Clincy et al. v. Galardi South Enterprises Inc., No. 1:09-CV-02082-RWS (N.D. Georgia, September 7, 2011)
One of the questions before the court is whether exotic dancers are independent contractors or employees, entitled to minimum wages and overtime under the Fair Labor Standards Act (FLSA).
Each of the Plaintiffs performed as a dancer/entertainer (DE) at Club Onyx. Galardi South Enterprises Inc. is owned by Jack Galardi, who also owns Pony Tail, Inc. and Galardi South Enterprises Consulting, Inc. Pony Tail leases the premises where Onyx is located and admits to owning and controlling Onyx.
Onyx employs a management team that handles the club's day-to-day operations. House moms assist the entertainers. Part of the house mom duties include directly managing a DE, including her appearance, signing her in for her shifts, and explaining how a DE is required to pay the disc jockey and a bar fee.
When hired, a DE at Onyx is given a "Dancer Packet" which contains forms to review, complete and return to management. The packet includes 1) Onyx's Club Rules and Conduct for Contractors and Employees; 2) conduct rules for the VIP Rooms; 3) a Dancer Information Sheet; 4) a Random Drug Test Consent Form; 5) an Independent Contractor Agreement; 6) a document entitled "Wage Acknowledgment Regarding `Tip Credit'" and 7) Rules Recognition and Consent.
A DE is responsible for obtaining an individual adult entertainment license specific to Onyx from the City of Atlanta, where the club is located, and paying the annual cost to maintain an adult entertainment license. A DE is also asked to attend separate meetings to discuss Onyx's rules and policies, changes in City law, promotional events and Onyx's decoration and furnishings. Though there is no concrete rule as to the minimum number of nights a DE must work each week, if a DE does not work four nights a week, she is fined or disciplined. A DE must also call her House moms if she cannot perform on a work day.
The FLSA defines an "employee" as "any individual employed by an employer." 29 U.S.C. § 203(e)(1). The economic realities of the relationship between the worker and the boss determines whether a worker is an independent contractor or an employee.
The court reviewed six factors to determine the economic reality relationship between the plaintiffs and defendants.
1. The nature and degree of the alleged employer's control as to the manner in which the work is to be performed. The court finds Onyx exerts control over nearly every aspect of a DE's work from hire to termination.
2. The alleged employee's opportunity for profit or loss depending upon his managerial skill. The court finds Onyx is primarily responsible for drawing customers into the club, which determines a DE's earnings and Onyx's revenue.
3. The alleged employee's investment in equipment or materials required for his task, or his employment of workers. The court finds a DE's investment in exotic dancing is small in comparison to Onyx's investment.
4. Whether the service rendered requires a special skill, which is indicative of an independent contractor. The court finds that special skills are not required to perform as a DE at Onyx.
5. The degree of permanency and duration of the working relationship. The court finds most of the plaintiffs have worked less than a year for Onyx. This is not indicative of an employer-employee relationship.
6. The extent to which the service rendered is an integral part of the alleged employer's business. The court finds the presence of a DE was integral to Onyx and weighs in favor of finding an employer-employee relationship.
The court concludes that the economic reality relationship between the plaintiffs and defendants is such that plaintiffs are employees of Onyx and entitled to minimum wages and overtime as decreed by the FLSA. The court grants plaintiffs' motion for partial summary judgment and deny defendants' cross motion for summary judgment.
This decision is significant as the majority of strip clubs in the country, including Las Vegas, disregard court decisions that hold most strippers, employed under circumstances similar to those in the case, are actually employees.
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