ORDER
This case comes before the Court on Plaintiffs’ Motion for Partial Summary Judgment [211], Defendants’ Motion for Summary Judgment [218], and Defendants’ Objection to Plaintiffs’ Late-Filed Consent Forms [271]. After considering the record, the Court enters the following Order.
Background
The Court bifurcated discovery in this action, with the first phase focused on whether the entertainers at Onyx are independent contractors or employees. (Dkt. [59]). Therefore, the pending Motions for Summary Judgment [211, 218] require the Court to determine whether Plaintiffs should have been classified and treated as employees rather than independent contractors.
I. The Parties
Each of the named Plaintiffs in this action has performed at Club Onyx (“Onyx” or the “Club”) as a dancer/entertainer. (Dkt. [211-2] at ¶ 3
1
). Defendant
II. The Club and Club Management
Plaintiffs refer to Onyx as a strip club, Defendants refer to it as a nightclub, regardless of this distinction in nomenclature, Onyx is a club in Atlanta, Georgia that features “nude, female exotic dancers.” (DSF at ¶¶ 1, 2, 4; PSF at ¶¶ 1, 2). The Club has one main stage where entertainers perform, аs well as two satellite stages. (PSF at ¶ 214). The main stage is visible from almost every location in the club, and the satellite stages are located in the areas in which the main stage is not visible. (Id. at ¶ 215). Onyx features full-service bars, televisions, pool tables, VIP rooms, and dining options. (DSF at ¶ 5).
The Club’s management team includes a night manager, relief manager, and a general manager. (PSF at ¶ 24; DRPF at ¶ 24). Rick Hayes, general manager of Onyx, has worked as a manager at the Club since 2006. (PSF at 1126). Since October 2008, Cliff Adams has served as the night manager at Onyx, and for more than a year before that worked at the Club in other capacities. (Deposition of Clifford I. Adams (“Adams Depo.”), Dkt. [234] at 6:19-7:4, 7:5-8). The day-to-day operating decisions at Onyx are made by the Club’s management team, unless Defendant Kap conveys specific operating instructions from Defendant Galardi. (PSF at ¶ 35). Management’s duties also encompass ensuring entertainers comply with the Club’s rules and policies as well as the laws of the City. (Id. at ¶ 34).
Assisting the Club’s management team with day-to-day operations, particularly in regards to the entertainers, are house moms, “who assistf] [entertainers] in the dressing room and on the floor with their
III. Becoming an Entertainer at Onyx
Onyx does not recruit entertainers. (DSF at ¶ 7). Rather, entertainers interested in working at Onyx must come to the Club and apply in person. (Id. at ¶ 9). Defendants prefer dancers with prior exotic dancing experience, which several of its hires have had, but there is no requirement for past experience or formal dance training, and the Club does not provide any dance training. (Id. at ¶¶ 10, 11; PSF at ¶¶ 186, 187). Applicants typically undergo a “body check” and audition by dancing to two to three songs. (DSF at ¶ 12). The “body check” is an examination of an applicant’s physical appearance, including looking for stretch marks and tattoos. (PSF at ¶ 190). The individual(s) before which the applicant auditions evaluates how she moves on stage, her rhythm, her perceived experience dancing naked, and her eye contact. (Id. at ¶ 194). Entertainers are evaluated by club management on the quality of their dancing, experience in the industry, appearance, and communication skills. (Id. at ¶ 195; DSF at ¶ 13). The Club does not perform reference checks to verify previous exotic dancing experience. (DSF at ¶ 21).
If the audition is successful, an entertainer must obtain an individual adult entertainment license specific to Onyx from the City of Atlanta (the “City”), before she may perform at the Club. (Id. at ¶ 15). The entertainer is responsible for paying the $350 per year cost of the license. (Id. аt 21). Some entertainers perform at Onyx for more than a year, but Defendants contend that many have relatively short-lived relationships with the Club. 2 (DRPF at ¶ 197).
IV. Working as an Entertainer at Onyx
When an entertainer returns to Onyx after obtaining a current license from the City, she is given a “Dancer Packet,” which contains forms to review, complete and return to Club management. (DSF at ¶ 19). The packet includes, in part:
(1) Defendant’s Club Rules and Conduct for Contractors and Employees; (2) conduct in VIP Rooms; (3) Dancer Information Sheet; (4) Random Drug Test Consent Form; (5) Independent Contractor Agreement; (6) a document entitled “Wage Acknowledgment Regarding ‘Tip Credit’ ” (a document explaining nature of independent contractor relationship between Club Onyx and Dancersand explaining how Dancers would be compensated if they were classified as employees); [and] (7) Rules Recognition and Consent; ...
(Id. at ¶ 20). Also, upon an entertainer’s return with a valid license, the “house mom generally goes over the amounts entertainers are required to pay the disc jockey (“DJ”) and house mom with the entertainer and walks through the club’s general expectations.” (Id. at ¶ 122 (emphasis added) 3 ). Onyx management has also asked entertainers to attend separate meetings to discuss Onyx’s rules and policies, changes in City law, promotional events and the Club’s decoration and furnishings. (Id. at ¶ 123).
