Academic journal article Journal of Case Studies

Independent Contractor or Employee: The Exotic Dancer Cases

Academic journal article Journal of Case Studies

Independent Contractor or Employee: The Exotic Dancer Cases

Article excerpt

The Beginning

Ray Thompson and his family were longtime owners and operators of food, beverage, and entertainment establishments. One of these, the Valley Gentleman's Club, was a popular entertainment venue featuring exotic dancing. One afternoon, while Ray Thompson was attending to the club's financial records and disbursements, he received a visit from the deputy sheriff. Ray knew the deputy because he had been a frequent visitor to the club for both personal and professional reasons. The deputy handed Mr. Thompson a document and Ray said, "What's this?"

The deputy said, "Ray, I've served Civil Summons and Complaints on you before when people have fallen on your business premise or sued you because they thought they were being 'strong armed' by your bouncers. This one is different. You're being sued by one of your dancers, Tina Brown."

"What!" Ray exclaimed. He continued, "We had to let her go because she was breaking all the club rules. As far as I know, she hasn't danced here for awhile now." The deputy sheepishly shrugged and said "I have to get back to the station, Ray." As he was leaving, the deputy heard Ray say, "This was not what I wanted to hear today. Now I have to drop everything else and see if I can get George Poston to handle this!"

George Poston, attorney at law, had been a sole practitioner specializing in civil litigation for many years. His practice was centered in a small Midwestern city but he represented clients in over forty counties of his state and had tried civil jury trials in the majority of them. Many of his litigation matters involved business clients who were referred to him by their business attorneys. He acquired Ray Thompson through one of these referrals and represented him multiple times in the past. This particular afternoon was an unusually quiet day at the office. The lack of distractions gave him an opportunity to do some research for an ongoing litigation matter, but his efforts were soon suspended by the phone.

"George?"

"Yes."

"This is Ray Thompson. I think I need your help. One of my ex-dancers is suing me"

"Why?" George asked.

"She claims that our club should have treated her as an employee. She says that the club should have paid unemployment taxes and withheld income and social security taxes from her wages. She's also seeking back wages."

George had not been involved with internal employment matters of the Valley Gentlemen's Club in the past, so he asked a clarifying question, "The club treated her as an independent contractor. Is that correct?"

"Yes," said Ray. "Our club classified all of the dancers that way. That's what worried me most about this lawsuit. The amounts this dancer claimed aren't huge, but, if the word gets around and we end up on the losing end of this thing, we could have exposure to more claims."

"OK. We need to sit down and discuss this thoroughly. I also need to look over any employment contracts or other pertinent documents. Next Monday is a fairly light day for me. How does Monday at 1:00 p.m. at my office sound? Bring any paperwork and other information concerning this dancer with you, " George told him.

"That's a good time for me, too. See you then," said Ray.

Before the appointment, George decided to research the legal issues of employee or independent contractor classification and also searched for background information helpful for applying the issues to exotic dancing clubs. He discovered that the treatment of performers at these clubs was an issue of contention between the clubs, performers, and governmental agencies. Gentlemen's clubs had been frequent targets of IRS audits and of litigation between the performers and club management. Some clubs preferred to treat their performers as employees just to minimize the risk of audits and claims but many clubs continued to treat their performers as independent contractors. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.