ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
■ THIS CAUSE is before the Court upon Defendants’ Motion for Summary Judgment [DE 150] (“Motion”). The Court has considered the Motion, Plaintiffs’ Amended Response [DE 169], Defendants’ Reply [DE 173], and the record in this case, and is otherwise advised in the premises. For the reasons stated herein, the Court will grant in part and deny in part the Motion.
I. BACKGROUND
Plaintiffs Sarah Shaw, Rebecca Wiles, and Ashley Howell bring this action on behalf of themselves and others similarly situated pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 202(a), 206, 207, and the Florida Minimum Wage Act (“FMWA”), Fla. Const, art. X § 24 and Fla. Stat. § 448.110. See [DE 20]. Plaintiffs are exotic, dancers (“Entertainers” or “Dancers”) who formerly performed at two strip clubs (“Clubs”) operated by Defendants The Set Enterprises, Inc. (“SEI”) and Faneuil Entertainment, Inc, (“FEI”). Their legal dispute centers on whether Plaintiffs and the putative class members should have been classified as employees under the FLSA, Defendants argue that Plaintiffs were not employees but instead licensees permitted to use the Clubs to perform in consideration for certain house fees and tip-outs. Plaintiffs claim that they were misclassified and are owed the minimum and overtime wages that the FLSA and FMWA afford employees.
Prior to working at the Clubs, each Dancer was required to sign a Dancer Licensing Agreement (“Agreement”). Under this arrangement, the Dancer was granted a license to “utilize the stage, other entertainment facilities and the dressing rooms located within the. Club for the performance of exotic dance routines.” [DE 40-1]. The Clubs also provided bartenders, waitresses, hostesses, security staff,-music played by DJs, food and liquor services, and advertising and promotions. The Dancer, in turn, agreed to pay mandatory house fees and tip-outs to the Clubs’ employees and contractors each shift, as set forth in a schedule attached to the Agreement. The house fees started at $15.00 or $20.00 at the beginning of a shift (day, mid, or night) and increased in progressive increments each half hour after the initial starting time. Defendants also set the minimum charges for certain entertainment services performed by the Dancers (e.g., table dances, private shows, friction dances), and required the Dancers to pay the Club $5.00 per friction dance performed. The Dancers retained the remainder of the fees and tips collected directly from patrons and did not receive compensation from Defendants. The Dancers were offered a position based on their appearance and were not required to have formal training or experience prior to signing the Agreement.
The Agreement required the Dancers to abide by the “Entertainer Rules” attached thereto and posted in the.Clubs. These rules prohibited the Dancers from engag-
The Dancers were responsible for their own attire, hair, and makeup. They could choose when to work but were required to sign in upon arrival. They also were not restricted from working at other clubs or in other lines of work.
Plaintiffs, on their own behalf and on behalf of all others similarly situated, initiated this action on October 13, 2015, and filed the operative Amended Complaint on November 23, 2015. [DE’s 1, 20]. Both Defendants filed Answers denying liability, and Defendant FEI asserted counterclaims for breach of contract and unjust enrichment. [DE’s 27, 40]. On December 5, 2016, the Court certified this case as an FLSA collective action consisting of all current and former Entertainers who worked for the Clubs during the three years preceding the filing of this action. [DE 134]. On December 28, 2016, Defendants moved for summary judgment on the grounds that: (1) Plaintiffs are not employees under the FLSA; (2) Plaintiffs cannot support their claims for overtime wages; and (3) Plaintiffs’ wage claims should be offset by their liability for breach of contract or unjust enrichment. See [DE 150].
II. LEGAL STANDARD
'A district court “shall grant summary judgment 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 “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,
After the movant has met its burden under Rule 56(a), the burden of production shifts, and the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
In deciding a summary-judgment motion, the Court must view the facts in the light most favorable to the nonmoving party. Davis v. Williams,
III. DISCUSSION
Defendants seek summary judgment on Plaintiffs’ FLSA and FMWA claims and Defendant FEI’s counterclaims. As explained in more detail below, the Court agrees with Defendants that Plaintiffs have failed to support their claim for FLSA overtime wages. As to all other matters, however, Defendants’ Motion must be denied.
