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Court Cases and Legal Developments

Are they independent contractors or employees?  See below.

For our commentary on the independent contractor/employee discussion, and to look at the reward we've posted, Click Here.

For First Amendment case developments of interest, Click Here.

We will try to make available citations and copies of cases dealing with certain employment law issues here.  In some of these, we have added yellow highlights to passages important to club owners.  These are not a substitute for legal advice.  Contact a competent Labor Law Attorney in your area for advice-- and ask your attorney the full meaning of the cases below.

*To view actual copies of court cases available below, you need Acrobat Reader.  If you don't have it, you may download Acrobat Reader for free from Adobe.

September 7, 2011: U.S. District Judge Richard W. Story grants dancers' motion for partial summary judgment, holding that their relationship with Galardi South Enterprises Consulting, Inc., proprietors of Atlanta's Club Onyx, was that of employee-employer under the FLSA.

July, 2011:  $11.3 million dollar settlement reached in class action suit against Deja Vu for its violations of FLSA in misclassifying dancers as independent contractors.  Dancers' attorneys awarded about $3,000,000.00.  See:  DeJaVu_Settlement.pdf and DeJaVu_AppealDismissal.pdf

April 4, 2011: Spearmint Rhino gets hit with a ten million dollar ($10,000,000.00) judgment for failing to treat its dancers as employees under FLSA.  The Dancers' attorneys were awarded $2,500,000.00.  SpearmintRhino

February, 2011: The Michigan Bar Journal has an excellent, concise, and very straightforward article that every club owner should read http://www.michbar.org/journal/pdf/pdf4article1812.pdf

January, 2010:  Labor law activity is popping up all over!  A recent web search turned up a huge volume of cases and articles-- so many that we've put them up on a separate page.  See More Cases

August, 2009:  The DOL and Plaintiff's attorneys are back in action against clubs.  US DOL is said to have hired 400 new investigators.  Plaintiff's lawyers are soliciting Dancers to sue clubs.

April, 2009: Class action suit filed against Ricks Cabarets, suing to treat dancers as employees, and for back wages: Ricks_0904.pdf

December, 2008: Oklahoma Appeals Court determines that Dancers are employees, making club liable for payment of unemployment insurance premiums on Entertainers:  Club Paradise, Inc. v Oklahoma Employment Security Commission

June 17, 2002:  In United States v. Fior D'Italia, Inc., the U.S. Supreme Court issues a major ruling relating to tip reporting and compliance.  See: USSCt Tips.pdf

March, 2001: In Circuit City Stores, Inc. v Adams, the U.S. Supreme Court issues an important ruling enforcing arbitration clauses in employment contracts.  See SCtCircuitCity.pdf

CALIFORNIA, 2001:  Assembly Bill 2509 was signed into law on September 29, 2000 by Governor Gray Davis, to be effective January 1, 2001.  This bill impacts all cabarets in California and imposes strict new requirements concerning classification, tips and more.  Every California club owner should carefully review with legal counsel new rules regarding tips and house fees. Severe penalties are provided.  CA_AB2509.pdf 

On December 28, 1998, a jury in San Bernardino, CA awarded 2 entertainers $54,000 in their labor law suit against Fantasy Topless Theater in Colton, CA.  The Defendant had failed to properly classify these Plaintiffs as employees.   If this case is published, we will make a cite available here.  For now, the article from the Los Angeles Daily Journal which ran on December 28, 1998:  SanBern2.pdf    UPDATE: September 1, 1999:  The owner of this club announced at the 1999 Exotic Dancer Expo in Las Vegas that she had been ordered to pay the dancers treble damages (3 times $54,000), plus attorney's fees to the dancers' attorney of $350,000!  This does not count her own attorney's fees or costs of defense.  She hopes to appeal, but must raise an appeal bond of one and one-half times the total judgment before she may file her appeal.

In July, 1998, dancers in San Francisco won a reported $2.85 million settlement against a Defendant there.

Lora Harrell v Diamond A. Entertainment, Inc., 992 F. Supp. 1350 (FLA, 1997)   Federal district court in Florida lays to rest the "professional exemption" defense, making clear that exotic dancers are not skilled professionals subject to exemption from certain labor laws.  The Court goes into great detail in discussing the business relationship between the club and entertainer.  See Harrell v Diamond  If you're wondering who the attorneys were who unsuccessfully defended this are, see:  Harrell_Counsel.pdf

Robert Reich, Secretary of Labor v. Priba Corporation, 890 F. Supp 586 (N.D. Texas, 1995) The "Cabaret Royale" case is the most detailed discussion on the proper classification of dancers, tip handling, and other employment related issues affecting cabarets. Judgment against club and individually against its owner for $1,000,000.   View or download a copy from our website:  CabRoy.PDF

Robert Reich, Secretary of Labor v. Circle C Investments, 998 F.2d 324 (5th Cir., 1993) This case from the U.S. Fifth Circuit Court of Appeals dominates current law in the country and must be followed by Federal Courts in the Fifth Circuit; it will guide all other U.S. Courts.  This holds that dancers are employees, not independent contractors for purposes of the FLSA. CircleC.PDF

U.S. v. Indianapolis Athletic Club, Inc., 818 F. Supp. 1250 (S.D. Ind. 1993) In a non-cabaret case, the Court holds that "The discretion to refuse payment is an essential element of a tip or gratuity." If customers must pay for table dances, these payments are not tips.


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Last modified: 8/26/2013