1. Does any of this case surprise you? Explain.

2. If you were the club owner and did not want the dancers to be employees, after receiving this decision how would you change things?

3. Do you think the dancers should have been considered employees? Why or why not?

Issue: Whether topless nightclub dancers receiving only tips are subject to FLSA or are “business women renting space, stages, music, dressing rooms and lights from the club,” not subject to FLSA.

Facts: The topless dancers receive no compensation from the club. Their only compensation is the tips they receive from customers for performing on stage and performing private “table dances” and “couch dances.” At the end of each night, each of the dancers were required to pay the club a $20 “tip out” regardless of how much they made in tips. The club says this is for stage rental and argues that the dancers are tenants renting space, stages, music, dressing rooms and lights from the club. The club says the dancers are not employees or independent contractors.

Decision: The court said to determine employee status under FLSA the focus is on whether the alleged employee is economically dependent upon the business to which she renders her services or is in business for herself. Five factors are analyzed: the degree of control exercised by the alleged employer, the extent of the relative investment of the employer and alleged employee, the degree to which the workers’ opportunity for profit and loss is determined by the alleged employer, the skill and initiative needed for performing the job, and the permanency of the relationship. Here, the court found that the club exercised a great deal of control over the dancers by requiring them to comply with weekly work schedules compiled by the club with input from the dancers, fining the dancers for tardiness, instructing the dancers what to charge for their services, dictating behavior such as no flat heels, no more than 15 minutes at one time in the dressing room, only one dancer in the restroom at a time, etc. The club argued that the rules were only for maintaining decorum and keeping the club legal, but the court determined it exercised significant control. The dancer’s investment is limited to costumes and the padlock. The costume prices can vary and some are quite expensive. As for the worker’s opportunity for profit and loss, the club has significant control over drawing customers, though once customers arrive at the club, a dancer’s initiative, hustle and costume significantly contribute to the amount of her tips. The skill and initiative required in performing varies, as many of the dancers did not have any prior experience with topless dancing before coming to work at the club. They do not need long training or highly developed skills to dance at the club. The dancer’s initiative is essentially limited to decisions involving costumes and dance routines, which is not indicative of persons in business for themselves. Most dancers have short-term relationships with the club, so the relationship is not very permanent. Based on the analysis of the factors, the dancers are subject to the Fair Labor Standards Act.