The “Rules of Conduct for Contractors and Employees” (“RCCE”) is drafted and distributed by GSEC. (PSF at ¶ 118; Deposition of Dennis Williams, Feb. 3, 2010 (“Williams Depo.”), Ex. 9 (“RCCE”)). The rules are not always enforced as written, but Club management has discretion to enforce the rules as they deem fit and fine entertainers for violations. (Id. at ¶ 119; Adams Depo. 34:9-20). House moms are generally the individuals that document incidents that occur during their shift. (PSF at ¶ 132). One method sometimes utilized by management to track rules infractions, and as a method of disciplining entertainers, is a written notice of corrective action. (Id. at ¶¶ 128, 129). Anyone can notify the house mom of conduct by an entertainer that warrants corrective action, and the house mom may complete a written notice. (Id. at ¶ 133). Onyx management has discretion to impose fines in connection with a notice of corrective action, which are then generally collected by the house mom on the night they are imposed. (Id. at ¶¶ 130, 136, 137). In addition to fines for violating written rules, Club management may also fine entertainers for bringing in outside food, breaking the law, and arguing or fighting with customers. (Id. at ¶ 138). Management also has the authority to suspend entertainers for violating the rules, and Adams did so on three to four occasions. (Id. at ¶ 29; Adams Depo. at 60:2-6).
A. Scheduling
The first RCCE states:
All entertainers will have expected performance days that they will be needed to work. If you are not able to perform for legitimate reasons, you are asked to call and speak only to your House-mom or Manager. You will be subject to fines or other appropriate discipline for no call/no shows.
(RCCE at ¶ 1). Entertainers sign up for shifts for the following week on а schedule posted in the management office, and management has completed notices of corrective action for entertainers who have failed to do so. (DSF at ¶49; PSF at ¶50). The parties dispute whether entertainers set their own schedules, select which days and nights they want to work, have discretion over how many days to work per week, and when they will arrive and leave for a shift. (DSF at ¶¶ 40, 48, 49; PRDF at ¶¶ 40, 48, 49). Swinger testified that “we need to know what days [entertainers] are available to come in. And we require or we would like for [entertainers] to make a four-day schedule.” (Swinger Depo. at 34:20-23). She also testified that the minimum number of days is three for some entertainers and four for others.
(Id.
at 33:18-19). Hayes testified that a four-day schedule is requested, but not enforced. (Deposition of James R. Hayes (“Hayes
Whether or not there is a concrete rule as to the minimum number of nights that an entertainer must work each week, Pony Tail has admitted that some entertainers have been fined or otherwise disciplined for not working scheduled nights without calling ahead. (Dkt. [212-12] at 77; PRDF at ¶ 49). Plaintiff Sales testified that an entertainer could manipulate the schedule to work any four days she wanted — an assertion supported by the testimony of Plaintiff Clincy — but she was still required tо work four days per week and would be fined if she did not. (Sales Depo. at 43:7-44:17; Deposition of Karenza Clincy (“Clincy Depo.”) at 45:17-21). Members of the Club’s management testified that entertainers have been fined if they did not show up for a scheduled night without calling ahead or worked at another strip club when they were scheduled to work at Onyx. (Adams Depo. at 35:20-36:3; Hayes Depo. at 86:11-15). Additionally, management sometimes requires proof that an entertainer had obligations preventing her from working a scheduled shift. (PSF at ¶ 55).
Also, there are some days over which entertainers do not appear to have discretion in regards to their schedule. Swinger testified that entertainers are asked to work a certain number of slow days — days on which the Club typically has lower attendance — and that management could determine whether an entertainer had met that requirement by referencing the sign-in sheet, and could impose a fine if an entertainer failed to meet the requirement. (Swinger Depo. at 73:2-11, 116:14-16). Adams also testified that Onyx required each dancer to work two slow days each month. (Adams Depo. at 36:16-37:22). Also, there may be less flexibility in scheduling for new entertainers. (See PSF at ¶ 64 (Clincy required to work 30 days on mid-shift before being able to work night-shift); Wells Depo. at 26:6-17 (required to work four day-shifts per week for a month when first hired)).
B. Preparing for a Shift
When an entertainer arrives at the Club, she checks in with the house mom, who records her arrival time, and puts her name on the D J list — a list by which entertainers are called by the DJ to perform on stage. (PSF at ¶ 70). Entertainers are urged to get dressed and on the floor within a reasonable amount of time and have been fined for not doing so.
(Id.
at ¶ 78). The house mom maintains the dressing room and ensures that the entertainers have what they need to prepare for their shift. (Swinger Depo. at 13:7-15). At the direction of management, the house mom has also talked to entertainers about changing their appearance — -hair, makeup, etc. — to comply with management’s desired appearance.
(Id.
at 52:12-53:2). Management has also directly instructed entertainers to make changes in their appearance and has taken disciplinary action for failure to comply.
(See
PSF at ¶ 84 (instructing entertainers to lose weight and written notice of corrective action for failure to do so), Hayes Depo. at 82:22-83:12 (Plaintiff Hayes told by management to lose weight and was limited to day shift until she did so; also told to change hairstyle and wear makeup to cover scar), PSF at ¶ 82 (Plaintiff Parker asked to change hairstyle);
see also
RCCE # 14 (“All entertainers must have hair done, nails and toenails painted, make-up on, costumes clean and in good condition and shoes (only high heels or stiletto platforms) clean and neat prior to the start of each shift____”)
C. Dancing and Making Money
Once entertainers have signed in with the house mom, paid their bar fees, and gotten dressed, they go out on the main floor of the club to perform personal dances for customers or dance on stage. (PSF at ¶ 86). At 11 p.m. the stage rotation begins. (Id. at ¶ 87). During the rotation, entertainers dance on stage in groups of as many as five, depending on how many entertainers are working that night. (Id. at ¶ 89). Customers throw money on stage or hand money directly to entertainers while they are dancing. (Id. at ¶ 92). The general rule at the Club is that an entertainer on stage takes her top off when she receives $10, and takes off her bottom when she receives another $10. (Id. at ¶ 98). If there are five entertainers on stage and $100 or more has been thrown on stage, the DJ generally announces for all entertainers on stage to remove all their clothing. The Club’s floormen gather up the money thrown on stage and give it to the entertainers who danced in the stage set to divide evenly. (Id. at ¶ 99). Dancers generally divide the tips evenly, which may be because it is the industry standard, or may be because it is mandated by Onyx. (DSF at ¶ 65; Hayes Depo. 58:18-59:9; Swinger Depo. 53:15-21 (entertainers required to split tips evenly)). Disputes about how much stage money belongs to each entertainer are investigated and resolved by Onyx management. (PSF at ¶ 101; Hayes Depo. at 59:10-60:17).
