It's 9 on a Tuesday night, and Jaguars Dallas, a big, boxy strip club between Stemmons Freeway and Northwest Highway, is almost empty. The club doesn't have many neighbors, just a row of truck lots and vacant yards, plus one friendly rock 'n' roll strip joint called the Clubhouse. Jaguars is trying for something more sophisticated, from the oversized Roman-columned façade to the round tables ringing the stage, each topped with a crisp white tablecloth. A disco ball shines a blue light over the main room's cheetah-print carpet, illuminating thousands of stains, as a cheery blonde circulates among the few customers, handing out hugs, plopping down in laps to say hello.
A woman named Holly is sitting at the bar in the back. She's slugging a Corona and adjusting her black-framed glasses, which match her black bra, frilly tutu and determined expression. A tattoo, a simple line drawing of Texas, graces her ribcage, and the cups of her bra stand at some distance from her chest.
"I pay $30 just to work," she grouses. "That's if I get here at seven." Ten bucks go toward the standard house fee, she complains, 10 more to the house mom and 10 more to the DJ.
Holly is 22. She used to work at a bank. She liked that much better. But car problems, combined with the urgency of feeding a 15-month-old son, sent her searching for something more lucrative. The money here is decent, she says, but stripping doesn't come with a lot of fringe benefits. Her son's on Medicaid. She has no healthcare.
"If I fall off that pole, I'm on my own," she says, flinging a skinny arm toward the stage.
Ten minutes later she's on her back at the edge of the stage, a kittenish smile on her face. Her stiletto heels are balanced on the shoulders of a guy in a suit who's methodically tucking bills into her G-string. On a good night she leaves Jaguars with around $600 — not a bad haul but hardly a killing by Dallas strip club standards. When she worked at Cabaret Royale, an all-nude 18-and-over club, she often walked out with $1,000 or more.
While Holly collects her singles on the stage, a manager appears at the bar. "I understand you've been asking questions," he says. Being interviewed upset the girls, he says. He can't have people in here making them uncomfortable. A reporter's business card, handed to Holly moments before, appears in his hand; he snaps it between his fingers before it vanishes into a jacket pocket. "I'd like you to call it a night," he says, and folds his arms.
Technically, Holly isn't the manager's employee. She's an independent contractor, a sort of freelance lap-dance consultant. But to labor lawyers and the government, the relationship between strippers and their clubs looks an awful lot like employment: Dancers have some set shifts, are required to be on stage at certain times, have specific dress codes (one high-end Dallas club has a "no booty shorts" rule) and even pay "emergency" fees for leaving a shift early.
But classifying dancers like Holly as contractors allows the clubs, like the many businesses that make use of the practice (including newspapers) any number of benefits to their bottom lines. They don't pay overtime, minimum wage, worker's comp or payroll taxes. It's a system employed by virtually every strip club in Dallas and across the country, with a few notable exceptions. (San Francisco's Lusty Lady is the country's only union shop; only a small handful of states, including Illinois and Massachusetts, have clubs where dancers are classified as employees.)
It's been this way for decades. But the independent contractor system, at least for strip clubs, is suddenly taking heavy fire. Current and former strippers are filing class-action lawsuits against clubs, claiming that they have been improperly classified as independent contractors. The suits, which have been won by strippers in at least 10 states, ask for back pay and damages, with settlements that sometimes run into the millions of dollars. And a Dallas-based strip-club business may be next.
But dancers across Dallas, one of the biggest planets in the stripper universe, are skeptical that the lawsuits will affect their bottom lines for the better. They argue that the lawsuits will actually threaten their income stream while handing to lawyers a bonanza in fees — just another set of hands grasping at the glittery wads of cash jutting from their G-strings.
"Everyone sees sex workers as a cash cow," says Amanda Brooks, a former Dallas stripper who switched to escort work because she found it less stressful. (With all the fees and fines, Brooks says, she finished more than one shift owing the club cash.) "By the time the money reaches you, there are people trying to take their bit out of it of the entire route."
If you shelled out $20 for a lap dance in the 1990s, there's a good chance it was at Cabaret Royale. The club touted its brass chandeliers, oil paintings on the walls and $1,500 annual VIP memberships, presaging a host of local clubs that hoped to replace the industry's scuzzy image with something more elegant. These days, some customers complain that the club, located in the same glut of nude joints that line Northwest Highway and the surrounding area, is showing its age. But back then, Cabaret Royale was at the cutting edge of a new kind of live-nude entertainment.
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.
"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.
