CASE STUDY
ACCESS TO THE BOOK :STRATEGIC COMPENSATION:A HUMAN RESOURCE MANAGEMENT BY JOSEPH MARTOCCHIO
Referring to pages 304 – 307 of the text, apply the Economic Realities Test to the following case.
The exotic dancers at a nightclub sign independent contractor agreements at the beginning of their employment and are paid entirely by the tips they receive from appreciate customers. The club does not recruit dancers. Instead, women interested in working there come in for a dancing audition and “body check.” If selected, dancers must obtain, at their own cost, an adult entertainment license ($350 per year). Dancers must remit a house fee to the club for each night of work (between $30 and $100 depending on the day of the week and time of arrival) and tip the DJ (at least $20) and “house mom” ($5–10). On slow nights, dancers can suffer a net loss for the evening. Dancers also spend thousands of dollars a year on costumes, shoes, cosmetics, and hair care. However, they are not investors in the club and do not pay any of the other expenses associated with operation of the club, including facilities, advertising, the sound system, and food and drink. Schedules are worked out between dancers and the club, although there is a strong expectation that dancers will work at least four nights a week. The club has a rule book for contractors and employees, and dancers have been disciplined for violations of these rules. There are elaborate procedures for checking in and out of work, including appearance inspections by the house mom and a breathalyzer test at the end of shifts. A number of the dancers have worked at the club for at least a year, but shorter periods of employment are also common.
Are the dancers of the club entitled to the protections of the Fair Labor Standards Act or are they independent contractors? Why?
