Exotic dancers who worked at a Philadelphia strip club that substantially controlled the work environment and took cuts of tips and lap dance proceeds are employees and can bring an FLSA collective action, a federal judge has ruled.
U.S. District Judge Anita B. Brody of the Eastern District of Pennsylvania ruled in Verma v. 3001 Castor that The Penthouse Club improperly classified its strippers as independent contractors instead of employees. The ruling is a win for a proposed class of strippers who claim they are entitled to minimum wage, overtime compensation and all the gratuities they earned.
Brody granted lead plaintiff Priya Verma conditional class certification under the Fair Labor Standards Act, but denied her request for class certification of state law claims under the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law. Brody ruled the class action requirement of predominance could not be proven at this early stage of the case, but allowed for Verma to refile a motion for class certification after the evidentiary record has been developed.
Brody’s analysis of whether the strippers were employees or independent contractors for purposes of the FLSA claims came down largely on the control the club exerted over the dancers’ work.
According to Brody’s opinion, the dancers at The Penthouse don’t earn any wages, receiving all of their compensation from the club’s customers. And during certain shifts, some of the dancers are required to pay the club a stage rental fee to work the shift. The club’s cut of the dancers’ performances range from $10 of every $30, four-minute private dance to $200 of every $500, one-hour private dance, Brody said. The club sets the price and duration of all private dances and the dancers are not allowed to charge above that price, the judge said.
The dancers also have to give a portion of their tips to various club staff, including the DJ, “house mom,” “podium host” and possibly the valet. The dancers face fines for being late or leaving early from a shift, using their cellphone, chewing gum, entering or exiting the stage from anywhere other than the stairs or failing to wear their hair down. There is a salon on site and dancers are instructed on their physical appearance, Brody said.
In order to avoid additional shift fees, dancers have to work at least four shifts a week to avoid being considered freelancers. While the dancers can leave the club at any time and work for another club, they are under “continuous review” by club management when working at The Penthouse, Brody said.
The club argued that dancers set their own schedules and that if dancers “hustle,” they can make up to $1,600 a shift, according to the opinion.
“Here, the dancers’ control over their schedules is minimal compared to all of the elements of the work that defendant controlled,” Brody said.