The numbers of dancers involved, and the sums they're awarded, keep rising. In 2006, San Francisco's Gold Club was forced to pay a $2.5 million settlement to former dancers. More recently, an enormous class-action suit against the chain Spearmint Rhino won dancers a $10 million settlement. The club also may agree to reclassify its dancers as employees, although the settlement is still being negotiated.
The debate over misclassifying employees is hardly unique to stripping. It cuts across many industries and, according to the Department of Labor, may be costing the government billions of dollars annually in lost tax revenue. The construction business has been especially plagued by it; entire crews working for months on the same project are often classified as independent contractors. Delivery drivers and truckers also face widespread abuse: FedEx has fought in court in 16 states over its practice of classifying drivers as independent contractors.
Labor Department officials recently announced that, in cooperation with the Department of Treasury, they would be cracking down on the practice, which officials say denies workers access to "critical benefits" and generates "substantial losses" to the Department of Treasury, Social Security, Medicare and the national unemployment insurance trust fund. And it's a problem that's lingered for decades: When the feds studied the issue in 1984, they found that some 15 percent of employers were misclassifying around 3.4 million employees, a loss of $1.6 billion, or $3.4 billion in 2010 dollars. They estimate that anywhere from 10 to 30 percent of employers nationwide misclassify their employees.
Given that strip clubs and other adult business make for such a lucrative industry — the businesses take home around $1 billion in annual profit in Texas alone, according to a 2009 University of Texas study — one might think the cash-strapped government would target misclassified strippers. But the Labor Department is simply spread too thin, says department spokesman Juan Rodriguez. As many as 30 percent of employers may misclassify their workers, he says, so they've had to focus their efforts on "high-risk" fields: construction, janitorial work, home healthcare, childcare and agriculture, among others.
"If any employee in the entertainment industry believes they're not being paid in compliance with the FLSA, they have every right to call and file a complaint," Rodriguez says. "So if there is a perception out there that Wage and Hour [the Labor Department Division that oversees these complaints] has stopped overseeing this industry, that's not true. All they have to do is call Wage and Hour and file a complaint. But we have a certain number of investigators, and we have to focus those resources."
Jaguars, the big, blue-tinted palace where Holly performs, used to be part of a much larger chain, Jaguars Gold, whose corporate offices are in Dallas. Although the group sold the Dallas location five years ago, the company still owns a slew of clubs in other cities: Abilene, El Paso, Odessa, Lubbock, Longview, Beaumont, Edinburg, Harlingen and Phoenix.
Bryan Scott "Niko" Foster owns and operates the chain, as well as downtown ultra-lounge Plush. On the company website, he bills his strip clubs as "the only real Las Vegas-style gentleman's clubs in Texas," and promises "the world's most beautiful women look forward to entertaining you."
Lately, though, a few of Foster's employees have instead been looking forward to a fight. The chain is at the center of the latest lawsuit against strip clubs, filed in mid-October against Foster and JGC Dallas LLC. It alleges that four Abilene-based strippers — Erica Jones, Crystal Winter, Selisha Brooks and Ashley Cowart — all worked in excess of 40 hours a week but, because they were considered contractors, weren't paid minimum wage or overtime. Instead, the women claim, the only money they earned was from tips, which they were required to share with the house and other employees. They're asking for overtime, unpaid wages, the misappropriated tips and attorney's fees.
Foster, the CEO of Jaguars, has a two-word descriptor for the lawyers who press stripper lawsuits: "Ambulance chasers."
The lawyers are "convincing these poor dancers this is the wave of the future," Foster says. "The girls have to drive back and forth for depositions, have to make promises here and show up for court there, and in the end, they get a check for 500 bucks." He insists that most dancers ultimately wouldn't even want to be considered employees.
"Once they hear what it's like for an employee, that they get scheduled, that they have to give up their tips to the house, because that's the house's money ... the amount of money it costs the dancer is definitely terrifying the dancers," Foster says. "Once the rubber hits the road, they're running to the hills."
But the attorneys, he says, "do not tell these girls that. They're all being trapped and lured into these promises of thousands and thousands of dollars. The lawyers make hundreds of thousands of dollars, and the dancers make peanuts."
Individual payouts vary widely, but a few recent cases show substantially larger awards to dancers. Greenberg, the D.C.-area lawyer, recently settled a suit against the Mile High Club in Maryland in which one dancer was awarded $18,000, a second got $16,500 and two more were awarded $11,000 each. In the Spearmint Rhino case, one plaintiff, identified as "D. Trauth," was awarded "up to $15,000," while the other class representatives got $6,250 apiece. In a case involving Scores East and Scores West, two now-closed New York clubs, four plaintiffs won $7,000, and two more got $1,000 each. In the majority of these cases, the original complaints ask for the defendants to pay the plaintiff's lawyer's fees, something that's virtually always approved. The Abilene strippers are asking for a jury trial, but their attorney, Galvin Kennedy, says that, like most of these lawsuits, the case will more likely settle. He also says it's incumbent on private firms to take up what the feds won't. It's an ambulance that needs chasing, in other words, even if many dancers worry about the repercussions.
