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August, 11 2009

Strippers Misclassified as Independent Contractors

Posted by Liz Greene

In a case that brings vivid new meaning to the “three areas of control,” the Boston Globe reported today that a judge has ruled in favor of about 70 exotic dancers who were misclassified as independent contractors by Chelsea establishment King Arthur’s Lounge. The class action case will now proceed to trial on damages, estimated to come to thousands of dollars per dancer. With such a misclassification finding, the club may now also be exposed to the full monty of independent contractor reclassification risks, including wage and hour law, immigration law, discrimination laws, payroll tax penalties, and more.

 

According to the Globe reporter,

The club had argued that selling alcohol is its main business, not putting on strip shows, and that the performers were independent contractors who provided extra entertainment akin to televisions and pool tables at a sports bar. Suffolk Superior Judge Frances A. McIntyre dismissed that argument. “A court would need to be blind to human instinct to decide that live nude entertainment was equivalent to the wallpaper of routinely-televised matches, games, tournaments, and sports talk in such a place,’’ she wrote. “The dancing is an integral part of King Arthur’s business.’’

Under Massachusetts law, service employees are entitled to $2.63 minimum wage and employers are not allowed to take a portion of their tips. In this case, the strippers had to pay a fee to take it all off, received no minimum wage, and were required to hand over a portion of earnings. Berluti, the attorney for King Arthur’s, is reported to have said that Judge McIntyre’s ruling reflected the fact that Massachusetts has one of the strictest laws in the country concerning misclassification of workers as independent contractors.

 

The case joins similar fights in Minneapolis and Indiana.

Tags: class action, misclassify, contractor, employee, independent contractors, MA, strippers, misclassification

Comments

anonymous at 10/16/2009 15:37:57

I work at a club in Illinois and we are experencing the same thing.  The club is suggesting that if a dancer doesn't sign the new contract thy will not be allowed to work under the old contract and will be "fired".  This new contract has increased what the dancer has to pay and the club has also increased areas of control (i.e.  days/hours worked, how the dancer wears her hair, clothing, makeup, jewelry, perfume, when she can take time off and "lease damages" for anything violated).  Sounds like an employee to me. 

Liz Greene at 08/28/2009 18:03:21

Joseph, yes, MA is an "ABC" state. A more detailed review of the court's application of the statute is well explained here by Keating and McGovern at Littler Mendelson, LLP: http://www.littler.com/PressPublications/Lists/ASAPs/DispASAPs.aspx?id=1413 

It is always advisable to consult qualified legal advice, and generally we recommend companies leverage the expertise of third party Independent Contractor Engagement Specialists (ICES) to assess and maintain compliance of your contract workers, and properly engage the individuals as either compliant entities via an Agent of Record (AOR) arrangement, an Employer of Record (EOR) payrolling method, and/or a Portable Employer of Record (PER) approach, according to the most appropriate fit for each individual. (MBO Partners is an Independent Contractor Engagement Specialist offering all three of these contractor engagement models.)

anonymous at 08/28/2009 17:05:49

Seems like the proper result under Massachusetts law.

Joseph Saguaro at 08/28/2009 13:49:33

Good update, MBO.  Is Massachusetts one of those states that follows the so-called "ABC Test" (that is, you must meet three strict requirements in order to meet the IC test)?

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