The parties dispute whether an entertainer may ignore a call to perform on stage. Adams testified that one of his responsibilitiеs as a manager is to ensure that entertainers are on stage when the DJ calls them. (Adams Depo. at 9:9-19). It appears that dancers may refuse to dance on stage when called, but may be fined for failing to do so, or for arriving on stage too late, or leaving too early. (DSF at ¶¶ 54, 55; PSF at ¶¶54, 55, 140; see also Deposition of Kimberly Jordan (“Jordan Depo.”) at 87:19-21 (fined for getting to stage too late)).
Aside from dancing on stage, entertainers may also earn tips from the Club’s customers by performing table-side dancés and dances in the Club’s VIP Rooms. (DSF at ¶ 42). The parties disagree over whether entertainers may set their own price for table-side dances. Defendants maintain that the amount a customer pays for a table-side dance is ultimately decided by the individual entertainer and the patron. (DSF at ¶ 30). However, Defendants also state that “the price of table or personal dances is set by industry custom in the relevant market. In the Atlanta market, the industry-wide rate for such dances is $10.00.” (Dkt. [212-12] at 91). One of the Rules set forth in the RCCE states that “[h]ouse dances are $10.00 ($20.00 in V.I.P. rooms).” (RCCE at ¶ 7). Further, Adams asserts in his declaration that entertainers do not have the ability to negotiate the price of table-side dances. (Dkt. [227] at ¶ 5) (“Dancers who perform at Club Onyx remain free to ... negotiate the rates for their entertainment services (with the exception of table dances, which dancers in the industry customarily charge $10.00 each) ... ”). If a customer refuses to pay an entеrtainer for a table-side dance, the entertainer is supposed to inform a floorman and if management decides there is validity to the entertainer’s claim they may pursue the customer for payment. (PSF at ¶ 159); see also RCCE at ¶ 7 (“Please get your money wp front or else YOU risk not being paid!” (emphasis in original)).
D. Paying the Club
While the Club does not make payments to the entertainers, there are fees that the entertainers pay to Onyx and or its employees. One fee that entertainers are required to pay each night in order to work is the “house fee” or “bar fee.” (Id. at ¶ 71). Entertainers are expected to pay this fee when they report to the house mom upon arriving at the Club for a shift. 4 (Id.). This fee schedule was established by Onyx and varies based upon the day of the week and time of arrival, with the fee increasing the later in the night a dancer arrives at the Club. (Id. at ¶ 72; DSF at ¶ 38). Regardless of time of arrival, the fee on Monday is $29, and on Wednesday is $45. (PSF at ¶ 72). On other nights the fee is: $45 if the entertainer arrives between 8 and 9 p.m.; $75 if the entertainer arrives between 9 and 10 p.m.; and $100 if the entertainer arrives between 10 and 11 p.m. (Id.). Management has sent home entertainers that arrived to work after 11 p.m. (Id. at ¶ 66; see also Id. at ¶ 67 (Plaintiff Clincy denied permission to arrive after 11 p.m.); Id. at ¶ 68 (Plaintiffs Leaphart and Wells told on some occasions on which they arrived after 11 p.m. that they could not dance that night); Id. at ¶ 69 (Plaintiff Parker sent home for arriving too late in the evening)).
Entertainers also tip the DJ after each shift — either $20 or 10% of their gross receipts, whichever is greater. (DSF at ¶ 44). The amount paid to the DJ by each entertainer is tracked on a “DJ Fee Sheet.” (Williams Depo. at 95:6-11). The payment was established by Onyx management, but the parties dispute whether it is required, as opposed to a payment that is voluntarily made at the end of each shift. (PSF at ¶¶ 109, 110; DRPF at ¶ 109). However, Club management has the discretion to fine entertainers if they believe an entertainer has not paid the DJ the full payment, and Swinger testified that entertainers get fined for not tipping enough to the DJ. (PSF at ¶ 111; Swinger Depo. at 116:7-9). Defendant Pony Tail admitted “having fined entertainers when an entertainer is suspected by Club Onyx Management of providing false information by under-reporting the amount of tips and dance fees she generated in a given night, and then under-reports the amount she is supposed to tip the DJ.” (Dkt. [212-12] at 78); see also Adams Depo. at 81:11-12 (“If an entertainer under reports, there is a fine because it is a form of theft.”). Thе DJ is required to give 40% of what he is paid by entertainers to the Club’s management. (PSF at ¶ 112). Half of that amount is split amongst Onyx’s management and half is forwarded to the corporate office. (Id.).
