Sure, exotic dancers provide specialized or requested services on an as-needed basis, but recent lawsuits have found that these performers are not independent contractors, even if club owners have them sign contracts and charge them a "pole" tax.
In Smith v. TYAD, Inc, d/b/a Playground Lounge & Casino, the Montana Supreme Court ruled that the exotic dancers at the club, who were charged a fee to rent the stage when they danced as well as their dressing rooms, were really hourly employees who were entitled to the minimum wage and overtime and are covered under workers' comp and unemployment laws. The dancers had reported the club to the state Department of Labor and Industry and the Workers' Compensation Commission, both of which declared them to be employees.
Prior to 2003, the club had paid dancers $5.15 per hour and withheld appropriate money for tax purposes. But when they began being paid for private dances while they were getting their hourly pay, the club decided to start asking them to sign a contract outlining “fees” to the club owners for the use of the facility because they were no longer employees, but independent contractors. However, they were allowed to keep any tips from customers for the dances.
The court ruled the classification as independent contractors is wrong, despite the contracts. The court awarded the dancers back pay and worker's comp contributions and also ruled that the stage rental fees must be returned to the dancers.
In another federal class action lawsuit just filed in Minnesota, the National Law Journal reports that exotic dancers are suing a club because they are required to pay to work though “pay for the pole” fees, and they receive only tips and no salary. The dancers “can't be forced to work for only tips anymore than a waitress can,” says their attorney, E. Michelle Drake of Minneapolis-based Nichols Kaster, in the article. “Employees cannot be required to pay their employer to go to work under federal law.”
And there is lots of case law to support these dancers/plaintiffs, according to the National Law Journal . Beginning with Reich v. Priba , a case out of the Northern District Texas , in which the court held that adult entertainers were misclassified as independent contractors, courts have found for dancers in cases in Alaska , California , and Oregon . In fact, in one California lawsuit, Doe v. Gold Club , the dancers won over $3 million.
So it is curious that club owners continue the misclassification, although the fees can run into good income if dancers are charged $100 and more per night. Plus the owner/employers save money by not having to pay for required benefits, such as workers' comp. “It's lucky none of the dancers fell off the stage,” the article concludes.
Sources: World of Work Blog and National Law Journal