In the News: A Dallas strip club is sued by the dancers for failure to pay overtime; ends up settling for $2.3 million.

12.26.2014  The lawsuit alleged that Jaguars, a strip club in Dallas, illegally classified the dancers and “house moms” as independent contractors and failed to pay them overtime.  According to the petition filed with the court, the club hired/fired, issued pay, supervised, directed, disciplined, scheduled and performed all other duties generally associated with that of an employer with regard to the dancers and “house moms.” Additionally, Jaguars instructed the dancers about when, where, and how they were to perform their work; required them to fill out employment applications as a prerequisite to their employment, determined their schedule, and fined any dancers who failed to comply with it.

Jaguars answered that the dancers were independent contractors and not the club’s employees because they leased space from the club to dance as supported by the lease agreements they signed with the club.  After 2 years in court, the club settled the suit with 190+ dancers this week for $2.3 million. Jones, et al. v. JGC Dallas LLC, et al., 3:11-cv-02743 (N.D. Tex.)

Commentary: Lawsuits arising out of employee misclassifications have been skyrocketing over the past few years.  The costs associated with such lawsuits are high since the employer who is found to have misclassified its employees as independent contractors must pay the back overtime wages it owes such independent contractors and the employees’ attorney’s fees, which a lot of times exceed the backpay.  While it is tempting to designate one’s workers as independent contractors to lower labor costs, a single lawsuit brought by a dissatisfied employee may erase or even exceed any savings gained by the misclassification.  When in doubt, an employer should consult with a labor and employment attorney to determine whether certain categories of workers should be classified as employees or independent contractors.

If you are facing a Department of Labor audit or have been sued under the Fair Labor Standards Act for misclassification and need legal assistance, contact Leiza Dolghih at Leiza.Dolghih@GodwinLewis.com or (214) 939-4458.

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