"There are so many offenders in this area of the law that going after the stripper industry wasn't the main target," until some firms started pursuing these cases and winning, he says. "Now it's becoming more popular, and more women are speaking up."
Still, he acknowledges, "The industry is slow to change. [The independent contractor system] is the way it's done in almost every strip club across the country. It's the standard in the industry.
"But not for long," he goes on. "I think over the next five years, as a result of lawsuits like this, you're going to see a big change. Otherwise, I'll keep suing."
Rebecca Avalon likes to say she did things backwards: went to college, became an elementary school teacher, then started stripping. She's quit dancing full time twice but keeps going back.
"It's fun and it's a great revenue stream," she says. These days she does a few days a week at the Lodge, the homey-but-upscale club off of Northwest Highway, and runs Strip and Grow Rich, a website and seminar on financial education and management and long-term career planning. She based her program on Naked Assets, a similar series of classes that she took in Las Vegas; by May 2008, she was a majority owner in the Naked Assets company. Successful strippers, she says, think like business owners.
That's why employee status would be a disaster for them.
"I don't think any of the girls filing these claims fully understand what being an employee would mean," Avalon says. "Say you do a dance for 20 dollars. That would belong to the club. And then the club would pay you, whatever, eight, nine bucks an hour to do the job. A lot of [dancers] don't understand that it's an advantage to be an independent contractor. That's what I teach in the Stripping Business course."
Tax benefits are another focus of her workshops. "We have many more legal rights," she says, "things we can do as a business owner, as an independent contractor, in terms of tax advantages. We can write off the cost of our costumes, the cost of our makeup, everything that's associated with being a dancer." Most clubs provide receipts for house fees, she says, which the smart (and honest) dancer writes off during tax season.
To Avalon, the house fees are a minor cost of doing business. "We run our own business. We pay the house a fee," she says. "Say I owned a store. I'd have to rent space from someone who owned a storefront. It's exactly the same thing. Relatively speaking we pay a low house fee to the club in order to rent their stages in order to provide the services we provide."
Another local dancer, Meredith, agrees. She's 31 and has five-plus years in at the Lodge; she started working there while researching her master's degree in women's studies, but stayed on for both the money and the freedom to set her own schedule. "I wouldn't join one of these lawsuits," she says. She likes that she has greater control over her hours as a contractor, but that's not all that would prevent her. "I'd be concerned if those girls could be terminated at the club," in retaliation for joining a lawsuit, she says.
"I'd never want to jeopardize my position at the club," she says. "Nowhere else in the state I could make the same amount of money. I wouldn't want to rock that boat." Still, she allows, "It would be nice to be able to get sick leave or worker's comp, or health insurance."
Sarah is a 22-year-old dancer who's worked in strip joints from Dallas to Chicago (she asked that we change her name for this story). She's seen any number of creative ways clubs make money from dancers — including, she says, an "emergency fee" of $150 to $200 if dancers have to leave a shift early. But she's worked at clubs that classify their dancers as employees and is unimpressed with that system, too.
"The only real difference I see is I have proof of income right up front," she says. "But if I didn't file taxes that wouldn't be beneficial to me. Otherwise I don't really see it as an advantage at all. All it does is put a cap on my money, how much I can earn."
Sarah says she travels from state to state, working at some clubs as a contractor and others as an employee. Regardless of how she's classified, she says, "They still make us pay." And as a traveling dancer, the typical house fee is simply renamed a "locker fee," she says. She also pays the usual cuts to the DJ and house mom. "We still pay fees, they just rename them," she says. Many clubs have apartments where they let the traveling dancers stay; there, they're required to pay food and "overnight" fees as well.
Therein lies the problem: It's not that being considered an employee is the issue. Instead, these dancers say, they fear that clubs would be able to take an even greater share of the cash foisted on them by the lonely and horny. Stripping is, in many ways, a low-skill job in an industry no one seems terribly interested in regulating. So why not opt for the system that provides as much freedom as possible?
"If you work hard at this industry," Sarah says, "you'll get what you deserve. I'm worried the employee thing is going to become an industry standard."
