Employment Law Blog

Federal Judge Approves Settlement between Exotic Dancers and San Francisco Nightclubs   

4/24/2017

 

A United States Magistrate Judge in San Francisco recently gave preliminary approval to  a nearly $5 million settlement between nearly 4700 exotic dancers and nine San Francisco nightclubs in a Fair Labor Standards Act (FLSA) class action lawsuit.  The dancers claimed that that they were not paid the legal minimum wage as a result of allegedly being misclassified as independent contractors instead of employees of the nine clubs. The federal judge ruled that the settlement, which provides the approximately 4,691 dancers who are members of the class up to $800 each, is reasonable, despite objections by some dancers who claimed it shortchanged them considerably.  This settlement follows several other settlements in cases involving FLSA claims made by exotic dancers against the clubs that employed them, including a 2011 Atlanta case ruling in favor of exotic dancers at a number of clubs in that city and a more recent $13 million settlement in a case filed by dancers at several nightclubs in the Los Angeles area.

What is the Minimum Hourly Wage I Must Be Paid By Law?

Minimum wage is regulated by federal, state and, in some cases, municipal law.  For example, the minimum wage in California is currently $10.00 per hour.  However, in Los Angeles the minimum wage was recently raised to $10.50 per hour for employers with 26 or more employees (and will be increasing to $12.00 per hour on July 1, 2017), while under federal law the minimum wage remains $7.25 per hour.  If an employer fails to pay an employee the prevailing minimum wage, the employee has a claim against the employer for unpaid wages.  However, the payment of minimum wage hinges on whether or not someone is classified as an independent contractor vs. an employee of a business, which was the crux of the exotic dancers’ lawsuit.  The dancers claimed they were employees and were entitled to minimum wage in addition to tips, while the clubs claimed they were only entitled to tips because they were independent contractors.

What is the Difference between an Independent Contractor and an Employee under California and Federal Law?

California’s labor and employment laws generally distinguish an independent contractor from an employee based on whether or not the worker has the right to control the way the work is conducted.  In the exotic dancers’ case, the plaintiffs argued that they did not have control over scheduling, how long their shifts lasted, and the manner in which they performed their work. Under the FLSA, the same factors are used to determine if someone is an employee or an independent contractor, but other factors also go into that determination, such as who bares the risk of profit and loss in the business-individual relationship. The dancers were pursuing violations of both California labor laws and the FLSA in the case described above.

What Reasons Would a Business Have to Misclassify Workers as Independent Contractors instead of Employees in Violation of California or Federal Law?

A business’s choice to classify a worker as an independent contractor rather than an employee essentially comes down to money.  A business must pay unemployment insurance, workers’ compensation insurance, Social Security taxes, and Medicare taxes for employees, whereas businesses do not have to pay any of these expenses for independent contractors.  More importantly, a business is also not bound to provide an independent contractor rights given to employees such as minimum wage and overtime or benefits such as health insurance or sick pay.  Therefore, many employers will attempt to misclassify workers as independent contractors instead of employees to benefit the business’s bottom line.

Contact Hekmat Law Group if You Believe Your Employee is Misclassifying You as An Independent Contractor Instead of an Employee and Refusing to Pay You Minimum Wage

Employers nationwide, including in California, are increasingly treating the individuals who work for them as independent contractors instead of employees in violation of both California law and the FLSA.  The experienced employee rights lawyers of the Hekmat Law Group have extensive experience representing California residents whose employers are attempting to misclassify them as independent contractors instead of employees in violation of California and/or federal law in an effort to save the business money.  If your employer is doing so, please contact the experienced and aggressive employee rights attorneys of the Hekmat Law Group at 424-888-4LAW to discuss your potential legal options today.