Hallandale Beach, Florida, July 2, 2015 – As per the Miami Herald, Scarlett’s Caberet, a chain of strip clubs, one each located in Hallandale Beach and Ybor City, both in Florida, and one in Toledo, Ohio, have agreed to settle a class-action lawsuit for $6 million. U.S. District Judge William P. Dimitrouleas, of the Southern District of Florida, preliminarily approved the settlement on June 29, 2015. After preliminarily approving the settlement, the judge set a fairness hearing for Oct. 22, 2015, in Fort Lauderdale.

Labor Law - Inscription on Red Road Sign on Sky Background.

Labor Law – Inscription on Red Road Sign on Sky Background.

The lawsuit (Adonay Encarnacion et al v. J.W. Lee Inc. et al., U.S. District Court for the Southern District of Florida, case number 0:14-cv-61927-WPD) was originally filed by ex-dancer Adonay Encarnacion on August 22, 2014. Ms. Encarnacion, a college student at the time, said business courses she was taking were what taught her to recognize the wage and hour violations that were considered policy at her workplace. When she complained to a manager about the violations, he refused to listen to her concerns and told her that if she didn’t like it, she was free to leave. So she did … and hired lawyers to take her case.

Because the lawsuit was certified as a class-action, now more than 4,700 current and former dancers might be entitled to a payout besides Ms. Encarnacion. Qualifying dancers are those who worked during the 2009 to 2015 period.

Plaintiffs’ attorneys (Beatriz Sosa-Morris and Galvin B. Kennedy, Kennedy Hodges, Houston; Andrew Frisch, Morgan & Morgan, Plantation, Florida) requested $1.66 million in attorney fees.

The wage and hour laws that were violated all came about because the strip clubs classified the dancers as “independent contractors” instead of employees. As a result, the strip clubs failed to pay them the minimum wage and overtime they were entitled to and evaded taxes and insurance requirements. Other tipped service employees, such as waitresses, waiters, and bartenders, are all guaranteed a minimum wage per hour, plus overtime pay if warranted. Ms. Encarnacion’s lawsuit sought parity for exotic dancers, another tipped profession. In addition to the wage violations, dancers were required to pay “fees” to the club and non-tipped employees each shift they worked. Dancers paid a $55 fee to the club for “leasing the club’s space.” Dancers were also required to give the D.J. $20 each shift, and also give each security guard between $3 to $5 each shift. These expenses could amount to $150, Encarnacion said. Sometimes, she said, she saw “girls hitting the ATM because they had not made enough in tips to cover their costs if business was slow that day.”

In their own defense, the strip clubs tried to classify dancer’s tips as “service charges,” which would mean that the money was the lawful property of the club, not the dancer, and the club could do whatever it wanted to with the dancer’s tip money.

Plaintiffs argued they were employees in part because they had scheduled shifts and were required to work a certain number of days. The club, not the dancers, determined the rate and method of payment. The claims summarized below are from court filings:

[T]hroughout the time period from December 2009 through February 2015, Plaintiffs received no hourly wage or salary from the Nightclubs based upon their classification as non-employees (colloquially termed “independent contractors”). In this case, Plaintiffs alleged that Defendants misclassified them as independent contractors, when they were actually employees, and as a result Defendants failed to pay them legally mandated minimum wages and/or overtime as required under the Fair Labor Standards Act (“FLSA”), the Florida Minimum Wage Act (“FLMWA”), and the Ohio Minimum Fair Wage Standards Act (“OMFWSA”).

Bloody but unbowed, the strip club owners did not agree to change their business practices as a condition of the settlement.