IN an effort to keep labor costs down, some companies take shortcuts and break the law. One of these shortcuts is to classify workers as “independent contractors” so that they do not have to be paid minimum wage, overtime, missed breaks, and other benefits. There are also no deductions for taxes and Social Security. Some companies pass on the costs of running the business to these workers by making them pay for all kinds of “fees.”
Just how rampant is the misclassification of workers? Early this year, we talked about the plight of truck drivers in the Long Beach ports, who hauled cargo containers. These drivers were classified as independent contractors by their companies even though they were treated like employees.
Most recently, a group of strippers (also known as exotic dancers) made headlines when they settled a misclassification class action against the clubs that they danced for. The settlement amounted to nearly $13 million. The case was filed against known gentlemen’s club, Spearmint Rhino. It was started by Christeen Rivera and Tracy Dawn Trauth, two exotic dancers who worked at Spearmint Rhino’s club in Oxnard, CA. The class action eventually became nationwide and 12 other Spearmint Rhino dancers agreed to be named as class representatives in the lawsuit.
The dancers alleged that they were classified as independent contractors while all the while being treated like employees. As a result, even though they earned an average of $500,000 a year in tips for lap and table dances, most of the money went to the club to cover “rent,” the disc jockey, “stage fees,” overhead costs and even penalties if they did not get enough customers to purchase drinks during a shift. The dancers also alleged minimum wage violations as a result. The lawsuit sought back wages, tips, attorney fees and other damages.
The court approved a settlement of $12,900,000 for all exotic dancers working for the Spearmint Rhino adult nightclub in six states. Dancers in California are entitled to 50.14 percent of the settlement amount. Dancers in Nevada will get 42.69 percent, and 7.16 percent will go to dancers in Kentucky, Idaho, Texas and Florida. Aside from their share of the settlement amount, the 14 class representatives named in the lawsuit will get an “incentive award” of $1,000 to $15,000. Incentive or enhancement awards are paid to class members who spent time on the case and took personal and professional risks by actively participating in it.
Also, as part of the settlement, the clubs have agreed that they will no longer treat dancers as independent contractors or lessees, but as employees, shareholders, or partners. In California, dancers will no longer be charged stage fees.
There are, of course, legitimate independent contractor relationships. However, simply making workers sign contracts and labeling them independent contractors do not make them so. The true status is determined by law, not by the parties’ agreement.
The most important factor that determines independent contractor relationship is the employer’s control of the worker’s manner and means of performing the job. If the employer instructs the workers on how they should do the work, and decides what and how tasks are accomplished, the worker is likely an employee.
Workers misclassified as independent contactors lose money. Hence, they should carefully examine the nature of their working relationship with their principal or employer. If they are really employees, they are entitled to back wages and reimbursements for expenses which should have been paid to them by the employer.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum-a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayas law.com or contact his office by telephone at (818) 291-0088