Entertainers also tip the house mom at the end of a shift. (DSF at ¶ 45). Whether this payment is required is in dispute, but the customary amount is $7 for each entertainer. (PSF at ¶ 107; DRPF at ¶ 107). Adams testified that the entertainers have to tip the house mom a minimum
E. Check-out Procedure
Before leaving for the night, entertainers are required to go through a check-out process, which includes taking a breathalyzer test to assess blood alcohol content, tipping the DJ, and tipping the house mom. (PSF at ¶ 105; Adams Depo. at 80:3-10; Hayes Depo. at 75:18-76:11). After taking the breathalyzer test, an entertainer receives an exit ticket from the house mom, which she then takes to the DJ. (Hayes Depo. at 75:18-76:11). The DJ signs off on the ticket after he has been paid and the entertainer signs a DJ fee sheet indicating how much she paid, and then the entertainer takes the ticket to the floor manager. (Id.; Williams Depo. at 95:6-11). Once this process has been completed and the parking lot has been cleared of customers, the entertainers are allowed to leave in small groups. (PSF at ¶¶ 115, 116). This measure is for the safety and security of the entertainers. (DRPF at ¶ 116). Entertainers may be fined for leaving early without checking out and management has taken corrective action against entertainers who do not complete the check-out process. (PSF at ¶ 103; Hayes Depo. at 53:7-16).
V. Attracting Customers to the Club
Decisions about marketing and promotions for the Club are made collectively with input from Williams, Kap, and GSE and GSEC’s director of marketing, Jack Pepper. (PSF at ¶ 143). Pony Tail also contracts with other corporate entities to market Onyx. (Id. at ¶ 145). Entertainers are not consulted in making decisions as to how to market the Club. (Id. at ¶ 151). Dancers occasionally assist Onyx in promoting the club by handing out flyers. (DSF at ¶ 60). Additionally, some dancers may promote themselves on nights they are working through the use of Twitter. (DSF at ¶ 59; PRDF at ¶ 59). The Club has denied requests from entertainers to promote the Club by using the Club’s van or on the radio. (PSF at ¶ 170).
The parties dispute whether the presence of nude entertainers is a significant driver of the Club’s business. Defendants argue that Onyx is popular because the Club satisfies a niche for a hip-hop urban club for African Americans. (Williams Depo. at 59:10-21). The Club regularly features appearances by rap and R
&
B artists, and is frequented by sports and entertainment personalities. (DSF at ¶ 3). The Club also sells liquor by the bottle, which Defendants assert is distinctive.
(Id.
at ¶ 6). Defendants assert that many of the Club’s customers do not frequent Onyx for the nude entertainment, but rather “come to Club Onyx simply to drink, dance, listen to music, watch sporting events, shoot pool, and have a good time in a hip, urban nightclub setting.” (DSF at ¶ 36)
5
;
see also
Swinger Depo. at 46:19-22
In contrast to Defendants’ assertions, Adams testified that he has never fired an entertainer because “[g]irls make the club busy. As far as if you don’t have enough girls in the building, your customers won’t stay, you know.” (Adams Depo. at 60:9-12). Similarly, Swinger testified that the Club “would like for [the entertainers] to get on the floor within an hour so [the Club] can keep some of the customers [] that are there to see the girls.” (Swinger Depo. at 21:23-22:2). Onyx management has called in additional entertainers to work on nights where there are many customers and only a few entertainers at the Club. (PSF at ¶ 219). Also, the Club has advertised in Xcitement, a magazine geared toward the adult entertainment industry. (Id. at ¶ 224). Further, in advertising the Club, Pepper chose to put scantily-clad women on a Club Onyx billboard because “[i]t represents beauty, kind of like Crest Toothpaste, nice smiles, inviting.” (Deposition of Jack Pepper (“Pеpper Depo.”) at 26:15-19). He also believed that it conveyed to the public that Club Onyx is an adult entertainment nightclub. (Id. at 26:20-23).
Defendants also maintain that “Club Onyx does not profit from the dancers; the dancers themselves do.” (Id. at ¶ 67). Plaintiffs contest this, arguing that “Defendants profit from entertainers’ work at Onyx, for example, through the receipt of fines and fees, amounts entertainers tip the DJ, and the presence of customers on whom Onyx can impose door fees and drink mínimums.” 6 (PRDF at ¶ 67). While the general ledgers produced in this action do not reflect the amount of money paid to Defendants from the amount collected by the DJ, or the amount paid to the Club through fines, it appears that the largest portion of the Club’s revenue comes from the sale of alcohol to customers. (Accounting Ledger, Ex. 21, Affidavit of Anna P. Prakash, Dkt. [212-21]).
VI. Defendants’ and Plaintiffs’ Relative Investments and Control
Defendant Pony Tail leases the premises where Onyx is located and has admitted to owning and controlling the Club. (Id. at ¶¶ 172, 173). Club management and Defendants control: decisions regarding the advertising and marketing of the Club; selection and pricing of food and drinks; music selection; club layout, amenities, and lighting; hiring of wait staff and security; the amount of the cover charge; and the overall atmosphere of the Club. (PSF at ¶¶ 164, 147-150; DRPF at ¶ 164). Defendants contend that Onyx “exercises only a slight degree of control over its dancers,” and that they remain free to make decisions concerning, among оther things, their appearance, their schedule, and their work outside of the Club. (Dkt. [227] at ¶ 5).
The named Plaintiffs have not made any capital investments in the facilities, advertising, maintenance, sound system, lights, food, beverage, other inventory, or staffing efforts undertaken on behalf of the Club and were not consulted regarding the same. (PSF at ¶ 171). Defendants, citing the depositions of Plaintiffs Clincy, Leap-hart, and Parker, maintain that “[d]ancers
Discussion
I. Defendants’ Objection to Plaintiffs’ Late-Filed Consent Forms [271]
The Court conditionally certified the FLSA collective action in this case, approving a 60-day notice period for individuals to opt in by filing consent forms with the Court. (Dkt. [147]). Notice was initially mailed on August 30, 2010, resulting in an October 29, 2010 deadline for opt-in plaintiffs. Plaintiffs’ Counsel received two consent forms after this date. One from Najila Harris on November 3, 2010 (Dkt. [247]), and another from Brezzy Hurst on November 9, 2010 (Dkt. [267]).
