In general, dancers at strip clubs are considered freelance employees who take home whatever is left after paying often hefty fees to the club. Over the last few years, a number of dancers around the country have sued — some successfully — clubs over this arrangement, arguing that they are not freelancers who can do as they please, but are employees who have to follow very strict and uniform guidelines for what they wear, when they work, and how much they charge customers.
Some dancers at an Atlanta club called The Cheetah allege they were not only mis-categorized as freelance “contractors” and compelled to pay kickbacks to the club, but that they were also forced to agree to a binding arbitration policy that prevents them from pursuing any legal action in court.
As we’ve covered a lot on Consumerist, mandatory arbitration forces alleged victims to settle their disputes outside of the courtroom, before a supposedly independent arbitrator. Not only that, but it often prevents similarly wronged individuals from joining together to pool their resources in a class action.
The day before the dancers filed their lawsuit in a federal court in Atlanta, they claim the club owners distributed a mandatory arbitration agreement [PDF], which dancers were told to sign or be terminated immediately.
The agreement contains the typical arbitration stuff, like stating that neither the dancer nor the club can sue the other in court, and that dancers can’t arbitrate as a group. But then there are some truly questionable conditions.
For instance, dancers who sign the agreement give up their right to sue over anything that “arose before and/or after this Agreement went into effect.” The agreement specifically calls out the possibility for complaints “arising under federal discrimination laws, including but not limited to… the Fair Labor Standards Act (FLSA).”
Another industry-specific clause of the 4-page agreement (most arbitration clauses are merely a few paragraphs) states that “In the event that you ever assert that you are an employee and not an independent contractor, then you acknowledge and agree that table dance fees and any other fees established by [the club owners] that you have been permitted to retain as part of your income are setoffs and shall be credited against any minimum wage and overtime obligations that otherwise would be due to you if you were determined to be an employee and not an independent contractor.”
To the plaintiffs, this clause is intended to deter a dancer from even attempting to arbitrate their status as a contractor/employee because it would mean giving up “the right to claim the full minimum wage as damages in this action [and] the right to retain entertainment fees.”
In plain speak, the plaintiffs say that dancers were told by the club, “don’t sue us and we won’t mess with you.”
What’s more, they claim that the club misled the dancers about the reason for needing these agreements signed immediately. According to the complaint, the club owners said they were switching “arbitration companies,” even though they say the club had no such agreement with dancers before this.
While not all of the named plaintiffs were working at the club by this time, one says she was fired. The plaintiffs allege that by making arbitration a condition of employment, the club is violating both the FLSA and the Federal Arbitration Act.
“Defendants, with full knowledge that they have violated and continue to violate federal wage laws… conditioned the entertainers continued employment on their signing the Arbitration Agreement, thereby forcing the entertainers under duress to relinquish an existing rights to sue in return for continued employment, which is an illegal action,” reads the complaint.
In speaking to the Atlanta Journal-Constitution — and in a response filed with the court — a lawyer for the club claims that there was indeed an arbitration policy before the one mentioned in the complaint. The club also contends that the dancer who said she was fired for not signing the agreement left on her own accord.
by Chris Morran via Consumerist