Texas Strip Club Sued in Federal Wage Lawsuit

Maylene Velasco and Megan Jenkins, two employees of the Texas XTC Strip Club, filed a federal, collective-action lawsuit on November 6, 2012 against XTC Cabaret, RCI Entertainment, and Rick's Cabaret International alleging the clubs’ misclassification of employees as independent contractors. Both Valesco and Jenkins believed the claims also applied to other exotic dancers working at the Houston, Dallas, Austin, and San Antonio clubs, who were all paid under the same compensation system.

Rather than pay the dancers, the club owners allowed them to perform at the club for a charge of between $20 and $100. Dancers lost additional wages after being forced to share a portion of their tips with disc jockeys, managers, and other workers. As a result, the amount that the dancers earned often averaged at a rate below the federal minimum wage of $7.25 per hour. Payment for time worked in excess of 40 hours per work week was also withheld, resulting in an even greater loss of wages.

Are Dancers Independent Contractors?

The clubs justified this compensation system by arguing that the dancers were independent contractors, thus not entitled to the same wage and overtime protections as employees. Hired by Velasco and Jenkins as their legal representation, Kennedy Hodges disputed this classification. We held that, due to the following factors, the dancers included in the suit qualified as employees:

  • Dancers were required to fill out employment applications prior to working at a club
  • The clubs provided music, stages, lighting, and other equipment that dancers used to perform their work
  • Dancers accumulated fines from the clubs when they failed to follow the established schedule
  • Work performed by the dancers was continuous, and many had worked at the club for several years
  • Shifts were structured by the clubs, and dancers were charged fees for failing to adhere to these schedules
  • Details of the dancers’ work were regulated by the clubs, including the amount dancers could charge their customers and the clothes and makeup they wore

In a move to dissuade dancers from seeking protections under the Fair Labor Standards Act (FSLA), clubs often claim that workers will make less if they’re paid minimum wage. However, that is not necessarily the case. Under the law, clubs may pay dancers in the same way that waitresses and waiters are paid: at a rate of $2.13 per hour with no additional fees for working at the club.

The Suit

Velasco and Jenkins, along with the other dancers who later joined the case, sought to recover $7.25 for each hour worked during 40-hour work weeks, in addition to time plus one-half for overtime hours. The group also sought returns for the fees charged by the clubs and liquidated damages of all back wages owed, as well as attorney fees and court costs. They sought these damages from November 2009 through the time that the group filed suit.

Are You Earning the Pay You Deserve?

In addition to charging fees for using establishment facilities, clubs have historically failed to pay wages and overtime, and many have illegally forced dancers to tip share with other club workers. These clubs also often charge dancers fees for end-of-shift breathalyzer tests, inadequate drink sales, and other penalties as established by the club.

If you’re a dancer who feels you’ve been denied fair wages under FLSA, contact Kennedy Hodges to discuss your situation. If you would like to learn more, feel free to download a free copy of our e-book, Exotic Dancers’ Rights to Fair Pay Under the Law. As employees continue to be paid less than their entitled wages, our firm is here to help. Contact us for a free consultation.