Defendants object to the late-filed consent forms and argue that Harris and Hurst should not be included in the collective. In light of the circumstances that delayed both Harris and Hurst in receiving notice of this action and their submission of the consent forms within 10 days of the deadline, as well as interests of judicial economy and in recognition of the remedial purposes of the FLSA, the Court will allow the inclusion of both Harris and Hurst in the collective. Defendants’ Objection [271] is OVERRULED.
II. Motions for Summary Judgment [211, 218]
A. Standard for Summary Judgment
Federal Rule of Civil Procedure 56 requires that summary judgment be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party “bears ‘the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absencе of a genuine issue of material fact.’ ”
Hickson Corp. v. N. Crossarm Co.,
B. Determining Whether a Worker is an Employee under the FLSA
The requirements of the Fair Labor Standards Act (“FLSA” or “Act”), 29 U.S.C. §§ 201-219, apply only to employees.
Freund v. Hi-Tech Satellite, Inc.,
i. There is no antecedent question to the economic realities test.
Defendants argue that at a minimum each Plaintiff must establish that she is a putative “employee.” (Dkt. [218-1] at 15, citing
Benshoff v. City of Va. Beach,
The Supreme Court has stated that “[t]he definition ‘suffer or permit to work’ was obviously not intended to stamp all persons as employees who, without any express or implied compensation agreement, might work for their own advantage on the premises of another.”
Walling v. Portland Terminal Co.,
first learns the routine activities by observation, and is then gradually permitted to do actual work under close scrutiny. His activities do not displace any of the regular employees, who do most of the work themselves, and must stand immediately by to supervise whatever the trainees do. The applicant’s work does not expedite the company business, but may, and sometimes does, actually impede and retard it.
Id.
If the trainee successfully completes the seven to eight day course, his name is added to a list of individuals qualified to be hired by the railroad as a brakeman when the need arises.
Id.
The Court, “[accepting the unchallenged findings here that the railroads receive no ‘immediate advantage’ from any work done by the trainees, [held] that they [were] not employees within the Act’s meaning.”
Id.
at 153,
Even assuming that the analysis applied by the Supreme Court in
Walling
to determine whether the trainees were employees is separate and distinct from an analysis of the economic reality of the relationship or represents an antecedent question to an analysis of economic reality, that analysis applied to the facts of this action would result in a finding that the entertainers are employees of Onyx. The Court’s findings included: that the trainee’s work “serves only his own interest;” that “[t]he applicant’s work does not expedite the company business, but may, and sometimes does, аctually impede and retard it;” and that “the railroads receive no ‘immediate advantage’ from any work done by the trainees.” Id. at 149-150, 153,
Defendants’ reliance on two Eleventh Circuit cases is also unavailing. The first,
Villarreal v. Woodham,
The second Eleventh Circuit case upon which Defendants rely is
Patel v. Wargo,
Defendants reliance on
O’Connor v. Davis,
The Second Circuit stated:
We believe that the preliminary question of remuneration is dispositive in this case. It is uncontested that O’Connor received from Rockland no salary or other wages, and no employee benefits such as health insurance, vacation, or sick pay, nor was she promised any such compensation. This case thus differs from Haavistola v. Community Fire Co., in which the Fourth Circuit considered whether a volunteer member of a fire company was an employee for Title VII purposes where “[o]n the one hand, [plaintiff] did not receive direct compensation as a member of the Fire Company, but, on the other hand, she did not affiliate with the company without reward entirely.”6 F.3d 211 , 221 (4th Cir.1993). The court then noted thatthe plaintiff received, through her volunteer position, a state-funded disability pension, survivors’ benefits for dependents, scholarships for dependents upon death or disability, group life insurance, and several other benefits. See id. The court concluded that the district court granted summary judgment improvidently, given that a factfinder should determine whether “the benefits represent indirect but significant remuneration ... or inconsequential incidents of an otherwise gratuitous relationship.” Id. at 222.
Because the absence of either direct or indirect economic remuneration or the promise thereof is undisputed in this case, we agree with the district court that O’Connor was not a Rockland employee within the meaning of Title VII and thus that her discrimination claim under that statute must fail.
O’Connor,
The analysis of the Eighth Circuit in
Graves
is similarly unhelpful to Defendants. The Eighth Circuit noted that “the absence of any compensation flowing to WPRA members by reason of their membership, together with the absence of any duty of service owed by members to WPRA or anyone else, suffices to exclude WPRA from being an ‘employer’ of its members under Title VII.”
The Court does not find that any of the aforementioned eases require a determination of whether an individual is an “employee,” before, or separate and apart from, examining the economic reality of the work relationship under the FLSA. Even assuming that the Court must determine whether an individual is an “employee” under the FLSA prior to applying the “economic realities” test, none of the cases cited by Defendants support a conclusion that the entertainers are not employees of Onyx.
C. Applying the Economic Realities Test
Whether an entity is an employer within the meaning of the FLSA is a legal question, with subsidiary findings considered issues of fact.
Patel,
(1) the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed;
(2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill;
(3) the alleged employee’s investment in equipment or materials required for-his task, or his employment of workers;
(4) whether the service rendered requires a special skill;
(5) the degree of permanency and duration of the working relationship;
(6) the extent to which the service rendered is an integral part of the alleged employer’s business.
