Sarah Padilla danced for six years at Sugar’s Gentlemen’s Club in San Antonio, where she says she had to pay a fee of at least $45 each shift and share with managers and staff the tips customers paid her.
There were times Padilla, 26, left the club having made no money, requiring her to dip into her own pocketbook to pay the “mandatory” $20 to each of the managers and staffers.
“It angers me how much these people (clubs and owners) get away with and not only are they robbing these girls of their money but damaging them mentally and emotionally by making them work under these one-sided pay conditions,” Padilla said. “The truth about the ‘glamorous big-buck lifestyle’ is an illusion. I just think that it is very important to shed some light on this issue.”
Padilla has sued Sugar’s and its principals, alleging she and other dancers were never paid the federally mandated minimum wage of $7.25 an hour, were unlawfully charged rent to dance, and were forced to split tips with other club employees.
Padilla’s lawsuit follows others filed against Rick’s Cabaret and Perfect 10 Men’s Club in recent weeks in San Antonio federal court, each brought under the Fair Labor Standards Act — the 81-year-old law that requires employers to pay a minimum wage.
Such litigation against strip clubs has been going on for years, however, with the dancers often prevailing and, in some cases, even obtaining multimillion-dollar awards.
“These are opportunistic lawsuits filed by plaintiffs’ lawyers who are simply trying to get a payday on the backs of dancers who executed a contract that (stipulates) they were independent contractors and not employees of the club,” said Casey Wallace, a Houston lawyer who defends strip clubs against such lawsuits.
Wallace represents Rick’s Cabaret in the recently filed lawsuit here, but he said his comments were not about any specific club or lawsuit.
Gregg C. Greenberg, a Silver Springs, Md., attorney for the woman suing Rick’s Cabaret, offered a different take on what’s behind the litigation.
“My sense, maybe it’s not a legal analysis, but what they do is pay the dancers nothing, they charge the dancers to go to work and they take a portion of the dancers’ tips,” he said. “It’s seems like it’s less expensive to break the law and get caught every once in a while, as compared to just follow the law.”
The strip club industry is fragmented, with many small operators, even though they may employ several hundred dancers, said Michael LeRoy, a professor at the University of Illinois College of Law, who has studied the business.
LeRoy didn’t intend to study the industry. He was examining litigation surrounding alleged wage theft by employers who misclassify workers as independent contractors rather than as employees. Workers in the gig economy often are misclassified, he said.
The largest category of claims involved strip clubs, LeRoy said. So he decided to dig deeper. In his study from 2017, he researched 75 state and federal court rulings on wage and hour claims by dancers who work at strip clubs.
LeRoy found dancers won 93 percent of the misclassification rulings. Many of the cases were in California, Nevada and Illinois.
“I’m personally not surprised that Texas is a focal point now because generally Texas does not have good law for employees. It’s an employer-friendly state,” LeRoy said. “That said, what the plaintiffs’ attorneys are bringing to the table is a wealth of precedence that’s going to be hard for Texas judges to overlook.”
San Antonio dancers’ work arrangements are not going to differ much from those who work in other cities where litigation has been prevalent, LeRoy said.
Clubs “have similar kinds of scheduling and rules about dancing and tipping policies,” he said. “Tipping is the big area because dancers … are frequently bankrolling part of the payroll for the club with tipping to bartenders, bouncers, house moms and DJs. I would imagine that that practice more or less is the same in San Antonio as it would be in any other major city.”
The Texas Workforce Commission has examined the issue of whether exotic dancers are independent contractors or employees when determining tax liability. It relies on 20 factors, including whether the dancers have set work hours, whether there is a continuing relationship with the club and whether they realize a profit or loss.
“Liability has gone both ways depending on the facts of the case,” TWC spokesman Cisco Gamez said in an email.
Businesses are responsible for determining a worker’s status as either an independent contractor or employee. Courts apply a six-factor test that includes how much control a worker has, the worker’s opportunity for profit or loss, the skill required to do the job and how integral the work is to the business.
“When you look at the test, you have to individually apply it to the business and then to the people who were classified as independent contractors and see if they meet the test,” said Wallace, the lawyer who represents clubs. “Because Tiffany’s was found to have been liable under the Fair Labor Standards Act does not mean that Rick’s or Baby Doll’s or the Men’s Club or any other business is equally liable.”
In June, a five-person Houston jury found the dancers suing Moments Cabaret did not prove they were employees. The dancers received nothing in their wage suit. Wallace defended Moments.
“It is not universal that the payday hits when the plaintiffs file these lawsuits,” Wallace said.
Using the economics reality test, U.S. District Judge Lee Rosenthal in Houston found that dancers at four strip clubs were not employees in a 2016 ruling. Nonetheless, the clubs agreed to pay $1.1 million to the dancers and their lawyers.
The Nevada Supreme Court in March affirmed a lower court ruling that dancers at Treasures Gentlemen’s Club in Las Vegas were independent contractors. The court found the dancers “do not have minimum shift hour requirements, need not request permission to depart early, can decline dance dollars, (and) set their own prices.”
On the flip side, though, the California Supreme Court last year ruled that dancers were considered strip club employees, ending years of being classified as contractors, Los Angeles Magazine reported.
Dancers have won some big awards, too. Late last year, dancers at Spearmint Rhino and other clubs were awarded almost $20 million in a California federal case. In 2017, some 28,000 dancers obtained a $6.5 million settlement against Déja Vu Services in Detroit federal court.
Wallace, though, said he believes the tide is turning in favor of the clubs because they’ve changed their “mode and method of operation.”
Many clubs now require dancers to agree to go to arbitration to settle disputes and waive any collective- or class action.
In the Rick’s Cabaret lawsuit, Greenberg’s client filed an action with the American Arbitration Association pursuant to the arbitration agreement the parties signed. The suit alleges that Rick’s did not participate in the action, resulting in the case landing in San Antonio federal court. Wallace could not comment on behalf of Rick’s.
Perfect 10 Gentlemen’s Club filed a counterclaim against the women who sued it, alleging neither worked for the club.
“This is not uncommon because these clubs do a horrible job of keeping records,” said David Hodges, a Houston lawyer whose firm filed the lawsuit against Perfect 10. His firm also represents Sarah Padilla in her suit against Sugar’s. “Their position is they are not employees so (they) don’t (keep) the typical employment file” like most businesses.
Perfect 10 and Sugar’s have the same principals. They and their lawyer did not respond to requests for comment.
Patrick Danner is a San Antonio-based staff writer covering banking and civil courts. Read him on our free site, mySA.com, and on our subscriber site, ExpressNews.com. | [email protected] | Twitter: @AlamoPD