Sarah also acknowledges that her viewpoint be skewed by her experience at higher-end clubs, where making well above minimum wage is the norm. "A lot of the girls I talk to at work don't care because we're the top earners," she says. "This could potentially hurt our group. It's only good for the low earners."
Kennedy, the lawyer for the Abilene strippers, disagrees that an employee system has to spell bad news for any dancer. "All [club owners] need to do is pay them $2.13 per hour," he says. "That's legal. And let them keep all of their tips — period." Requiring employees to share tips, he says, is illegal in every industry.
There's also the matter of all that pesky paperwork. Not having a paper trail of income is helpful if dancers plan on being less than truthful on their taxes, or if they don't file at all. And in clubs where women are covertly selling "extras" — something dancers say is common — "the contractor system takes the club off the hook," Rebecca Avalon says. In 2007, the Penthouse Key Club, a now-shuttered club on Stemmons, was shut down for five months after a prostitution sting netted 21 arrests of dancers. There's no record of managers or owners being arrested.
Overall, though, Avalon says it's pretty basic why the clubs prefer the contractor system. "The clubs like it because they don't pay anything," she says, chuckling. "We pay them. It's not just cheap labor, it's profitable labor."
On a recent Friday, Avalon looks out on the main floor of the Lodge with a professional eye. She's wearing the most risqué possible version of a black evening gown, a heavy silver chain with a jade charm around her neck and a slim silver wristwatch. She has very long blonde hair and subtle blue eye-shadow, and she smells like perfume and strawberry lip gloss. She has a 20-dollar bill wound absentmindedly around two fingers as she points a French-tipped nail at a table about 20 feet away. "That guy," she says, "He's a blue."
Part of Avalon's business model involves "personality profiling," as she puts it, complete with a color code: Customers are generally either reds, blues, greens or yellows. "Red are the businessmen," she explains, pushing her hair onto one shoulder. "They're more formally dressed. The VIP type. And they want attention." Blues, meanwhile, are "the fun guy," spiky-haired, often wearing Ed Hardy if they're young or Tommy Bahama if they're older. "They're here to party," she says. "They're the guy who's buying everyone else a drink."
Avalon likes to focus in on reds and blues first, "because they make decisions quickly," she says. Quick sales from them help balance out the greens, who are bargain hunters ("You know them as soon as you sit down at the table") and yellows, the regulars: faithful, quiet guys who want to talk at length before buying a dance or time in the VIP section. (At the Lodge, the VIP area is only for people who have bought club memberships or who buy a $500 bottle of Champagne.)
Avalon points out a corpulent guy who looks to be in his late 40s. He's wearing a red polo shirt and balancing a very small Asian dancer in his lap. He looks delighted. He's a "fun guy" blue, Avalon says. "When I was on the side stage earlier tonight," she says, "he came in and already had a dollar ready, he was dancing around, all that."
She got to work at around 9 tonight. Her early arrival meant that she paid no house fees, but it had a downside: There were three customers in the whole place, and dozens of dancers competing for their attention. Her first interaction with a customer that night was tough going, bargaining-wise, she says. "He knew he had the upper hand." Her business, she says, "is all negotiation."
Not entirely though. Some of it, Avalon says after a moment, also involves working smartly. Although the Lodge tries for a slightly more dignified atmosphere, all over Dallas you can see women doing wild acrobatics on stripper poles: climbing to the very top, for example, then sliding down head first, using only their leg muscles for support. It's an impressive feat, and probably a killer workout. And Avalon's worked in the "day-glo outfits and fishnets" clubs where such things are common. But she quickly concluded that they're not worth her time.
"I have danced for 12 years and I don't climb a pole ever," she says. "The job is not about dancing. It's about talking to someone, making connections. It's kind of like being a topless therapist. You get paid for your time to stop, listen to people and entertain them."
Plus, as an independent contractor, Avalon knows that if she falls on her head on the way down, she's not getting money for her injury or time off from the club. (In 2007, an Indiana dancer who injured her cervical spine while pole dancing managed to successfully sue for worker's comp, but that's not common.)
"As far as worker's comp goes, what I teach is if you climb up a pole, twirl around and do cool stuff, you'll get a couple dollars, and maybe some hoots and hollers too," she explains. "Is it worth it?" In making the choice between sitting with someone and getting paid for your time, or swinging like a scantily-clad Tarzan above the heads of patrons, she says, "Which one is working smarter for your money?"
In the end, Avalon takes a hard, pragmatic line when it comes to her career. "If you don't know how to sell, you won't make money," she says. "It's a business." She looks out on the floor and smiles a little. "I can't compare it to any other."
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