Freund,
Before embarking on an examination of the factors set forth above as applicable to the facts of this action, the Court notes that several courts have addressed the question of whether a nude dancer is an employee under the FLSA, and “[without exception, these courts have found an employment relationship and required the nightclub to pay its dancers a minimum wage.”
Harrell v. Diamond A Entm’t, Inc.,
i. Nature and degree of control.
Plaintiffs contend that
Defendants’ control over entertainers’ work starts from the moment an entertainer is hired, carries through nearly every aspect of work until employment is terminated, and dictates the most meaningful aspects of an entertainers’ work such as how entertainers should look, exactly when and how entertainers will remove their clothing, when and how they will dance, and how much they will charge for their services.
(Dkt. [211-1] at 7). Defendants respond that:
The evidence in this case shows that Plaintiffs, not Club Onyx, control the most meaningful parts of their dancingcareers: when and how they dance, for whom they perform, their appearance, their income, manner of dance, and when they come-and-go from the Club. The few conditions identified by Plaintiffs as beyоnd their control are also beyond Club Onyx’s complete control, and are mandated not by the Club itself, but instead by State law and municipal ordinance.
(Dkt. [257] at 7). Defendants note that the State of Georgia and the City: control what types of activities can and cannot occur in the Club; control which permits and licenses dancers and club owners must have; control what hours the Club can legally be open for business; and impose a duty to reasonably monitor entertainers, such that they do not drive away from the Club intoxicated. (Id. at 7-10). Defendants also argue that entertainers “are not required to adhere to written rules of conduct, and Club Onyx does not enforce its advisory rules by disciplining its dancers.” (Id. at 11). Defendants’ arguments are unavailing.
“An employer cannot saddle a worker with the status of independent contractor, thereby relieving itself of its duties under the F.L.S.A., by granting him some legal powers where the economic reality is that the worker is not and never has been independently in the business which the employer would have him operate.”
Mednick v. Albert Enters., Inc.,
The mere fact that [the club] has delegated a measure of discretion to its dancers does not necessarily mean that its dancers are elevated to the status of independent contractors. Indeed, one could say that the nature of a dancer’s job requires some measure of discretion and flexibility. 11 The question this Court must resolvе is whether a ... dancer’s freedom to work when she wants and for whomever she wants reflects economic independence, or whether these freedoms merely mask the economic reality of dependence.
Harrell,
Upon an entertainer’s return to the Club with a valid license an entertainer is given a packet, which includes among other things, Defendants’ rules of conduct.
(See
RCCE). The rules cover, among other things: scheduling; conduct regarding dancing on stage; dress and appearance; and the cost of table-side and VIP dances.
(Id.).
Defendants maintain that “Club Onyx does not enforce any rules except
The Court finds that based upon the totality of the record Defendants exercise a significant amount of control over the entertainers, and that this factor ways in favor of finding an employer-employee relationship.
ii. Opportunity for profit or loss.
Defendants argue that Plaintiffs’ opportunity to profit is largely a product of their own initiative, resulting from when and how оften they choose to work, their conduct at work, and is “directly related to advertising, marketing, and promotion over which they have considerable control.” (Dkt. [259] at 23-24). The Court is not aware of any decision in which a court found that an exotic dancer has significant control over her opportunity for profit or loss relative to the club at which she works. Several courts, however, have rejected this argument.
See e.g., Circle C,
Defendants also argue that because there are nights on which dancers suffer an effective net loss as a result of fees paid to the Club, entertainers cannot be considered employees. (Dkt. [259] at 25). However, as other courts have found, the risk of loss is much greater for the Club than it is for an entertainer.
See Morse,
The second factor weighs in favor of finding an employer-employee relationship between the Club and Plaintiffs.
in. Relative investment.
Defendants argue that their investment in exotic dancing pales in comparison to that of Plaintiffs, as “the Club’s only direct investment in their exotic dancing work are the stage and poles on which they dance .... The remaining investments, for facilities, maintenance, repairs, liquor licenses, and food would exist whether or not Plaintiffs performed at Club Onyx,” [and therefore,] “should not be considered in the Court’s analysis of the parties’ relevant degree of investment.” (Dkt. [259] at 26). Again, Defendants do not cite a single case in which a court has accepted this line of reasoning, but there are several that have rejected it.
See e.g., Circle C,
From 2007-2009, the cost of equipment, fixtures, leasehold improvement, advertising, property and liability insurance, rent, set design, maintenance and repair, alcohol and other drinks, licenses, and music for the Club was on average approximately $900,000 a year. (Accounting Ledger, Ex. 21, Affidavit of Anna P. Prakash, Dkt. [212-21]). In comparison, if one takes the high end of Plaintiff Clincy’s estimates for her annual spending related to hair, costumes, props, shoes, makeup, and nails, the total is around $50,000. 13 While this is a significant amount, it is does not exceed the Club’s investments as Defendants assert. 14 Further, it appears that Clincy’s spending may be an outlier. In comparison, the other two individuals that Defendants rely upon for the assertion that entertainers invest large sums of money spend considerably less. It appears that Plaintiff Leaphart spends, on the high end, approximately $14,000 per year on her costumes, shoes, personal grooming, and hair. 15 The portion of Plaintiff Parker’s testimony upon which Defendants rely indicates only that she spends approximately $40-$150 per costume. The Court finds that Plаintiffs’ investment in exotic dancing is small in comparison to Defendants’ investment in the Club, and this factor weighs in favor of finding an employer-employee relationship. (See supra at 21-22).
iv. Necessity of special skill.
