On November 14, 2014, a New York federal judge awarded [pdf] over $10 million in back pay wages to about 2,000 current and former exotic dancers in a class action lawsuit brought against Rick’s Cabaret for unpaid wages from 2005-2012. 

This recent order awarding damages to the dancers is a furtherance of the Court’s September 2013 holding which determined that the dancers were employees of Rick’s Cabaret, rather than independent contractors, as claimed by the defendant. In siding with the dancers, the Court found that Rick’s Cabaret exercised control over the dancers and that the dancers could not make independent decisions about their work. Accordingly, the Court held that the dancers, as employees, are entitled to the protections of the Fair Labor Standards Act (FLSA) and New York Labor Laws (NYLL). The violations of the FLSA and NYLL committed by Rick’s Cabaret, including minimum wage violations and for improperly keeping portions of the dancers’ tips, amounted to over $10 million in damages.

However, this $10 million order is not the end of the case; rather, it is the result of a ruling on a motion for partial summary judgment. In addition to the $10 million already awarded by the Court, the dancers may receive up to $18 million total should they prevail at trial on the remaining issues. Trial has not yet been scheduled; however, Rick’s Cabaret has already announced its intention to appeal the ruling.

At first blush, this lawsuit may be seen as an outlier case— nothing more than another salacious news story. However, it is much more than that— it serves as an important reminder that businesses in any industry can face harsh consequences for improper classification of workers, and employers should regularly review their worker designations.

The Department of Labor and state agencies offer published guidance on this issue, see, e.g., DOL Fact Sheet #13: Am I an Employee? [pdf] Your labor and employment counsel can, of course, provide additional advice.