Strippers Get $6.5M, Say in Employee Status Under Settlement

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By Kevin McGowan

Dancers at adult entertainment clubs run by Deja Vu Services Inc. and related companies would have a say in whether they are employees or independent contractors under a proposed $6.5 million class action settlement ( Doe v. Deja Vu Servs., Inc. , E.D. Mich., No. 16-10877, preliminary injunction granted 2/9/17 ).

The settlement may be “the first of its kind” because it would create a process for covered clubs and individual dancers to resolve if the dancers are employees or independent contractors, said Jason Thompson, a Southfield, Mich., lawyer who represented the workers.

Under the proposed settlement, dancers would complete an “entertainment assessment form” that lists factors considered under the IRS’s “economic realities test” for deciding if a worker is an independent contractor or employee, Thompson told Bloomberg BNA Feb. 10.

That’s a novel way to resolve the oft-litigated issue of whether exotic dancers are employees covered by the Fair Labor Standards Act and state wage laws or independent contractors not entitled to minimum wage and overtime pay protections.

A federal district court in Michigan Feb. 7 granted preliminary approval of the settlement, which potentially covers about 50,000 current and former dancers at 64 clubs nationwide operated by Deja Vu, its predecessor and affiliated entities.

The court Feb. 9 put on hold a dozen related lawsuits against Deja Vu clubs pending its final approval of the proposed settlement. The court scheduled a June 6 fairness hearing to consider final approval.

Dancers who agree to work solely for one club presumably would be deemed wage-protected employees, and dancers who perform at multiple clubs, have their own websites or do free-lance gigs could be independent contractors, Thompson said.

“Frankly, it’s what needed to be done,” said Thompson, a senior shareholder with Sommers Schwartz PC.

Attorneys representing Deja Vu weren’t immediately available for comment.

Individual Assessments Proposed

Factors considered under the economic realities test include a purported employer’s control of a worker’s hours, performance conditions, compensation and ability to work elsewhere.

The settlement’s intent is that after a dancer completes the individual assessment, the club and dancer would agree on employee or independent contractor status, Thompson said. But the proposal also includes procedures for resolving that issue if the parties can’t agree, he said.

Dancers’ lawsuits filed under the FLSA and state wage laws challenging their independent contractor classifications are plentiful. But dancers have had mixed success in arguing they are employees entitled to wages and other benefits, Thompson said.

Some courts have decided dancers are employees under the FLSA and state wage laws even if they signed agreements that say they are contractors.

For example, the U.S. Court of Appeals for the Fourth Circuit last June ruled dancers at a Maryland establishment were employees rather than independent contractors. The Labor Department filed a brief supporting those dancers’ legal arguments.

Adult clubs have had some success in getting courts to enforce dancers’ signed agreements to arbitrate any employment disputes, including their independent contractor classification.

Two Settlement Pools

The Deja Vu proposed settlement would split the $6.5 million into separate settlement pools of $2 million and $4.5 million.

The first pool would include $1 million for class members who elect cash payments, $900,000 in attorneys’ fees and costs, $30,000 in awards to two proposed class representatives, $100,000 in California Private Attorney General Act payments and up to $50,000 for settlement notice and administrative costs.

The second pool would be split into credits for dancers who “rent” stage time or pay other performance fees, depending on an individual club’s business practices. Credit amounts would range from $220 for dancers who performed at a club for at least a month to $2,000 for dancers who worked for 18 months or longer.

Notices now will be sent to potential class members, who can choose to opt into the settlement, opt out or file objections.

Pitt McGehee Palmer Rivers PC also represented the dancers. Shaffer & Associates represented Deja Vu.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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