Defendants argue that “[t]he evidence in this case affirmatively shows that Club Onyx dancers, including Plaintiffs, are skilled, and come to perform at Club Onyx with prior experience performing exotic dancing at other clubs.” (Dkt. [259] at 29 (citations omitted)). Plaintiffs contend that the primary requirement for being a dancer at Onyx “is appearance, not skill.”
Examining the record as a whole, the Court finds that special skills are not required to perform as an entertainer at Onyx, and this factor weighs in favor of finding an employer-employee relationship between the Club and Plaintiffs,
v. Permanency of working relationship.
Other courts have found, and Plaintiffs have previously asserted, that nude entertainers tend to be transient or itinerant.
See Harrell,
vi. Importance of entertainers to the Club.
Defendants argue that “[n]ude dancing, while also contributing to the Club’s caché, is not it’s essential function.” (Dkt. [269] at 33). Rather, Defendants argue,
Club Onyx is one of the premier nightclubs in the Southeast, which regularly features appearances by international superstar rap and R & B artists, and celebrity sports and entertainment personalities, and is known as “a place tosee and be seen.” ... To this end, Club Onyx regularly promotes these appearances, which result in significantly higher customers than on non-promoted nights.... Club Onyx is also known for selling liquor by the glass and bottle, a unique privilege in the Atlanta bar and nightclub community, which further contributes to the Club’s caché.
(Id. at 32-33 (emphasis in original)). Plaintiffs contend that Defendants’ argument that nude dancers are not integral to the Club’s business is “absurd,” because: Onyx has three stages for dancing, with at least one stage visible from all areas of the Club; its website and billboard feature scantily clad women; it advertises in adult magazines; and it admits that it is a strip club. (Dkt. [272] at 18; Dkt. [211-1] at 22-24). The Court agrees.
Adams, the Club’s night manager, testified that “[g]irls make the club busy. As far as if you don’t have enough girls in the building, your customers won’t stay .... ” (Adams Dеpo. at 60:9-12). Defendants admit that on nights that there are many customers and few entertainers at Onyx, management will call in additional entertainers. (PSF at ¶ 219). GSE and GSEC’s director of marketing, Jack Pepper, believed that the presence of scantily clad women on a billboard advertising the Club conveyed to the public that Onyx is an adult entertainment nightclub. (Pepper Depo. at 26:15-19). Based upon the record as a whole, a reasonable juror could not find that the presence of nude entertainment is not integral to the Club. This factor weighs in favor of finding an employer-employee relationship.
vii. Other considerations.
Defendants argue that because Plaintiffs were given the choice of being treated as an employee or independent contractor, and elected to be treated as an independent contractor, and because several Plaintiffs have held themselves out to the IRS as independent contractors in regards to their relationship to the Club, and because each entertainer must obtain an individual permit from the City to perform at the Club, the economic reality is that they are independent contractors. (Dkt. [259] at 34-39). This is not the case. “In deciding whether an individual is an ‘employee’ within the meaning of the FLSA, the label attached to the relationship is dispositive only to the degree it mirrors the economic reality of the relationship.”
Donovan v. Tehco, Inc.,
viii. Examining the record as a whole.
In determining whether an employer-employee relationship existed between the Club and Plaintiffs “[n]o one factor is determinative;” “each factor should be given weight according to how much light it sheds on the nature of the economic dependence of the putative employee on the employer.”
Perdomo,
The Court has found that the Club’s degree of control over the work of entertainers, the entertainers’ opportunity for profit and loss, the entertainers’ relative investment, the lack of specialized skill required to be an entertainer, and the integral nature of nude entertainment to the Club’s business support a finding that an employer-employee relationship existed between the Club and Plaintiffs. Considering these factors that the Eleventh Circuit has identified as relevant, and in light of the record as a whole, the Court finds that Plaintiffs should have been classified as employees under the FLSA.
Having decided that Plaintiffs should have been classified as employees under the FLSA, the case is scheduled to proceed with the second phase of discovery addressing other FLSA defenses and damages. See October 15, 2009 Scheduling Order (Dkt. [59]) at 2. Consideration of the costs that might reasonably be incurred in the next phase of discovery causes the Court to conclude that the parties would be well served by engaging in mediation before proceeding to this phase of discovery. Therefore, the Court hereby REFERS the case to Chief Magistrate Judge Janet F. King for assignment to a Magistrate Judge for mediation. Discovery shall be STAYED until the mediation process is concluded.
Conclusion
For the aforementioned reasons, Plaintiffs’ Motion for Partial Summary Judgment [211] is GRANTED, Defendants’ Motion for Summary Judgment [218] is DENIED, and Defendants’ Objеction to Plaintiffs’ Late-Filed Consent Forms [271] is OVERRULED. The case is hereby REFERRED to Chief Magistrate Judge Janet F. King for assignment to a Magistrate Judge for mediation. Discovery shall be STAYED until the mediation process is concluded. If mediation is unsuccessful, the parties shall proceed with discovery in accordance with the October 15, 2009 Scheduling Order.
Notes
. The background section is taken from Plaintiffs' Statement of Undisputed Facts ("PSF”)
The Court has also considered Defendants’ Objections to Declarations filed by Plaintiffs [252], Where Defendants have raised a valid objection to one of the declarations, the Court has not relied upon the objectionable portion of the declaration in ruling upon the Motions for Summary Judgment [211, 218]. Further, the Court's reliance on any of the declarations is limited, as less than 20 of Plaintiffs’ 226 material facts solely cite one or more of these declarations. Defendants do note that "the fact that the Declarations are virtually identical to one another, make Defendants wonder whether the declarations were read by the Declarants prior to signing them.” (Dkt. [252] at 1-2). Interestingly, Defendants filed 16 affidavits (Dkt. [253-1 through 253-16]), which other than having blanks to be filled in regarding the entertainer’s name, her start date at Onyx, and the names of any other nightclubs at which she has danced, are exactly identical.