A. Classification as Employees
Plaintiffs are employees under the FLSA. The FLSA defines “employee” broadly as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). Under Florida law, the terms “employee” and “employer” “have the meanings established under the [FLSA] and its implementing regulations.” Fla. Const, art; X, § 24. The following analysis therefore applies to both the FLSA and FMWA claims.
To determine whether an employer-employee relationship exists, “courts look to the ‘economic reality’ of the relationship between the alleged employee and alleged employer and whether that relationship demonstrates dependence.”
In their Motion, Defendants point to only two unpublished cases wherein district courts in other circuits held that exotic dancers were not employees under the FLSA. See Hilborn v. Prime Time Club, Inc.,
1. Nature and Degree of Control
The first factor in the economic reality test is “the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed.” Scantland,
In Degidio v. Crazy Horse Saloon & Rest., Inc., for example, the club exercised significant control, even though it did not fine its dancers, because the club maintained either formal or informal rules regarding sign-in requirements, house fees and tip sharing, the sequence in which the performers would appear on stage, minimum prices for select services, promotional materials, and “[v]arious policies intended to maintain a sense of class in the establishment.” No. 4:13-CV-02136-BHH,
Here, Defendants exercised significant control over the Dancers at the Clubs. The Dancers were required to follow “Entertainer Rules” that regulated their appearance and behavior, pay ■ escalating house fees based on the time of their arrival, sign in for shifts, follow procedures for stage rotations, and charge minimum fees set by Defendants. The Dancers had virtually no control over the customer volume, hours, food and drink, or overall atmosphere at the Clubs. Although the Dancers could choose their shifts, clients, and which dances to perform, such discretion is typical for an exotic dancer and does. not, without more, establish that the Dancers were independent agents. See Harrell,
Defendants maintain that the only rules that they actually enforced were those prohibiting illegal activity. See DE 173 at 10. However, lax enforcement of the rules does not evidence lack of significant control because “[a]n employer’s ‘potential power’ to enforce its rules and manage dancers’ conduct is a form of control.” McFeeley,
2. Opportunity for Profit and Loss
The second factor is “the alleged employee’s opportunity for profit or loss depending upon [her] managerial skill.” Scantland,
Defendants argue that the Dancers’ opportunity for profit was largely a product of their own control — that is, how often to work, how long to work, what to wear, what type of entertainment to offer, how to dance, how much to charge for certain services, etc. However, .“[t]his argument— that dancers can ‘hustle’ to increase their profits — has been almost universally rejected.” Id. at 243; see also Thompson v. Linda And A., Inc.,
Here, Defendants’ risk of profit and loss far exceeded that of the Dancers. By controlling the flow of customers and setting minimum fees for services, Defendants exercised significant control over the Dancers’ opportunity for profit. The only risks of loss that the Dancers incurred were the tip-outs, house fees, and $5.00 friction dance fees. The remainder of the overhead costs fell on Defendants. Thus, the second factor weighs strongly in favor of finding an employer-employee relationship.
3. Investment in Equipment or Materials
The third factor in the economic reality test is “the alleged employee’s investment in equipment or materials required for [her] task.” Scantland,
This case is no exception. Like employees in many fields, the Dancers were financially responsible for maintaining an appearance suitable to their work environment. Specifically, the Dancers invested in their hair, makeup, and costumes. In contrast, Defendants’ investments included the club facilities, parking, stages, fixtures, décor, advertising and promotion, bartenders, waitresses, hostesses, security staff, music equipment, and general operating bills and expenses. Defendants’ investments in the Clubs clearly and substantially outweighed the Dancers’ investments. Thus, the third factor weighs in favor of the Dancers being employees.
