So as an employment defense attorney, I am constantly amazed by the creative arguments put forth by plaintiffs and their attorneys. I am certain that the creators of certain laws would never, in their wildest dreams, have anticipated how they could be applied. A recent example of this can be found in Stevens v. Oval Office, LLC dba Oval Office Gentlemen’s Club.
As you may know, a recent hot topic for federal and state agencies is the misclassification of employees as independent contractors. According to the U.S. Department of Labor’s newly created webpage, misclassification hurts employees by denying them: minimum wage and overtime pay, the protection of federal and state employment laws, workers’ compensation and unemployment insurance, workplace health and safety protections, and employer-provided benefits. It also hurts non-compliant employers who may be subject to fines and unpaid taxes and wages, as well compliant employers who face unfair competition from those who reduce their costs by being non-compliant. And it hurts government agencies who do not receive the appropriate employment tax revenues.
Plaintiffs’ attorneys have picked up on this governmental focus, and we have seen an increase in the number of cases asserting that an independent contractor should have been properly classified as an employee. Many of these cases have involved exotic dancers, who traditionally have been designated as independent contractors for the clubs where they perform.
This was the situation in the Stevens case. Furthermore, the club imposed fines on the dancer for various rules infractions: getting to the stage late; starting a routine late; leaving the stage before the next dancer arrives; failing to spend enough time on the floor with customers to sell additional services; failing to fully remove all clothing, except for underwear, by the end of the first song when dancing on stage (I particularly enjoyed that rule! I had no idea such standards existed!); spending too much time in the dressing room (I guess it’s the corollary to the rule about not spending enough time on the floor); and not dressing according to the club’s dress code (isn’t it really an “undress code”?). According to the club, the fines were intended to “incentivize” good performance.
The dancer claimed that she should have been classified as an employee, rather than an independent contractor. Further, she claimed that fines were actually deductions from her pay in violation of state law, which provides that “No employer may make any deduction from the wages due or earned by any employee, who is not an independent contractor, for defective or faulty workmanship, lost or stolen property or damage to property, unless the employee authorizes the employer in writing to make that deduction . . . .” (Most, if not all, states prohibit employers from making deductions from an employee’s pay, with exceptions for things like taxes and benefits premiums, unless the employee authorizes the deduction in writing). She argued that the fines were, in fact, deductions for “faulty workmanship.”
The issue then became whether the definition of “workmanship” was broad enough to encompass her (apparently sub-standard) dancing. The employer argued it was not – that the statute only prohibited deductions to recoup actual business losses. The court, however, noted that there was nothing in the statute’s language that required such an actual loss. The employer then argued that “workmanship” necessarily involved the manufacture or production of actual objects. The court again rejected the employer’s argument, finding that the statute’s language contained no such limitation. Rather, the court concluded that “workmanship” includes “any endeavor individuals are employed to perform.” Without limitation. Including exotic dances! Which, apparently, can be “faulty!”