The Sapphire Gentleman’s Club, the world’s largest gentlemen’s club, recently lost its appeal at the Nevada Supreme Court. The gentlemen’s club was accused of violating the Fair Labor Standards Act (FLSA) and state labor law when it classified its dancers as independent contractors. The misclassification allegedly resulted in a failure to pay the dancers minimum wage and earned overtime, since the dancers’ only wages came from tips earned each night.
The Club’s Failed Claim
Sapphire claimed the dancers never signed an employment contract with the club and therefore could not be employees. However in the court’s rejection of that argument, it noted that the dancers did sign a very detailed agreement regarding the rules for their employment. Some of these rules included the dancers had artistic control over how they dance, but they had to dance to the music the DJ selected. And the dancers could choose their hours and prices, but they had to agree to six-hour shifts and their prices had to be above the club’s minimum price. As with wage and overtime claims brought by dancers across the country, the club had significant say in the dancers outfits, charged the dancers “house fees” for each of their shifts, and the dancers were vital to the clubs business. These details are indications that Sapphire actually had significant control, like that of an employer, over the dancers.
Sapphire, despite the details in the dancers’ agreement, claimed that the dancers had significant autonomy, an important trait of an independent contractor. But, the court determined the dancers’ “choices” were illusory. The dancers’ “choice” of when to dance and who to give private dances did exist, but if the dancers failed to do what the club wanted they risked significant losses during their shift. The club also claimed that since the dancers only earned tips it encouraged them to “hustle” clients for more tips, which, according to the club, put the dancers in business for themselves.
Determining Independence
The federal courts have set an “economic realities” test for determining if an individual is an independent contractor or an employee which the Nevada court is following in this case. Based on the test, the dancers’ do not fit the definition of independent contractor sufficiently enough to meet the exemption requirements. In reality, the dancers were dependent upon the club for their earnings. The dancers were also subject to the rules and control of the club in many of the aspects of their performance. From an economic standpoint, the dancers were an essential element to the club and were employed for the benefit of the club.
If you are an independent contractor, but are treated more like an employee, you may have been misclassified. Contact our experienced team of overtime pay lawyers today at (855) 754-2795 to discuss your situation. If we accept your case, we will represent you under our No Fee Promise.