Finally, Defendants have filed an Objection to Affidavit of Anna P. Prakash [283], which was filed in support of Plaintiffs' Response [275] to Defendants’ Objections to Declarations [252]. The Court did not rely upon Ms. Prakash’s three paragraph affidavit or the accompanying exhibit in considering Defendants’ Objections to Declarations [252] and therefore Defendants’ Objection [283] thereto is moot.
. The following individuals worked at the Club for an extended period: Plaintiff Wells, sometime in 2006 through August 2009 (Deposition of Naturee Wells ("Wells Depo.”) at 15:5-17:11); Plaintiff Sales, mid to late 2008 until August 2009 (Deposition of Summer Sales ("Sales Depo.”) 28:5-29:2); Plaintiff Clincy, June 2007 to Fall 2010 (PSF at ¶ 200); Plaintiff Leaphart, June 2008 to present (Id. at 201); Plaintiff Pough, May 2008 to present (Id. at 202); Plaintiff Parker, latter half of 2008 to August 2009 (Id. at 203); Plaintiff Jordan, in 2006 and again from late 2007 to December 2009 (Jordan Depo. 25:23-34:1); Opt-in Plaintiff Judith Bloedoorn, October 2007 to July 2009 (PSF at ¶205); Opt-in Plaintiff Amber Jefferson, approximately two years (Id. at 206); Opt-in Plaintiff British Martin, approximately one year on two different occasions (Id. at 207); and Opt-in Plaintiff Torey Hughes, approximately one year (Id. at 209).
. Defendants do not object to the veracity of Plaintiffs' Fact # 122, but do object to other facts set forth in PSF on the ground that payment of fees to the DJ and house mom are not mandated, but suggested.
. The “bar fees” collected by Defendants is transmitted to LVA Management, a company controlled by Defendant Galardi. (Williams Depo. — Feb. 3 at 83:24-84:25).
. Defendants' citations for this assertion do not support the statement that customers come to Onyx to dance, listen to music, watch sporting events, or shoot pool. Rather Hayes
. To enter the Club, customers must pay a door fee of between $10 and $40, and there is a two drink minimum for customers. (PSF at ¶¶ 156, 160).
. If entertainers give the DJ 10% of their proceeds for the night, half of 40% of which is then transferred to Defendants, Defendants directly receive 2% of the money earned by entertainers each night. Even if this were the only benefit Defendants’ received as a result of having entertainers at the Club, it constitutes an immediate benefit to Defendants, which was absent in Walling.
. Given the testimony and actions of the Club’s management, the testimony of one of its house moms, and its marketing efforts, see supra at 19-20, no reasonable juror would conclude that the presence of nude entertainment does not represent an immediate benefit to the Club.
.A reasonable juror might then wonder why the Club even has nude entertainment, the presence of which subjects it to additional local ordinances.
. The Second Circuit in
O’Connor
stated "that when Congress uses the term 'employee’ without defining it with precision, courts should presume that Congress had in mind "the conventional master-sеrvant relationship as understood by the common-law agency doctrine.””
. Footnote in original:
For example, in 303 West 42nd St. Enters., Inc.,916 F.Supp. 349 , the Southern District of New York found that certain “fantasy booth” performers were employees (rather than independent contractors), notwithstanding the freedom a performer had to strike her own deals with her customers:
Once inside the booth, it may seem, upon first glance, as if fantasy booth performers control the work by negotiating prices and performing in private. However, it must be remembered that Show World's product is adult entertainment. The only way to put forth the product is by the use of the human figure. The presence of the individual is essential for the distribution of the product.
One of the distinguishing characteristics of the services that booth performers provide is that the particular fantasy is narrowly tailored to the individual customer’s needs and preferences. In this respect it may be likened to the services provided by a home health care provider who tailors her routine to the needs of the patient. Similarly, it may be likеned to the stage dancer at an adult club who structures her routine so as to please the specific audience. Despite the individuality exercised in her performance of these services, for the purposes of employment taxes, both the health care provider and the stage dancer are employees.
Id. at 362 (citations omitted).
Harrell, 992 F.Supp. at 1349 n. 8.
. See also Harrell, 992 F.Supp. at 1350, 1352:
Defendant argues that Plaintiffs income was solely and completely dependant upon her initiative. Plaintiff performed "rounds” to obtain tips and to solicit table dances (an activity called “hustling” in the industry).
The "hustling” argument has been universally rejected by every court to consider it. That a dancer may increase her earnings by increased "hustling” matters little. As is the case with the zealous waiter at a fancy, four star restaurant, a dancer's stake, her take and the control she exercises over each of these are limited by the bounds of good service; ultimately, it is the restaurant that takes the risks and reaps the returns.
. The Court used the following figures in calculating the total: hair ($2,300/month); costumes ($4,000/year); props ($3,000/year); shoes ($5,000/year); makeup ($7,000/year); and nails ($3,000/year). (Clincy Depo. at 89:24-90:18, 107:25-109:22).
.
See Harrell v. Diamond A Entm’t, Inc.,
.The Court used the following figures, erring on the side of greater spending, in calculating the total: costumes ($400/month); shoes ($l,000/year); personal grooming ($175/month); hair ($500/month). (Leaphart Depo. at 84:6-88:12).