In a recent opinion by the U.S. District Court for the District of Columbia, five exotic dancers were found to be employees of the club that they danced at, entitling them to minimum hourly wages and overtime compensation. See Thompson v. Linda & A., Inc., 2011 U.S. Dist. LEXIS 46078 (D.D.C. Apr. 29, 2011). In Thompson, the defendant classified its dancers as independent contractors and paid them $40 per 10 hour shift plus tips. The plaintiffs argued that despite the independent contractor classification, they were in fact employees entitled to the protections of the Fair Labor Standards Act. The Court performed an economic realities test and sided with the dancers. Specifically, the Court found that: (i) the club asserted significant control over the dancers; (ii) the dancers did not have the opportunity for profit or loss and investment in the business; (iii) the dancing did not require a degree of skill and independent initiative to be independent of the club; and (iv) the dancers were an integral part of the employer’s business. Thus, the club was responsible for paying dancers minimum wages for each hour worked and overtime premium pay for hours worked over 40 in a single week.
The improper classification of exotic dancers as independent contractors is a common practice. Other types of employers will also do the same in order to avoid their responsibilities of paying workers minimum wage and overtime pay.

I recently read an interesiting (and, I think, important) decision in which Middle District of Pennsylvania Judge Thomas I. Vanaskie reasoned that a “workweek standard” must be applied in determining whether a company violated the minimum wage provisions of the Pennsylvania Minimum Wage Act (“PMWA”), 43 P.S. sec. 333.101, et seq., by failing to pay workers for all hours worked.  In Masterson v. Federal Express Corp., 2008 U.S. Dist. LEXIS 99622 (M.D. Pa. Dec. 10, 2008), the workers claimed that the copmany did not pay them for all hours worked and they sought the minimum wage of $7.15 for every unpaid hour.  After analyzing the PMWA, Judge Vanaskie held that an employer does not violate the PMWA’s minimum wage provision so long as the employee’s weekly pay divided by all hours worked (including the unpaid hours) exceeds the $7.15 minimum wage.  In applying this method, the court utilized what is known as the “workweek standard” and rejected the view that every hour stands alone under the PMWA’s minimum wage provision.  This case has important implications for “off-the-clock” cases in which the workers do not work in excess of 40 hours per week.  Of course, once the work hours cross the 40-hour threshold, the PMWA’s overtime pay provisions kick in, and the workers’ damages will flow from their “regular rate” of pay.  So Masterson has no bearing on overtime cases.