4. Special Skill
The fourth factor is “whether the service rendered requires a special skill.” Scantland,
Defendants did not require the Dancers to have the kind of special skill that would bring them outside the FLSA’s definition of an employee. Defendants did not require prospective Dancers to have any formal training or prior experience. The only requirement to work at the Clubs was that the Dancer was an attractive female. The fourth factor weighs heavily in favor of finding that the Dancers are employees.
Fifth, the court considers “the degree of permanency and duration of the working relationship.” Scantland,
6. Integral Part of Business
The sixth and final factor is “the extent to which the service rendered is an integral part of the alleged employer’s business.” Scantland,
7.Consideration of All Factors
The totality of the circumstances requires a finding that Plaintiffs and the putative class members are employees as defined by the FLSA. Considering the preceding factors, the economic reality is that Defendants controlled the economic opportunity of the Dancers. Accordingly, the portion of Defendants’ Motion seeking summary judgment on the issue of employee status will be denied.
B. Overtime Claims
Plaintiffs have not presented evidence beyond the pleadings showing that a reasonable jury could find that Defendants owe them any overtime wages. The FLSA requires employers to pay their employees at least one and a half times their regular wage for every hour worked in excess of forty per week. 29 U.S.C. § 207(a)(1). If the employer failed to keep time records, an employee meets her initial burden by producing sufficient evidence to show: (1) that she has in fact performed work for which she was improperly compensated; and (2) the amount and extent of that work as a matter of just and reasonable inference. Lamonica v. Safe Hurricane Shutters, Inc.,
Here, Plaintiffs have not met their initial burden to come forward with evidence that any of them worked more than 40 hours per week. To the contrary, Plaintiffs’ attorney demand letters to Defendants do not claim any overtime wages due to the named Plaintiffs or any other Dancers. See [DE 20-6], Similarly, Plaintiffs stated in their interrogatory responses that they worked at the Clubs between 32 and 35 hours per week. See [DE’s 152-7 to 152-9]. When asked to state their claims for unpaid overtime wages, Plaintiffs did not identify any hours of unpaid overtime. Id
In their defense, Plaintiffs argue that Defendants did not provide accurate records of the amount of time that each Dancer worked. Even if true, inaccurate reporting would not excuse Plaintiffs from satisfying their initial burden of coming forward with some evidence to support a just and reasonable inference that they worked more than 40 hours per week, even if only on certain occasions. Summary judgment therefore will be granted in favor of Defendants as to Count I of the Amended Complaint.
C. Counterclaims
Defendant FEI’s counterclaims for breach of contract and, alternatively, unjust enrichment fail as a matter of law. Defendants argue that while they abided by the terms of the Agreements, Plaintiffs have attempted “to repudiate their Agreements by retaining all fees and tips they were paid, while simultaneously seeking to obtain additional compensation in the form of wages.” [DE 150] at 16. Allowing the Dancers to collect minimum wages in addition to retaining service fees would unjustly enrich them, Defendants claim. Therefore, Defendants contend that they are entitled to offset their minimum wage liability under both the FLSA and FMWA with the amount of fees retained by the Dancers.
