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4th Circuit: Exotic dancers in Prince George’s Co. are employees

Court rejects 'independent contractors' argument

The owner of two Prince George’s County strip clubs owes his dancers unpaid wages because they were employees and not independent contractors – as he had erroneously asserted – a federal appeals court said Wednesday.

The owner of two Prince George’s County strip clubs exercised such control over dancers’ work schedules and job duties that the relationship bore ‘little resemblance to the latitude normally afforded independent contractors,’ a federal appellate panel in finding the dancers were employees and entitled to unpaid wages. (Thinkstock)

The owner of two Prince George’s County strip clubs exercised such control over dancers’ work schedules and job duties that the relationship bore ‘little resemblance to the latitude normally afforded independent contractors,’ a federal appellate panel in finding the dancers were employees and entitled to unpaid wages. (Thinkstock)

In its 3-0 decision, the 4th U.S. Circuit Court of Appeals affirmed damages of at least $267,000 to dancers at Fuego and Club Extasy under the federal Fair Labor Standards Act and corresponding Maryland wage laws.

Uwa Offiah, the owner, had argued through counsel that the FLSA and state laws did not apply to the dancers because they were independent contractors and not employees. Offiah said the workers were free agents who rented dance time at the clubs, worked their own hours and were paid in tips from the customers.

The 4th Circuit rejected the argument, saying the clubs’ management exercised the stringent control over the dancers work schedules and job duties that the laws associate with an employer-employee relationship and which bear “little resemblance to the latitude normally afforded independent contractors.”

Management, for example, dictated when the dancers would work; restricted their activities, such as prohibiting them from loitering in the parking lot after business hours; set the fees they were to charge customers for private dances; and made all decisions regarding the dancers’ advertising, the appellate court said in drawing a line between employees and independent contractors.

“None of this is to suggest that a worker automatically becomes an employee covered by the FLSA the moment a company exercises any control over him,” Judge J. Harvie Wilkinson III wrote in the 4th Circuit’s published opinion. “But the degree of control the clubs exercised here over all aspects of the individual dancers’ work and of the clubs’ operation argues in favor of an employment relationship.”

In short, employees are economically dependent on the companies for which they render service and independent contractors are in business for themselves, Wilkinson wrote.

Gregg C. Greenberg, the dancers’ attorney, praised the 4th Circuit’s decision as a victory for “the propriety of using the economic realities” to distinguish between an employee and an independent contractor.

“The purpose of the FLSA is to protect workers just like the plaintiffs in this case,” said Greenberg, of Zipin, Amster & Greenberg LLC in Silver Spring, who has represented exotic dancers in other wage suits in Maryland and other states.

The U.S. Labor Department also presented arguments before the 4th Circuit in favor of having the dancers deemed employees and not independent contractors.

Offiah’s attorney, Michael L. Smith, did not return telephone and email messages seeking comment on the 4th Circuit’s decision and any plans to appeal. Smith is with Smith Graham & Crump LLC in Largo.

Bad-faith actions

The dancers sued Offiah in U.S. District Court in Greenbelt, claiming to be employees denied minimum wages in violation of the FLSA and Maryland laws. Offiah sought to have the lawsuit dismissed, arguing that as independent contractors the worker were not protected under the wage laws.

But Senior U.S. District Judge Deborah K. Chasanow said the dancers were employees and let the litigation proceed. A jury found in the dancers’ favor of the dancers, awarding them a total of at least $197,000 in lost wages under the FLSA, the Maryland Wage and Hour Law and the Maryland Wage Payment and Collection Law.

Chasanow awarded at least $70,000 in additional damages after concluding Offiah was not acting in good faith by claiming the workers as independent contracts from April 2009 to September 2011, when, faced with a similar lawsuit, he received erroneous legal advice that the dancers were in fact independent contractors.

The 4th Circuit agreed with Chasanow on the additional damages.

These damages were warranted because prior to September 2011 Offiah had erroneously “assumed,” without having consulted an attorney, that the dancers were independent contractors, the 4th Circuit said.

Offiah “made no effort to look into the law or seek legal advice until he faced a lawsuit in September 2011,” Wilkinson wrote. “If mere assumption amounted to good faith and reasonable belief of compliance, no employer would have any incentive to educate itself and proactively conform to governing labor law.”

Judges Roger L. Gregory and Albert Diaz joined Wilkinson’s opinion in Laura McFeeley et al. v. Uwa Offiah et al., No. 15-1583.