Atlanta Employment Attorneys Blog
One of the emerging areas in Fair Labor Standards Act litigation centers on the misclassification of exotic dancers. Several groups of dancers have successfully sued clubs for illegally misclassifying them as independent contractors instead of employees. While this industry may be relatively small, these misclassification cases hold significance for more than just adult entertainment clubs and the dancers who perform in them. The question of “independent contractor or employee” is a crucial one in many lines of work and misclassification can have extremely deleterious consequences. If you have questions about independent-contractor-or-employee classification, contact a knowledgeable Atlanta worker classification lawyer to get the answers you need.
One local club in Northeast Atlanta is facing FLSA litigation… and it isn’t their first time. Last month, a group of four dancers sued the club seeking recovery for “unpaid wages and overtime compensation, interest, liquidated damages, attorneys’ fees, and costs” under the FLSA.
A decade ago, that same club settled a previous FLSA lawsuit, agreeing to pay a class of 73 dancers more than $1.5 million. In that case, the club classified the dancers as independent contractors and the dancers’ compensation consisted solely of the tips they received. Additionally, the club charged its dancers various fees to perform at the establishment.
The court, in granting partial summary judgment to the dancers in the earlier case, instructed readers that numerous factors “guide the inquiry into whether an individual is an employee or independent contractor,” including:
- “the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed;
- the alleged employee’s opportunity for profit or loss depending upon his managerial skill;
- the alleged employee’s investment in equipment or materials required for his task, or his employment of workers;
- whether the service rendered requires a special skill;
- the degree of permanency and duration of the working relationship;
- the extent to which the service rendered is an integral part of the alleged employer’s business.”
Even if your business is far from the world of “gentlemen’s clubs,” these cases’ lessons apply to many lines of work, such as, for example, businesses with outside sales representatives.
The Crucial Element of Control
In the dancers’ case, the court looked at the club’s high degree of control as strong evidence that the dancers were employees. The club imposed upon its dancers an array of tight rules that dictated the cost of dances, the scheduling of shifts, tipping DJs, and, allegedly, even details like “how entertainers should look, exactly when and how entertainers will remove their clothing, [and] when and how they will dance.”
If your team consists of outside sales representatives, control often will similarly represent a key element in deciding their proper classification. As explained by the Internal Revenue Service, the fundamental question is: does the worker control the details of how the service is provided, or does the hiring entity exercise that control?
In the sales industry, if an entity requires its sales representatives to meet a goal (in terms of achieving a certain number of sales, regardless of the hours he/she works,) that proof will point away from employee status. If, however, the entity requires its representatives to spend certain hours each day in pursuit of selling, that would lean toward employee status.
Similarly, if an entity provides its representatives with extensive training and seminars focusing on communicating information about the available products, that likely isn’t evidence of an employer-employee relationship. If, however, the entity’s training and continuing education focus on how to sell, including specific sales scripts and in-depth rules on what to say and what not to say to a potential customer, that factor might lean toward a finding of an employer-employee relationship.
As the courts have noted, these issues are complex and multi-faceted. Each one is unique and will be assessed on a case-by-case basis. Before your business makes expensive mistakes in classifying workers, get the legal advice you can rely upon from the experienced Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert. Contact us today at 404-873-8048 or through this website to schedule a consultation.