After reading about these exotic dancers, I just had to run to the nearest... laptop to research the case law (what did you think I was gonna say?). And I wonder why people call me a nerd. The article identified Reich v. Priba, 890 F.Supp. 586 (N.D. Tex. 1995) as the seminal case on the subject so let's examine its analysis.
Reich v. Priba Analysis
The Court briefly analyzed five areas: control; skill and initiative; investment; profit and loss; and permanency. Touching on just the highlight:
Control - The club set show times, issued conduct guidelines for the entertainers, and required a signed agreement written solely by the club. The club also controlled the advertising, atmosphere, and surroundings.
Skill and Initiative - "There was no evidence that any specialized skills were a requirement to perform at the club." I must interject my own opinion here that I highly doubt that in fact there were no special skills required. But hey, I didn't see the evidence.
Investment - "All investment and risk capital is provided by defendants."
Profit and Loss - "Any profit to the entertainers is more analogous to earned wages than to a return for risk on capital investment."
Permanency - The Court noted that the job of dancing is clearly impermanent. The Court did, however, note that "courts must make allowances for those operational characteristics that are unique or intrinsic to the particular business or industry."
In case it's not obvious at this point, the Court held that the dancers were employees, not independent contractors.
The Reich analysis seems pretty one-sided, and the King of Diamonds club should be worried. The National Law Journal article also mentions similar holdings in Alaska, California, and Oregon. Of course, each club has its own unique set of circumstances so maybe they have an argument. The National Law Journal could not obtain comments from the owner or manager of the club.