled to overtime compensation at a rate of one and one-half times your typical rate of pay for all time worked in excess of 40 hours in any one work week.
If you have questions about your pay, or believe that you have not received all the compensation you deserve, it’s a good idea to consult with a dedicated Atlanta overtime compensation attorney right away.
According to the lawsuit, the dancers were treated as independent contractors, and additionally required to participate in a tip sharing arrangement that left them making less than minimum wage.
Independent Contractor or Employee?
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. On the other hand, you are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if the worker has some freedom. What matters is whether the employer controls the details of how the services are performed.
Valid Tip Sharing Arrangement?
Also, the tip-sharing arrangement as set forth in the wage and hour lawsuit is questionable. The suit alleges that the dancers were required to turn over a significant portion of their pay including “house fee” ranging from $25-$100 per shift, as well as a portion of their lap dance fees calculated at $10 for one $30 song and $50 for a $300 30-minute private dance. Dancers were also required to pay a portion of their tips to the club’s “house mom,” the DJ and the valet. The suit alleges that as the result of the tip sharing, which also includes paying for business expenses, the dancers ended up receive little or no actual compensation for hours of work.
Very specific rules exist concerning tip sharing. For example, tip-sharing arrangements are generally only permissible if the employees sharing the tips are other tipped employees or have somehow participated in serving the customers who left the tips. Additionally valid tip-sharing arrangements cannot require employees who actually receive tips to contribute a greater percentage of their tips than is customary and reasonable. Whether the percentage the dancers were required to contribute is reasonable is also a significant issue.
This case raises numerous issues that are common across many lines of work.
For more information or if you have questions about your pay, please contact the experienced Atlanta wage and hour attorneys at Buckley Beal LLP, LLC for an immediate case evaluation.