Strippers Have Rights. But Do They Want Them?

It's fitting, then, that the granddaddy of stripper lawsuits came out of '90s-era Cabaret Royale. Between 1989 and 1995, the Department of Labor engaged in a drawn-out dispute with the club and its then-owner, Salah Izzedin, arguing that the club owed more than $11 million in back pay to both dancers and waitresses who had been classified as independent contractors.

Like the lawsuits that would follow, the suit also dealt with "funny money," the in-house currency that customers can use to pay dancers for lap dances and stage work — money that the dancers, theoretically at least, can turn in for cash at the end of the night.

Naomi Vaughan

By day, Rebecca Avalon teaches strippers how to make the most of their shifts.

Naomi Vaughan

By night, she practices what she preaches at the Lodge.

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In Dallas Federal Court, Three Strip-Club Dancers Demand Minimum Wage

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"Strip clubs operate in a very strange way," says Audacia Ray, a former editor for $pread, a now-defunct publication written by sex workers. Customers buy the currency using credit or debit cards rather than use an ATM machine, and dancers "are supposed to be able to redeem the fake cash for real cash." But often, she says "the club puts them off and says, 'We don't have the cash to do that tonight." In New York, where Ray lives, strippers are suing for as much as $50,000 they say the clubs owe them in unredeemed funny money.

In the case of Cabaret Royale, a judge agreed with the government that the dancers were indeed employees, based on the degree of control that Cabaret Royale exercised over their work environment. He awarded the dancers and waitresses $11 million in back pay and misappropriated tips.

The Observer predicted at the time that the lawsuit could have "profound effect" on the industry, forcing every club in town to quit using funny money and to classify their dancers as employees, lest they incur the wrath of the feds. In 1998, the famed Mitchell Brothers O'Farrell Theatre in San Francisco was forced to settle a similar suit. An industry-wide paradigm shift seemed imminent.

But little has changed. It's unclear whether Cabaret Royale paid what it owed to the waitresses and dancers, or switched, even temporarily, to an employee system. (The Department of Labor official involved in the case couldn't be reached.) The club reportedly filed for bankruptcy and changed ownership soon after the lawsuit, and a spokeswoman said Cabaret Royale continues to use a contract system. "I think the contract labor was what was upheld," she said.

If the 1990s were the crest of a stripper-lawsuit wave, what's happening now looks more like a tsunami. In the last two years alone, lawsuits have surfaced in Oregon, Washington, California, Massachusetts and Florida — all accusing the clubs of violating the Fair Labor Standards Act (FLSA), the federal law that sets overtime and minimum wage for all workers. And although the government involved itself in a handful of cases in the '90s, these days it's labor lawyers who have largely taken up the cause.

Gregg Greenberg, an attorney at Philip Zipin Law, a Washington, D.C.-area employment law firm that's handled several of the suits, claims strippers often decide to sue after they've been fired, injured or aged out of dancing. Generally they've also worked in a number of clubs and start to understand how the system works in the club's favor.

"It's a transient industry," he says. "Dancers will stay at one club for about nine months to a year, then on to the next one. As they get older, wiser and nearing retirement age, someone tells them, 'Maybe you should have gotten paid minimum wage.'" Or, he says, they get fired from a club and are denied unemployment, or fall off the pole, or take a tumble from five-inch heels and realize they've got no healthcare and no way to get workers comp.

Clubs often claim that transience — moving from one club to another, or working at multiple clubs — is part of what makes the dancers contract workers, not employees. The argument is not "totally ridiculous," Cynthia Estlund, a professor at NYU's Center for Labor and Employment Law, writes in an email, provided that the dancers work at multiple clubs at the same time. But, she adds, "Moving from one club to another — transience in the normal sense — seems less relevant."

But an independent contractor is defined as a worker who is contracted with an employer to complete a specific piece of work, regardless of "how it will be done," according to the IRS. The notion of "control" looms large in these disputes; a contractor, technically, shouldn't be subject to the employer's control, except for what they both agree to in a signed contract.

For strippers, the definition of "contractor" is often strained by the amount of control the clubs place on the women, especially things like requiring stage time and giving the women an exacting dress code. "'Control' over the details of the work — which in the case of strippers has a lot to do with what they can wear to work," is a factor that weighs in favor of employee status, Estlund writes.

The legal system seems to agree. Whether it's a judge's decision or, less commonly, a jury trial, the courts tend to reach the same conclusion: Dancers are employees, not independent contractors, and should be awarded damages based on the minimum wage and overtime laws.