1. Tip and Service Charge Offsets
Defendants' often describe FEI’s counterclaims as seeking an “offset,” but no statutory offset is available. As a general principle, the FLSA precludes employers from using tips and fees to offset the minimum wages that they are required to pay employees. See McFeeley,
Although Defendants insist that they are not seeking.a “tip credit,” most courts have concluded that performance fees collected by exotic dancers should be treated as tips. See, e.g., Priba,
Nor have Defendants demonstrated that they would be entitled to an offset if the Court were to construe the dance fees as service charges. In order to count a service charge as an offset to an employer’s minimum wage liability, the service charge must “have been included in the establishment’s gross receipts” and “distributed by the employer to its employees.” Id. at 246 (internal citations omitted); see also Vaughan
2. Unjust Enrichment
Defendant FEI’s counterclaim for unjust enrichment fails as a matter of law. To succeed on a counterclaim for unjust enrichment, a defendant must prove: (1) a benefit conferred upon the plaintiff by the defendant; (2) the plaintiff appreciated the benefit; and (3) the plaintiffs acceptance and “retention of the benefit under circumstances that make it inequitable for him to retain it without paying the value thereof.” Rollins, Inc. v. Butland,
The court in Hart applied a similar New York statute and rejected the same argument that Defendants make here — that is, “that the dancers will be unjustly enriched if they are allowed to retain performance fees alongside the statutorily- required minimum wage payments.”
As in Hart, Defendants cannot establish that the performance fees paid by customers to the Dancers were benefits that Defendants conferred upon them. Additionally, Defendants took a risk by classifying the Dancers as licensees, rather than employees, despite a substantial body of ease law holding that exotic dancers are employees. It is hardly inequitable to allow the Dancers to retain the supposed “benefit” of Defendants’ unsuccessful attempt to avoid creating an employer-employee relationship.
3. Breach of Contract
Finally, Defendant FEI cannot succeed on its breach of contract counter
IV. CONCLUSION
In light of the foregoing, it is hereby ORDERED AND ADJUDGED that Defendants’ Motion for Summary Judgment [DE 150] is GRANTED in part and DENIED in part as follows:
1. Summary judgment is entered in favor of Defendants and against Plaintiffs on Count I of the Amended Complaint for Overtime Claims, without prejudice.8
2. The portion of Defendants’ Motion seeking summary judgment on the issue of Plaintiffs’ employment status is denied, as the Court finds that Plaintiffs are employees for purposes of the FLSA and FMWA.
3. Summary judgment is denied as to Defendant FEI’s counterclaims for offsets, unjust enrichment, and breach of contract, as the Court finds that each of these Counterclaims fail.
4. The Court defers ruling on any requests for attorneys’ fees and costs stemming from the rulings m this Order. The parties may renew requests for attorneys’ fees and costs in a separate post-trial motion.
5. Defendants’ Request for Oral Argument [DE 177] is DENIED AS MOOT.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, this 17th day of March, 2017.
Notes
. All statements in the Background section are derived from uncontested portions of the parties' respective Statements of Material Facts [DE 151 & 168], unless otherwise noted.
. Defendants contest this fact, but it is clearly supported by the record evidence. See [DE 116-1] at 88:1-89:23.
.The Court notes that limited genuine factual disputes remain- — namely, whether a Dancer could charge a customer more than the minimum amounts established by the Clubs and the degree to which Defendants actually enforced their own rules. However, these contested facts do not preclude the Court from reaching the legal conclusions herein because resolution of the factual disputes "would [not] affect the outcome of the case under controlling substantive law” in light of the other evidence presented. See Liberty Lobby,
. All parties agree that the economic reality test applies to this dispute.
. See, e.g., McFeeley v. Jackson Street Entm't, LLC,
. The Court’s ruling in Section B of this Order regarding Overtime Claims is based on the evidence provided in the record in support of and in opposition to Defendants’ summary judgment motion. However, the Court notes that, while discovery regarding the named Plaintiffs has closed, discovery regarding the opt-in Plaintiffs is still ongoing. Accordingly, while summary judgment is entered in favor of Defendants as to the Overtime Claims, this ruling is without prejudice to being revisited as to any opt-in Plaintiffs’ potential overtime claims — in the event the ongoing discovery reveals evidence that one or more of the opt-in Plaintiffs worked more than 40 hours per week.
. The FMWA incorporates the exemptions and restrictions in sections 213 and 214 of the FLSA "as interpreted by applicable federal regulations and implemented by the Secretary of Labor.” Fla. Stat. § 448.110.
. See supra atp. 1328, n. 6