Employee or Independent Contractor? Topless Dancers Declare Their Non-Independence

A recently filed class action colorfully illustrates the problems that can arise when employers exercise too much control over their independent contractors.  Or in this case, their topless dancers.

Zuri-Kinshasa Maria Terry, an exoctic dancer at Sapphire Gentlemen’s Club in Las Vegas, has slapped the club with a putative class action alleging that it improperly classified its dancers as independent contractors in order to avoid complying with state wage and hour laws.  The class action, filed in Nevada state court, and covering potentially 5,000 current and former dancers, seeks back pay and overtime wages for the class members as well as an order forcing the club to comply with state wage and hour laws.

At issue is the legal distinction distinction between independent contractors and employees.  The distinction is a significant one.  Generally, employers must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Employers generally do not  have to withhold or pay any taxes on payments to independent contractors.   (For more information on this topic, click here: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html).  Employers also must pay employees in a manner consistent with state and federal wage and hour laws.  Not so with independent contractors.

The determining factor is control.  An independent contractor must be truly independent.  If an employer closely supervises and controls the manner in which a job is performed, the employer generally cannot claim that the job was performed by an independent contractor.  Some of the factors courts examine in making the employee-versus-independent contractor determination are as follows:

• Does the business provide instructions to the worker about when, where and how he or she is to perform the work?
• Does the business provide training to the worker?
• Is there a continuing relationship between the business and the worker?
• Does the business set the work hours and schedule?
• Does the worker devote substantially full time to the work of the business?
• Is the work performed on the business’ premises?
• Is the worker required to perform the services in an order or sequence set by the business?
• Is the worker required to submit oral or written reports to the business?
• Is the worker paid by the hour, week or month?
• Does the worker provide services for more than one firm at a time?
• Does the worker make his or her services available to the general public?

The plaintiffs in the Sapphire case contend that the club exercised too much control for them to be considered truly “independent” contractiors. For example,  club rules required the dancers to work six hour minimum shifts; remain on the premises throughout their shifts; refrain from  leaving with, or socializing with, club patrons; charge minimum fixed fees for dances; promote sales of drinks and take drink orders;  wear approved costumes; and pay a portion of their tips to club DJ’s, managers, bartenders and security personnel. According to the lawsuit, “[s]uch rules and regulations and control over the means and methods of dance and conditions of employment are not the type imposed upon independent contractors”

The suit claims that the dancers should have been classified as employees and, as such, paid in a manner consistent with Nevada’s wage and hour laws.  The dancers claim that the club broke the law by stiffing them on overtime and regular wages; denying them mandatory breaks; forcing them to wear uniforms purchased at their own expense; and forcing them to participate in illegal tip sharing scheme that required them to tip out DJ’s, managers, bartenders and security personnel.

The plaintiffs are represented by Robert Starr, who maintains the website  http://www.ExoticDancerRights.com.