By Sam Daheim

On May 11, 2016, the Fourth Circuit held in McFeeley v. Jackson Street Entertainment, t that exotic dancers who worked at two exotic dance clubs in Prince George’s County, Maryland, were employees of the clubs as opposed to independent contractors.  Therefore, the clubs were legally obligated to comply with the federal Fair Labor Standards Act (FLSA), and the corresponding Maryland wage and hour laws in regard to their dancers.

The plaintiffs in McFeeley were exotic dancers who worked at “Fuego” and “Extasy.”  They alleged that the clubs misclassified them as independent contractors, rather than club employees, and accordingly failed to pay them the minimum wage required by the FLSA and the Maryland Wage and Hour Law (MWHL).

The court analyzed the working relationship of the parties to come to its decision.  Applicants who wished to dance at either club were required to fill out a form and perform an audition.  While the clubs required all hired dancers to sign agreements that explicitly categorized dancers as “independent contractors,”  they did not pay the dancers an hourly wage or provide any other form of compensation.  Instead, the dancers’ compensation was wholly provided by performance fees and tips received directly from patrons.

The court then looked at the “economic realities” of the relationship between the dancers and the clubs.  The touchstone of the economic realities test, as the court put it, is whether a worker is “economically dependent on the business to which he renders service or is, as a matter of economic [reality], in business for himself.”  This test turns on the application of six factors.  Although no single factor in this analysis was dispositive, the court focused its attention on one factor in particular, “the degree of control that the putative employer has over the manner in which work is performed.”

In looking at the degree of control the clubs held over the dancers, the court considered several plain manifestations of the clubs’ control over dancers.  Dancers were required to sign in upon arriving to work, and to pay a “tip-in,” which was equal to the entrance fee required of patrons.  The clubs dictated each dancer’s work schedule.  The clubs required dancers to abide by a list of written guidelines during working hours, and set fees that dancers were supposed to charge patrons for private dances and prescribed how tips and fees were to be handled.  And, finally, the clubs made all decisions regarding advertising, hours of operation, and the types of food and beverage sold.  The court saw these circumstances as evidencing significant control over how the dancers performed their work.  Control that, the court thought, bore little resemblance to the latitude normally afforded independent contractors.

The court qualified its determination regarding the control factor by explaining that it wasn’t suggesting that a worker automatically becomes an employee at the moment a company exercises control over the work performed.  But the degree of control the clubs exercised here over the dancers’ work weighs in favor of an employment relationship.  The court further explained that each of the other five factors of the ‘economic realities’ test was either neutral, or weighed in favor of the same result as the “control” factor, briefly touching on each one.

The reasoning in McFeeley raises some interesting questions regarding the relationships between performing artists and the venues in which they showcase their abilities.  While there are clear distinctions between exotic dancers who perform nightly at the same club, and a musical performer who plays once a month at a bar, the distinctions are less clear in other cases.  For example, a theatre might exert extensive control over the cast of a play who performs on the same stage night after night.  Or an exhibit may exercise considerable control over: how art is displayed, hours of operation, food and beverages served, and even the pricing of the works displayed.  It will be interesting to see if the “control” factor, while clearly not dispositive, has any effect on the business relationships within the arts.

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