Exotic Dancers Ruled Employees, Not Independent Contractors

Sept. 14, 2023, 11:40 AM PDT

Exotic dancers who worked at an Alabama strip club were misclassified as independent contractors in violation of federal labor law, a federal magistrate judge ruled.

The lawsuit alleges that Best In Town Inc., doing business as The Furnace, intentionally misclassified the dancers to avoid paying them minimum wage, in violation of the Fair Labor Standards Act.

“The vast weight of authority from lower courts” supports a finding that dancers are employees under the FLSA, US Magistrate Judge John H. England III of the US District Court for the Northern District of Alabama said Wednesday, ruling on partial summary judgment, which he granted in part.

The court considered the Eleventh Circuit’s “six guiding factors” for distinguishing between an independent contractor and an employee: the employer’s control over the manner in which the work is performed; the employee’s opportunity for profit and loss; the employee’s investment in equipment or materials; whether the service requires a special skill; the degree of permanency and duration of the working relationship; and the extent to which the service rendered is an “integral part of” the business, the court said.

“The economic reality is that plaintiffs are employees of The Furnace,” England said. “With the exception of the permanency and duration factor, each of the factors weighs in favor of a finding that plaintiffs are employees,” he said.

The court rejected the company’s argument that it is entitled to a good faith defense to liability under the FSLA because there is no showing that it “relied on or acted in conformity with a written administrative interpretation by the agency designated to provide FLSA interpretations.”

Nor can the club invoke a statutory defense to liquidated damages by showing “reasonable grounds for believing” the action wasn’t a violation of the FLSA, England said.

“To the extent that defendants rely on the advice of the City of Birmingham, the City has expressly disclaimed giving any sort of advice about FLSA compliance,” England said. “While defendants state that they consulted with an attorney more than two decades ago, there is no indication what advice the attorney they consulted provided to them,” he said.

The court also rejected the club’s motion to offset any payment owed under the FLSA with payments, or tips, made directly by customers to dancers.

The plaintiffs are pursuing a collective action to recover unpaid minimum wages owed to them individually and on behalf of all other current and former employees of The Furnace.

The parties consented to the exercise of dispositive jurisdiction by magistrate judge.

Ellzey & Associates PLLC, Schilleci & Tortorici PC, and Carpenter & Zuckerman represent the plaintiffs. Ritchey and Ritchey represents Best in Town.

The case is Manasco v. Best in Town Inc., 2023 BL 321840, N.D. Ala., No. 21-cv-00381, 9/13/23.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloombergindustry.com

To contact the editors responsible for this story: Martina Stewart at mstewart@bloombergindustry.com; Blair Chavis at bchavis@bloombergindustry.com; Patrick L. Gregory at pgregory@bloombergindustry.com