Strippers around the country may be dancing all the way to the bank, as a strip-club employment lawsuit has settled for $13 million. The suit centered around whether the exotic dancers were properly classified as independent contractors or if they were in fact employees.

Why should a small business owner care? Because the improper classification of workers is a common employment law problem faced by employers everywhere.

However, because the strippers settled their lawsuit out of court, similarly situated workers will not have a ruling they can cite, reports The Huffington Post.

The strippers claimed that they were wrongly treated as independent contractors rather than employees entitled to benefits. They sought back wages, tips, attorney’s fees, and damages. The women claimed to have earned as much as $500,000 each for working at the clubs. However, they claimed most of that money went back to the club as “rent,” because they were improperly classified as contractors.

Along with paying $13 million to the plaintiffs, the strip clubs involved in the lawsuit also agreed to treat their strippers as employees, shareholders, or partners instead of independent contractors.

So what is the difference between an independent contractor and an employee? Well, the answer is very fact-specific and courts typically rely upon a series of tests that examine things like the degree of control that the employer has over the worker, and the amount of skill that the worker brings to her job.

Employers are typically inclined to count workers as independent contractors because wage and hour laws typically do not apply to contractors. So an independent contractor is usually not entitled to minimum wage, nor is a contractor entitled to overtime pay, meal and rest breaks, or other benefits that employees enjoy.

However, it can be extremely difficult to classify a worker as an independent contractor.

Small businesses that hire workers as independent contractors should be extremely careful and work with an experienced employment attorney to make sure the categorization is correct. Many of the costliest lawsuits dance around this exact issue.

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Related Resources:

  • Strippers Win $13 Million Settlement in Wage Dispute (San Diego’s KNSD-TV)
  • Don’t Break the Law When Hiring Holiday Help (FindLaw’s Free Enterprise)
  • Record Number of Reasons to Follow Wage and Hour Laws (FindLaw’s Free Enterprise)

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