Court Orders $10 Million in Backpay for Wage Violations
A group of exotic dancers who used to work for a New York City strip club called Rick’s Cabaret filed a class action lawsuit against the club alleging that the owners committed wage violations by failing to pay according to the Fair Labor Standards Act.
Now, before the wage violation lawsuit even begins, a federal judge has ruled that Rick’s owes 1,900 current and former dancers $10 million in backpay, because they failed to receive hourly wages in accordance with federal minimum wage standards for full-time workers.
The judge decided last year that the dancers were considered employees, because of the restrictions on scheduling and pay put on the women, even though they were labeled independent contractors. The wage violation trial is set to begin early next year, and although the judge said that Rick’s currently owes the employees at least $10 million, the club could owe more, depending on the outcome of the trial.
The dispute comes with the policy created by Rick’s Cabaret International, RCI Entertainment (New York) and Peregrine Enterprises, who own the Rick’s Cabaret chain, regarding Dance Dollars. Customers can, for example, spend $24 on $20 worth of “Dance Dollars,” and use those for a lap dance. The system retained $2 per voucher as overhead, plus a $4 service fee. Dancers only received $18 per voucher, but when dancers were paid cash, they could retain the whole $20.
“A reasonable customer paying that dancer $20 (or more) in cash would have expected, accurately, that the dancer would keep the entire amount,” U.S. District Judge Paul Engelmayer wrote. “There is no sound reason to conclude that a customer who chose to pay in Dance Dollars would have viewed these payments as any less a gratuity to be retained by the dancers.” Dance Dollars had a printed disclaimer stating they are “not valid for gratuities,” Engelmayer doubted that “a customer in the sybaritic setting of an exotic nightclub would choose or have the focus to read (let alone absorb) this disclaimer.”
“A reasonable customer, mindful that the Dance Dollar functioned as an alternative to paying the dancers in cash, could reasonably conclude that the disclaimer meant only that a Dance Dollar was not valid for use to pay gratuity for drinks or other items purchased in the club,” the 51-page opinion states.
“The court’s decision reflects that exotic dancers are entitled to the same legal protections as other employees, and is a resounding victory for a group whose voices are all too often ignore,” said an attorney for the plaintiffs.
A similar lawsuit was filed in Columbia, SC this past spring, involving Heart Breakers Gentlemen’s Club and Platinum Plus, both of which have clubs in Columbia and Greenville. The exotic dancers who worked at the clubs claimed that their employers violated the Fair Labor Standards Act by classifying the women as independent contractors, and taking so much of their pay that they did not officially receive minimum wage, in violation of federal law.
The Strom Law Firm Can Help with Federal Minimum Wage Violation Cases
Many times people are afraid to confront their employer regarding wage matters. A South Carolina wage payment attorney at the Strom Law Firm, LLC can assist you in seeking back pay if you are not receiving the federal minimum wage. Contact us today for a free, confidential consultation regarding your minimum wage case. 803.252.4800