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ED July 2016

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58 July 2016 Club Bulletin www.EDpublications.com "The court said we're not going to even allow the club to show how much money the dancers earned in tips and dance sales. So now you have dancers who are going in front of a judge and jury, and because the money was handed to them by the customers, they are basically being able to paint a picture that nightclubs paid them nothing, that they made nothing. And now the clubs have to pay them the equivalent of minimum wage, plus penalties and interest and lawyers' fees. "I sometimes have to pull dancers' 1099's from clubs. Many entertainers are making $50,000, $60,000 and $100,000. They're able to earn that on a nightclub's property and then say five years later, 'you know what, you didn't pay me'." We asked Shafer, based on the Epic ruling and other recent cases, if he expects a knee-jerk move by clubs who have not been considering their entertainers as employees to convert them to employees, and whether doing so would necessarily protect clubs that did against litigation? "I don't think any club owner should make any decision based on any one ruling unless there is a decision in their jurisdiction or by the U.S. Supreme Court that is binding upon him or her directly," cautioned Shafer. "What every club owner needs to do is to sit down with his or her professionals – lawyers and accountants – and conduct a detailed analysis of their club operations and the applicable case law, as it exists, and then make informed decisions. Shafer further noted, "Converting entertainers to employees may protect against some legal liabilities, but in fact it can create additional avenues of legal exposure for club owners. That is why it is so critical for clubs owners to sit down with their professionals and have detailed discussions on these topics." Shafer also cautioned: "Certainly, reading a few excerpts from an interview in a magazine article does not constitute the type of detailed information that would allow anyone to make an informed decision on these matters." Like Shafer, Thomas believes the decision as to whether to convert entertainers to employees depends on the club's specific circumstances and relevant case law. "I think operators are talking about converting entertainers to employees in ways they never have before," noted Thomas. "Do I think they're going to run out and do it overnight? There are a lot of unknowns. Are they going to have to give them Obamacare? There are all kinds of questions out there." "But we're getting decisions where the courts are finding dancers should be classified as employees," explained Thomas. "It costs clubs huge amounts of money to defend these cases. It doesn't seem to matter how we go about trying to honor what the dancers want to see happen in the clubs. When you have a court saying the club must pay her, whether or not she earned $100,000, pretty soon, clubs may not have any choice. It may be the only way to avoid these huge, expensive cases. And I don't think it's a good relationship. "Here's the problem: How do you put an employer in charge of a dancer's nudity? She's giving up control and letting the employer pick who she should dance nude for, and how she should perform." "Dancing nude isn't like washing cars, you don't have to come in every day. I still don't think the clubs are going to be able to maintain a schedule. I think there's a reason clubs don't control dancers, it's because they can't. I don't think courts are sympathetic to a delicate relationship between a dancer, a club and her customers. "And it's going to be a huge administrative nightmare, with tip reporting records, workers comp, unemployment, Obamacare, Social Security and more. And when dance charges are mandatory, the Internal Revenue Service requires that those monies belong to the club, and not to the dancers. Shafer also provided one parting comment. "If a club owner has been living under a rock and has not addressed these issues, the one thing these recent rulings should do is to motivate the start of a serious discussion between a club owner and his or her professionals." This article briefly summarizes extremely complex legal issues and is provided for general information purposes only and is not intended to provide either an exhaustive analysis of these matters or any specific legal advice or recommendation. Laws vary by state and municipality. The positions and opinions expressed by the attorneys represented here are theirs alone, and do not necessarily reflect those of ED Publications. Club operators and others are strongly encouraged to consult their attorneys and accountants for specific advice on how these issues will affect their businesses and what measures to take. Larry Kaplan and ED Publications do not guarantee the accuracy of this information. Larry Kaplan is the Legal Correspondent for Exotic Dancer Club Bulletin, Executive Director of the ACE of Michigan adult nightclub state trade association and a consultant in the sales and purchase of adult nightclubs and adult stores. Contact Larry Kaplan at 313-815-3311 or e-mail kaplanclubsales@gmail.com. Attorney Brad Shafer is the principal at the Shafer & Associates, P.C. law firm, 3800 Capital City Blvd., Suite 2, Lansing, Michigan 48906-2110. He is widely acknowledged as the foremost authority on the issue of adult nightclub employment law. He is a regular contributor to Exotic Dancer Club Bulletin and a regular panel moderator at the annual Gentlemen's Club Expo. Contact Brad Shafer at 517-886-6560 or email brad@ bradshaferlaw.com. Attorney Edi Thomas is located at 214 North Ridge Drive, Suite B, Fallbrook, CA 92028. Since 1988, she has represented adult nightclubs on tax, labor and employment claims, particularly sexual harassment and dancer claims of mis-classification. Contact Edi Thomas at 888-349-3940 or email Edithomas.fb.calif@gmail.com. "We're getting decisions where the courts are finding dancers should be classified as employees. It costs clubs huge amounts of money to defend these cases. It doesn't seem to matter how we go about trying to honor what the dancers want to see happen in the clubs. When you have a court saying the club must pay her, whether or not she earned $100,000, pretty soon, clubs may not have any choice." — Thomas continued from page 56

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