By: Ryan Knight, Associate, Miami

Ask yourself, who seems to control the environment when you walk into an exotic dance club – the dancer or the club? Most people would answer the club and that’s exactly how a Federal Court of Appeals ruled in McFeeley v. Jackson St. Entm’t, LLC, No. 15-1583, (4th Cir. June 8, 2016). Exotic dance clubs may no longer be able to rely on exotic dancers being classified as independent contractors rather than employees to maximize their profits and avoid the constraints of workers’ compensation laws.

Laura McFeeley was one of many dancers who sued two dance clubs alleging that they were owed minimum wage among other benefits because they were in fact, the club’s employees. The dancers claimed almost all aspects of their work were regulated by the club owners. The club owners regulated the fees the dancers were allowed to charge, set the dancers’ regular work schedules and trained the dancers if they “did not have the right attitude or were not behaving properly.” The club owners argued that the dancers were not employees because they signed a “Space/Lease Rental Agreement” which specifically labeled the dancers as independent contractors. They also relied on the fact that the dancers were allowed to come and go as they please, controlled their own wardrobes and were free to dance at other clubs whenever they chose.

The Federal District Court found that the dancers are employees. The Court chose to reject the club’s cherry-picked factors in light of the weightier and more numerous factors which indicated an employer-employee relationship. The Court relied on the “economic realities” test outlined in Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304–05 (4th Cir. 2006), which determines whether a worker is an independent contractor or employee by weighing these six factors:

1. The degree of control that putative employer has over the manner in which the work is performed;
2. The worker’s opportunities for profit or loss dependent on his managerial skills
3. The worker’s investment in equipment or material, or his employment of other workers;
4. The degree of skill required for the work;
5. The permanence of the working relationship; and,
6. The degree to which the services rendered are an integral part of the putative employer’s business.

The McFeeley Court focused primarily on the first factor and noted the club owners exerted significant control over how the dancers provided their services. The Court also ignored the signed agreement which labeled the dancers as independent contractors. The actual workplace environment and relationship between the employer and worker were far more persuasive. The Court quickly dismissed the club’s reliance on the fact that the dancers chose and paid for their own “costumes” to show that they were independent contractors by stating that an attorney buying his own suits by no means makes him an independent contractor.

This ruling now provides exotic dancers in all states precedent to rely upon when claiming they are employees and are entitled to benefits such as minimum wage and workers compensation. Considering there are an estimated 50 exotic dance clubs in the Miami/Fort Lauderdale area alone, this represents a potentially sizeable number of new clients. So, the next time you frequent your favorite neighborhood gentlemen’s club, remember that you may end up handling a claim with that “friendly” looking bouncer, the dancer, or the club’s owner.