(CN) - A Philadelphia strip club must face claims that it underpaid dancers and forced them to share their tips with other employees, a federal judge ruled.
Former exotic dancer Priya Verma is the lead plaintiff in a class action against 3001 Castor Inc. dba The Penthouse Club @ Philly, ABDCE Pennsylvania Management LLC, and 10 others.
Referring to the pornographic publication "Penthouse," the club's slogan is "Where the Magazine Comes to Life."
Verma said the topless club improperly classifies its dancers as independent contractors instead of employees, depriving them of minimum wage as well as overtime compensation. The dancers also share a percentage of their tips with the club and reimburse it for ordinary business expenses, according to the complaint.
In addition to violations of the Fair Labor Standards Act (FLSA), the class brought claims under the Pennsylvania Minimum Wage Act, Wage Payment and Collection Law, and common law.
In a motion to dismiss, the defendants relied on an affidavit by statistical consultant Joan Lenahan, who said that the club does not pay its dancers. Rather customers pay the dancers for stage performances and club-priced private dances, minus room rental fees of $10, $125 or $200 for four-minute, half-hour and one-hour private dances, respectively.
While dancers decide for whom to dance, they receive no compensation if they do not perform any private dances or get paid for performing on stage, Lenahan said.
to strike Lenahan's affidavit and for conditional class certification this past April.
Though U.S. District Judge
Anita Brody refused to strike the affidavit on June 30, she also denied
the club summary judgment, noting various conduct rules that the club imposes on dancers, regulating their choice of dress, hair and makeup, and number of songs to which they must dance.
"Given that defendant markets itself on the basis of providing topless dancers, it cannot credibly argue that the services performed by dancers are not an integral part of its business," Brody wrote. "This factor weighs in favor of employee status."
The club's control of dancers' profits also indicates employee status, the ruling states.
"Dancers at the defendant's club risk the loss of the cost of their costume, the stage rental fee, and the mandatory tip-outs in exchange for the opportunity to earn several hundred dollars in a six hour shift," Brody wrote. "This is not the kind of capital investment and risk-reward profile typical of someone in business for herself. Dancers cannot leverage their investment in reoccurring stage fess and tip-outs to create an increasing return on their investment."
The evidence supports a finding that Penthouse Club dancers are employees, not independent contractors, according to the ruling.
"Defendant exerts significant control over its dancers' behavior and appearance; defendant dominates the key levers driving the dancers' opportunity for profit; the dancers have no specialized skills and a limited real investment; and the dancers are integral to the success of the defendant's club," Brody wrote. "Measured against these factors, the transient and non-exclusive nature of the dancers' employment carries limited weight."
The judge conditionally certified the class under the FLSA and ordered the production of potential plaintiffs' contact information and the dissemination of notice.
While the court refused to certify the class under state law, Verma may refile the motion at the close of discovery.