Our view on...
Are they independent contractors or employees?
September, 2011: We've just updated our case listings and research, as shown on our Cases page. The Independent Contractor vs. Employee controversy continues to rage in the minds of club owners we've talked to from across the country. They are often misled by outside "experts" who tell them what they want to hear and sell them "magic" contracts that supposedly will make their entertainers be viewed as Independent Contractors by the Courts. This has gotten out of hand and club owners are paying for, and losing, very expensive lawsuits dealing with entertainer classification.
Are you willing to bet $10,000,000.00 (yes, ten million dollars) that your entertainers are independent contractors under the U.S. Fair Labor Standards Act (FLSA)? Spearmint Rhino did and had a judgment entered against them for that amount in April, 2011 for their failure to comply with FLSA. You may read the judgment yourself. Deja Vu lost even more in July, 2011-$11.3 million including $3 million in attorney's fees. See the Settlement.
If you think we're exaggerating about this, just Google "dancers & FLSA".
But, I have a great contract my lawyer drew up that says my dancers are NOT employees!
Yeah. So did a bunch of the other clubs that lost cases. NO contract can supersede Federal Law. To illustrate: Suppose you are rich and always in a hurry. You hire a limo driver and draw up a long and carefully worded contract with him that says he is to drive at 90 mph whenever he takes you down the freeway. For a long time this works well and you never get stopped by the police. Finally, you zoom past a radar trap. Do you think the cop will be impressed with your contract?
The issue of classification of dancers for FLSA purposes is nothing new. There were very clear Federal cases decided in the mid 1990's which should have put this to rest. Club owners have persisted in clinging to outdated beliefs and getting bad advice. This worked great as long as there were few "cops on the freeway". Now there are lots of cops in the form of hungry lawyers who are anxious to take your money. Did you notice that the lawyers who sued Spearmint Rhino in the case mentioned above were awarded $2,500,000.00? Do you think there are other lawyers who would sue your business if they thought they could collect this kind of money?
The Monkey Trial
Back in 1925 there was a trial called the Scopes Trial in which scientists made the claim that evolution had a sound scientific basis and was true. Every credible scientist still says so. And yet, some people deny it and believe otherwise. Their belief doesn't change reality. Your belief that your dancers are independent contractors doesn't change reality.
If you try to fight a lawsuit brought against you for violation of the Fair Labor Standards act by claiming your dancers are independent contractors, you better hope the plaintiff's attorney is an idiot. Otherwise you're going write a big check or lose your entire business. You may also be held personally liable. You exercise very little control over your dancers and you had them all sign a terrific contract that you paid your lawyer lots of money to prepare? The Court won't care. ReportWare offers the ONLY U.S. Department of Labor Law approved solution to this problem. Call us. 800-666-4855.
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