Nowhere to Run: New Case Serves as Reminder That FLSA Misclassification Settlements are Very Public

I just got back from running in a 200-mile relay, Muskegon to Traverse City, with a group of college friends. I ran three legs of 4, 4, and 5 miles. I had the easiest set of three legs among the 12 runners, but I’m happy just to have finished. It was great to see everyone, and I was able to disconnect from work life for a few days.

So, what I’m saying here is, I had a better weekend than the guys I’m about to write about. And for them, there’s no running away from their problems.

In yet another exotic dancer case to hit the news, the performers at King’s Inn Premier Gentlemen’s Club in Massachusetts are about to score a $292,000 settlement in a claim that they were misclassified as independent contractors. A hearing to approve the settlement is scheduled for this week.

There seem to be a lot of exotic dancer cases in the annals of independent contractor misclassification, and the clubs seem to lose their fair share of these cases. This case, like most of the dancer cases, is a wage and hour case. The dancers claimed they were denied a minimum wage and overtime pay, in violation of the Fair Labor Standards Act (FLSA). The club claimed the dancers were independent contractors and therefore were not covered under the FLSA.

But why do you care about a strip club exotic dancers case? Two reasons:

  • First, the Economic Realities Test is alive and well, and it applies to all industries.
  • Second, any settlement of an FLSA lawsuit must be approved, and it becomes public record.

You can read more about the first point here, in a collection of posts about this test and how it is used to determine whether someone is an employee.

The second point deserves a bit more attention, though. Most types of litigation can be settled in a private settlement agreement. An FLSA case cannot be. The law requires the settlement of an FLSA case to be approved by a judge, and there is a public hearing at which the settlement terms are considered.

Once you get sued for an FLSA violation, it’s very hard to get out of it with anything resembling confidentiality. This is the kind of claim you want to avoid in the first place.

How do you avoid an FLSA claim when you have independent contractors?

  • Be proactive. Evaluate your relationships using the Economic Realities Test and see if they hold up.
  • Review your contracts and see if they can be adjusted to better memorialize the facts that support independent contractor status.
  • Consider obtaining representations from the contractors up front to determine whether they really do operate independently.

Don’t wait until its too late to take action. You can’t just run away from an FLSA case.

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© 2021 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Strip Clubs Nailed for $8.5 Million in Settlement of Independent Contractor Misclassification Claims

Independent contractor misclassification settlement $8.5 million spearmint rhinoI learned there’s a chain of strip clubs called the Spearmint Rhino. I didn’t know that was an option for rhinos. The rhinos I’ve seen at the zoo smell nothing like spearmint.

This club was paying its dancers as independent contractors. As we’ve seen in other “exotic dancer” cases, that can be an expensive decision.

This time it cost The Rhino $8.5 million. A class of 8,000 ladies reached a deal after claiming they should have been treated as employees under Caliufornia and federal wage and hour laws. The class members claimed they were denied overtime, denied a minimum wage, denied meal and rest breaks, and had their tips misappropriated.

In other words, they didn’t feel like they had much to dance about.

What happens now to The Rhino? Does it reclassify its dancers as employees? Who knows. Who cares.

I will, however, be asking the zoo if there’s anything they can do about the rhino smell. It seems there may be a minty version of the beast.

 

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Drivers Rack Up Misclassification Settlements, While GrubHub Fights Back

In 1984, the Cars released a sad-sounding song called Drive. I assume it was about a guy longing for a girl, but it’s too depressing to listen to the whole thing. Throughout the song, Ric Ocasek asks “Who’s gonna drive you home tonight?” (Why the long face, Ric? Kidding.)

If you use a ride hailing service, chances are it’s an independent contractor driver who’s gonna drive you home. But in several high profile lawsuits, drivers have challenged their independent contractor status. While these suits have been in the news for years, there have been a recent flurry of high dollar settlements. Earlier this year, Lyft agreed to pay $27 million to a class of 95,000 drivers in California and Door Dash agreed to pay $5 million. Just last week, Postmates agreed to pay $8.75 million.

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Misclassification settlement strips $6 million from Club Assets

IMG_1090When I was an undergrad at Michigan, any time I would drive to the airport or to Tiger Stadium, I’d see billboards for Deja Vu, a strip club with (apparently) lots of locations. I never visited (not into that sort of thing, thanks for asking), and I never thought much of it. I certainly did not expect to be writing about Deja Vu and independent contractor misclassification 25 years later. But here goes.

When patrons of these fine establishments partake in the traditional lap dance, it’s doubtful they’re thinking about whether these often-single-mom “entertainers” who are just trying to make a living have been properly classified under wage and hour law. More likely, they’re thinking about — never mind.

But that’s an important issue, as Deja Vu recently learned, when it was sued by a class of 28,177 dancers alleging they were misclassified as independent contractors, rather than Continue reading