Addressing an issue that is being litigated around the country, the South Carolina Supreme Court ruled this month that an exotic dancer was an employee of a gentlemen’s club and is therefore entitled to workers’ compensation benefits. Lewis v. L.B. Dynasty, — S.C. –, — S.E.2d –, No. 2012-213376, 2015 WL 1223710 (Mar. 18, 2015).
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Lewis danced three or four nights a week at a club in Charlotte, North Carolina. On two or three other nights a week, Lewis traveled around the Carolinas to dance in other clubs. She testified she earned between $250.00 and $350.00 a night in cash, admitting she had never filed a tax return. The night Lewis was shot was only the second or third night she danced at the Boom Boom Room. Lewis presented several dancers as witnesses to explain that dancers often choose a city and a club to dance in on a particular night and travel there uninvited and unannounced. On the night of the injury, Lewis showed up at the Boom Boom Room, showed her identification to prove she was eighteen, and paid the required “tip-out” fee in cash to the club. She did not fill out an employment application or sign an employment agreement. The club gave her a “rules sheet,” she went to the dressing room to put on her outfit, and she danced. During the evening, an altercation broke out, and a stray bullet hit her in the abdomen, causing her serious injuries.
In order to determine whether a claimant is an employee or independent contractor, South Carolina looks to the purported employer’s right to control the claimant in the performance of her work. The four factors considered are: (1) direct evidence of the right to, or exercise of, control; (2) furnishing of equipment; (3) method of payment; and (4) right to fire. Each of these factors is given equal weight. Applying these factors, the Workers’ Compensation Commission held that Lewis was an independent contractor, not an employee. The Court of Appeals affirmed. The Supreme Court reversed, finding the club “exercised control over the manner in which she performed her work” and, accordingly, found Lewis was an employee of the club.
Right to control: The Court of Appeals found that because Lewis choreographed her own routines, the club did not control her work. The Supreme Court disagreed, citing other evidence of right to control suggesting an employer/employee relationship: Lewis was required by the club to pay a “tip-out” fee before her shift; she was searched prior to her shift; she had to review the club’s rules prior to the start of her shift; the club could decline Lewis’ entry if her appearance was undesirable; the club chose the music for all of Lewis’ performances; the club dictated when in the rotation of dancers Lewis must appear on stage; the club set a minimum cost for a V.I.P. dance, required Lewis to perform a V.I.P. dance if a customer requested one, and specified the area for those dances to take place; the club specified the degree of nudity and fined her for removing more clothing than allowed, and; the club did not permit Lewis to leave a shift early without paying a fine.
Furnishing of Equipment: The Court of Appeals found Lewis brought her own equipment for her work, and the club did nothing more than allow her onto its premises. The Supreme Court disagreed, finding that an individual’s body cannot be considered equipment. The Supreme Court further reasoned that because the club bore the risk of the capital investment in the space and equipment used by Lewis, including an area for V.I.P. dances, a stage with a pole, tables, and a sound system, the club could exert the necessary control to ensure the dancers effectively utilized the equipment provided to make sure the advertised experience was available to the patrons.
Method of Payment: The club did not pay Lewis; she collected all of her earnings in the form of cash tips from the club’s patrons. The Supreme Court agreed with the Court of Appeals and found the “method of payment” prong weighed in favor of an independent contractor relationship.
Right to Fire: Lewis testified how the club’s rules dictated her conduct at the club: “Well, if you don’t do what they say, then you get fined. If you don’t pay the fine, then you are fired. Or if—it depends on to what extreme the—what you did, you know…. Like if you get caught having sex in the club, then you’re automatically fired. Like fighting, you’re automatically fired, can’t work back at the club.” The Court of Appeals concluded these restrictions did not distinguish Lewis’s relationship with the club from any independent contractor relationship. The Supreme Court disagreed, noting Lewis’s testimony that she would be fined for violations of rules, including failure to maintain her place in the rotation of stage dances, and declining to perform V.I.P. dances. The Supreme Court acknowledged Lewis had the right to not show up for work at all, but noted that once the club hired Lewis for the night, the club could end that relationship prior to her shift ending and leave Lewis without recourse for that firing. The Supreme Court concluded, on balance, that an analysis of the right to fire factor lead weighed in favor of an employee relationship.