Alexis and Nicolette claimed in their federal court complaint that they worked more than 40 hours per week on average but were paid well below half of their hours with no paid overtime, and that dancers were required to split their tips with other workers such as the DJ, bouncer and Tiffany’s Cabaret itself as a house fee.
On March 12 a San Antonio federal court jury sided with Alexis and Nicolette, awarding Alexis almost $61,000 for unpaid wages and misappropriated tips over a three-year period, while Nicolette was awarded almost $65,000. The jury verdict was in the form of a series of answers to questions such as, did the plaintiff prove: 1) that the club failed to pay minimum wages and misappropriated tips; 2) showed reckless disregard for its known FLSA obligations; 3) evidence of willfulness to justify the longer 3 year back pay period; 4) the exact amount of the unpaid wages; and 5) the exact amount of misappropriated tips. All of the jurors answers were in Alexis and Nicolette favor.
Alexis and Nicolette lawyers next argued that the club made no good faith effort to remedy their legal shortfalls, and should pay double in "liquidated damages." Over the objection of the club's lawyers, the federal judge agreed and doubled the total award to more than $250,000. That does not count attorney's fees and costs. The judge did agree with the club's lawyer that the shortcomings were likely due to bad advice from its accounting firm.
In a similar pending case in New York, it is alleged that Larry Flynt’s Hustler Club misclassified exotic dancers as independent contractors and misappropriated their tips. The Hustler club had a practice of printing monopoly type bills called “Beaver Bucks” that customers could buy to use as a form of payment or to tip the dancers with instead of cash. However, when dancers went to exchange the beaver bucks for actual cash, he Club took a portion of the tip value for itself so dancers were not getting their tips in full, the suit alleged. That case is pending.
Common Sense Counsel: FLSA violations are the most common and costly employment lawsuits whether you run a strip club or other type of service business. An ounce of prevention with a wage and hour audit is the only FLSA proven risk reduction strategy. The top most costly violations are: 1) Misclassification of Exempt Employees; 2) Not Counting Every Hour Worked for Hourly Employees; 3) Not Calculating Overtime Pay the FLSA Way; 4) Misclassification as Independent Contractors when they are truly employees; 5) Misappropriation of Tips; and 6) Requiring tipped employees to perform more than 20% of their workweek on work not related to the tipped occupation work.
Tommy Eden is a partner working out of the Constangy, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at firstname.lastname@example.org or 334-246-2901. Blog at www.alabamaatwork.com and follow on twitter tommyeden3