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By John Kristensen of Kristensen Weisberg, LLP posted in Employment Law -- Employee on Friday, June 14, 2019.
John Kristensen, Who Obtained A Million Dollar Settlement From Spearmint Rhino, Pursuing Employment Claims For Dancers For Wage Theft

Attorney John Kristensen of Kristensen Weisberg, LLP was responsible for securing a $1,050,000 settlement in a case against Spearmint Rhino and one of its managers. The claims in the lawsuit included challenging the gentlemen club’s argument that the plaintiff, an exotic dancer, was not an employee. At the time, the club used the frivolous claim that its dancers were not employees, but tenants who were leasing space. Spearmint Rhino argued that it had no control over the dancers/employees.

Federal Judge Strikes Down Gentleman’s Club (The Follies) Schemes to Avoid Federal Pay Requirements
Gentlemen’s clubs throughout the United States have used multiple schemes to avoid paying damages. While the Spearmint Rhino case was under California law, a recent decision by United States District Judge Michael L. Brown from Atlanta illustrates the fallacy of the Gentlemen’s clubs efforts to continue wage theft. Judge Brown, a conservative Trump appointee, rejected The Follies claims that the dancers were independent contractors and not subject to minimum wages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. See Hurst v. Youngelson, 354 F.Supp.3d 1362 (N.D. Ga 2019).

The purpose of the FLSA is to “protect those whose livelihood is dependent upon finding employment within the business of others.” Mednick v. Albert Enterprises, Inc., 508 F.2d 297, 300 (5th Cir. 1975).

The Follies required dancers to pay a “house fee” and controlled shifts that dancers worked. The Gentlemen’s club required dancers to purchase tickets to sell drinks to customers. The club controlled the price of table dances and cover charges for entrance. Dancers were also required to tip out other employees.

The Follies claimed that the fees “increase at certain times because the demand per square foot increases with the number of entertainers willing to compete for that space and [they] charge more during times that entertainers are willing to pay more.” Judge Brown found: “[t]he notion that Plaintiff rented floor space is absurd — Defendants’ silly attempt to redefine reality to avoid the consequences of their conduct.”

California Law Provides Dancers Greater Protections Than Federal Law
California laws are more employee friendly than the minimum standards under the FLSA. This Supreme Court of California recently determined that that Court must apply the employee friendly ABC test to determine whether someone is an employee, rather than an independent contractor, tenant, or a licensee. See Dynamex Operations West v. Sup. Ct. (2018) 4 Cal. 5th 903. (Some clubs are even trying to claim dancers are members/shareholders of a limited liability company. Judge Brown’s ruling will likely be equally apt when that theory is litigated.)

The Dynamex Court explained the ABC test has three parts:

(A)   Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact?
(B)   Does the worker perform work that is outside the usual court of the hiring entity’s business?
(C)   Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

Free Consultation – Do I Have a Claim for Wage Theft?
If you are a dancer and believe the gentlemen’s club where you work, or did work, failed to pay your fair earned wages, feel free to contact us at (310) 507-7924 or at jpk@kristensenlaw.com.