Labor & Employment

The Hustler Club in Las Vegas

The Hustler club in Las Vegas. “We, as a business, saw a near-immediate decrease in income—by about 50%—and to date, we have not recovered in those locations,” says Ryan Carson, director of operations at Deja Vu Services Inc. Photo courtesy of Deja Vu Services Inc.

The amateur video starts off shaky, but the exotic dancer is clearly visible, positioned near the top of a pole that looks about two stories high. As she extends her body and stretches her legs to strike a dramatic inverted pose, something goes wrong. She loses her grip on the pole and plummets, landing face down on the disco floor below. But she doesn’t stay down. Rising to her hands and knees, she starts twerking and even pulls herself up to a handstand before the video cuts out.

This 22-second capture of Genea Sky’s incident at the XTC Cabaret, an upscale, all-nude gentleman’s club in Dallas, appeared on Twitter in early February and quickly went viral. Mainstream media jumped on the story, and Sky—dubbed the “bounce-back stripper”—was covered by the Washington Post, Rolling Stone, the Daily Mail and others.

Despite her performance, however, Sky did not, in fact, bounce back. Her jaw snapped in two places, and she had multiple broken and chipped teeth.

While Sky’s fall was horrific, lawyers argue that the real tragedy is in the aftermath. Sky had no health insurance, and because her employer, the publicly held RCI Hospitality Holdings, classified her as an independent contractor rather than as an employee, the company was not legally required to assist her with medical expenses.

Independent contractor status also excluded Sky from legal protections offered by legislation such as the Fair Labor Standards Act, the National Labor Relations Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act and more.

But RCI Hospitality Holdings is hardly alone. Independent contractor is the traditional employment classification for dancers in adult entertainment clubs, says lawyer Michael P. Maslanka, a labor and employment law expert in Texas and a professor at the University of North Texas at Dallas College of Law.

“Dancers are the original gig workers—before Lyft, Uber and GrubHub—and corporate America loves it,” says Maslanka, who has authored multiple books about the Family and Medical Leave Act, the Americans with Disabilities Act and the Texas Labor Code. “They say, ‘We can take these workers, and we don’t have to give them any benefits; we don’t have to follow regulatory laws, and we can make more money.’ ”

Class Act

Dancers have fought back against employment misclassification in the past, and when they have, courts are often on their side. In a 2017 study published in the William & Mary Journal of Women and the Law, Michael H. LeRoy, a professor at the University of Illinois College of Law, examined 75 federal and state court cases in which dancers sued their clubs for unpaid minimum wages, overtime and unlawful pay deductions. LeRoy found that courts ruled in favor of the dancers in all but three cases.

“In thirty-eight cases, courts ruled that dancers were employees; only three courts ruled that dancers were independent contractors,” according to the study.

Shannon Liss-Riordan, a plaintiffs lawyer at Lichten & Liss-Riordan in Boston, knows about winning employment classification cases. She’s represented exotic dancers since 2006 in cases in Massachusetts and California; won a $20 million class action settlement on behalf of Uber drivers; and has challenged worker classification at Uber, Lyft, Postmates, DoorDash, GrubHub, Instacart and others.

“A lot of the issues dancers face have to do with work rules and how they’re enforced,” Liss-Riordan says. “Just because they work at strip clubs does not mean they check their rights at the door.”

Despite the wins, little changed legally—until this year.

On Jan. 1, Assembly Bill 5 went into effect in California. Known as the “gig worker bill,” AB5 is the codification of a 2018 case in the Superior Court of California called Dynamex Operations West Inc. v. Superior Court of Los Angeles County. It was a landmark decision that created a new legal standard for employment classification that favors classifying workers as employees.

A few days later, on Jan. 10, the 5th U.S. Circuit Court of Appeals at New Orleans handed down Hobbs v. Petroplex Pipe and Construction Inc., which ruled that the pipe welder plaintiffs were misclassified as independent contractors and were in fact eligible for overtime pay under the FLSA.

In the opinion, the court extended itself beyond its usual five-factor test to consider an additional factor: the extent to which the pipe welders’ work was “an integral part” of Petroplex’s business. The more integral the work to the business, the more likely the parties are to have an employee-employer relationship, the court said.

Although the court determined that the new factor was neutral in Hobbs, Maslanka says it’s groundbreaking that the court took it up at all.

“This was the first time the 5th Circuit has ever acknowledged this as a factor,” he says. “They said they considered it because the parties briefed it, but they could have ignored it, they could have relegated it to a footnote. But they included it in the body of the opinion, and now it’s a new factor that lawyers can argue—it’s not going to be a predominant factor, but now that it’s worked its way into the jurisprudence, it’s not leaving anytime soon.”

Club Controversy

The Hobbs case is hardly as far-reaching as AB5, but Maslanka says the new factor it sets forth might prove to be helpful to dancers who are arguing for employee status in the future.

Not surprisingly, California club owners opposed AB5. It’s easy to understand why, says lawyer Mark J. Neuberger, of counsel at Foley & Lardner in its Miami office who specializes in labor and employment law.

Classifying workers as employees is “purely more costly—there’s payroll tax, Social Security, Medicare tax, FICA, and they may have to pay for workers’ compensation insurance—all those taxes automatically attach, then if they’re tipped workers, the company has to manage wage-and-hour compliance, break rules and mealtimes,” Neuberger says.

Now that the law has passed, one California club operator says the results that the industry predicted have come to pass.

“We, as a business, saw a near-immediate decrease in income—by about 50%—and to date, we have not recovered in those locations,” says Ryan Carson, director of operations at Deja Vu Services Inc., a company in Las Vegas that operates nearly 200 strip clubs across the United States and internationally.

When AB5 passed, Deja Vu clubs complied, which prompted “a massive influx of dancers from California to clubs in Las Vegas, Oregon and Washington—they hated it so much they relocated,” Carson says. “At the end of the day, entertainers don’t want schedules, they don’t want deductions in their paychecks, and they don’t prioritize health insurance. They just want cash.”

Liss-Riordan disputes this characterization.

“That’s what these companies always say—that’s what Uber says about their drivers, it’s what all gig employers say about their workers, and it’s just a lie,” she says. “It’s all in how you ask the questions. If you say, ‘Do you want to have a flexible schedule and not have a boss peering over your shoulder?’ the answer is yes, but that’s a false choice. The real question is, ‘Do you want the protection of laws?’ ”

Cut out of CARES

Because of COVID-19, however, many clubs that employ exotic dancers are currently or temporarily closed. Presumably, dancers in California and Massachusetts now have a statutory right to apply for unemployment insurance. But dancers in other states who are still classified as independent contractors may be left with no financial relief, despite the Coronavirus Aid, Relief and Economic Security Act.

The $2 trillion economic relief bill recently passed by Congress was drafted to include gig workers—an important legal milestone. But it includes financial assistance that is administered through the Small Business Administration, which has long-standing rules against loaning money to those engaged in activities of a “prurient sexual nature.” How this applies to exotic dancers remains to be seen.

Maslanka remains hopeful that during this time of the novel coronavirus pandemic, gig workers—dancers included—can continue to see gains.

“The coronavirus is exposing the dangers of being a gig worker—you have no benefits, no health care, and no one to one to speak for you,” he says. “I think this crisis is so severe that it will change the mindsets of the people, and when the mindsets of the people change, laws change.”