Shaw v. Set Enterprises, Inc.
241 F. Supp. 3d 1318
S.D. Fla.2017Background
- Plaintiffs are former exotic dancers who signed "Dancer Licensing Agreements" to perform at two clubs; they paid mandatory house fees, tip-outs, and retained patron-paid performance fees; clubs provided stage, staff, music, promotion, and set minimum prices for services.
- Agreements required adherence to posted Entertainer Rules and allowed clubs to terminate or refuse work for rule violations; dancers controlled attire, schedule choice, and could work elsewhere.
- Plaintiffs sued under the FLSA and Florida Minimum Wage Act claiming misclassification as independent contractors and seeking minimum and overtime wages; FEI asserted counterclaims for breach of contract and unjust enrichment.
- Court certified an FLSA collective; defendants moved for summary judgment on employee status, overtime, and counterclaims offsets.
- The court applied the FLSA economic-reality test (six-factor Scantland test) and denied summary judgment on employee status, granted summary judgment to defendants on overtime (no evidence of >40 hours), and dismissed FEI’s counterclaims for offsets, unjust enrichment, and breach of contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the dancers employees under the FLSA/FMWA? | Dancers were economically dependent on clubs and thus employees. | Dancers were licensees who paid fees and controlled their work. | Held: Employees (economic-reality factors overall favor employment). |
| Did plaintiffs prove unpaid overtime (>40 hrs/wk)? | Discovery incomplete as to opt-ins; clubs’ records unreliable. | Plaintiffs provided no evidence of working >40 hrs; attorney demands and interrogatories show 32–35 hrs. | Held: Summary judgment for defendants on overtime as to named plaintiffs (without prejudice to opt-ins if discovery later shows >40 hrs). |
| Can clubs offset minimum wage liability with performance fees/tips or service-charge treatment? | N/A (plaintiffs oppose offset). | Clubs assert performance fees allow offset/credit or that dancers were unjustly enriched. | Held: No offset — not eligible for tip credit (no employer wage paid or notice) and not service charges distributed via employer; offset denied. |
| Are FEI’s counterclaims (unjust enrichment, breach of contract) viable? | N/A (plaintiffs oppose counterclaims). | FEI seeks recovery of fees retained by dancers and contract damages. | Held: Counterclaims fail — unjust enrichment not established (fees from customers, not conferred by club) and breach-of-contract claim barred as FLSA rights cannot be waived. |
Key Cases Cited
- Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir.) (sets out the six-factor economic-reality test for FLSA employee status)
- McFeeley v. Jackson St. Entm't, LLC, 825 F.3d 235 (4th Cir.) (examines club control, tip-credit and employer potential power to enforce rules)
- Lamonica v. Safe Hurricane Shutters, Inc., 711 F.3d 1299 (11th Cir.) (plaintiff’s initial burden to prove work and amount when employer lacks time records)
- Lynn's Food Stores, Inc. v. U.S. ex rel. U.S. Dep't of Labor, 679 F.2d 1350 (11th Cir.) (FLSA rights cannot be abridged or waived by contract)
- Reich v. Circle C. Invest., Inc., 998 F.2d 324 (5th Cir.) (club control over customer flow and fees bears on dancers’ opportunity for profit)