Laura McFeeley v. Jackson Street Entertainment
825 F.3d 235
4th Cir.2016Background
- Plaintiffs are exotic dancers who performed at two Maryland clubs (Fuego and Extasy) owned/managed by Uwa Offiah between 2009–2012 and were required to sign agreements labeling them "independent contractors."
- Dancers received no hourly pay from the clubs; compensation came from tips and patron-paid performance fees; clubs also charged a mandatory "tip-in" for entry that dancers paid.
- Clubs imposed rules (sign-in, schedules, dress, conduct), set prices for private dances, controlled advertising, hours, music/lighting, and disciplined dancers for violations.
- Plaintiffs sued under the FLSA and Maryland wage laws claiming misclassification and unpaid minimum wages; the district court granted partial summary judgment finding employees under the FLSA using the six-factor "economic realities" test.
- A jury awarded unpaid wages; the district court denied liquidated damages only for the post-September 2011 period after finding the owner had obtained legal advice then; defendants’ motions for JMOL/new trial were denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dancers were employees or independent contractors under the FLSA | Dancers argue economic reality shows they were employees: clubs exercised significant control, provided core business investment, and dancers were integral to the business | Clubs argue dancers were independent contractors who set their own schedules, earned by personal effort, and merely rented space | Court held dancers were employees under the six-factor economic-realities test, emphasizing employer control and integral role |
| Availability of liquidated damages (good-faith defense) | Dancers: clubs not entitled to good-faith defense before counsel was consulted; liquidated damages appropriate | Clubs: owner reasonably believed classification was lawful from takeover in 2007/2009 and thus acted in good faith | Court denied good-faith defense pre-September 2011; accepted it from counsel-advice date forward; liquidated damages awarded for earlier period |
| Admissibility of evidence of tips and performance fees as offsets to wage liability | Dancers: tips/fees irrelevant because clubs cannot claim tip credit or show service charges were part of club receipts/distributed by employer | Clubs: dancers’ tips and performance fees exceeded minimum wage and should reduce any wage liability | Court excluded such evidence: tip credit unavailable (no employer-paid base/minimum or notice); service-charge offset unavailable because clubs never recorded or distributed performance fees as employer receipts |
| Adequacy of jury instructions, verdict form, and motion for new trial/JMOL | Dancers: instructions and form were sufficient; jury's credibility findings acceptable | Clubs: requested instruction on FLSA purpose, more detailed verdict form, and new trial/JMOL due to alleged credibility problems and exclusion of earnings evidence | Court rejected clubs’ challenges; instructions and form were adequate; credibility disputes insufficient to warrant new trial or JMOL |
Key Cases Cited
- Schultz v. Capital Int'l Sec., Inc., 466 F.3d 298 (4th Cir.) (articulates the six-factor economic-realities test for FLSA employee status)
- Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir.) (explains flexible application of multi-factor economic-realities analysis)
- Benshoff v. City of Va. Beach, 180 F.3d 136 (4th Cir.) (discusses the FLSA's remedial purpose)
- Hart v. Rick's Cabaret Int'l, Inc., 967 F. Supp. 2d 901 (S.D.N.Y.) (analyzes treatment of performance fees, tips, and employer control in exotic-dancer FLSA cases)
- Perez v. Mountaire Farms, Inc., 650 F.3d 350 (4th Cir.) (standard of review for liquidated-damages award)
- Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590 (U.S.) (historic statement of FLSA's protective purpose)