Wednesday, November 16, 2016

Exotic dancers, wage and hour claims, and arbitration clauses

Finally, a case that combines strippers, arbitration clauses, and wage and hour claims, amirite? The Third Circuit issued a brief non-precedential decision in Herzfeld v. 1416 Chancellor, Inc. (d/b/a The Gold Club).

An exotic dancer signed a series of "leases" with the Gold Club to "rent" its stage to perform in exchange for tips. The final agreement included an arbitration clause, requiring the parties to arbitrate "any dispute aris[ing] out of this agreement." Do the leases require the dancer to arbitrate her wage and hour claims under the FLSA (PA MWA and WPCL)?

Not the actual club at issue.
Photo by Rhinoedit at English Wikipedia, CC BY-SA 3.0
First, do the agreements even cover wage and hour claims? The Court noted that the agreements expressly negated any employment relationship and were styled as landlord/tenant leases.
Of course, an individual does not forfeit her rights as an employee under the FLSA simply by signing a cleverly drawn up contract, but this language does support the conclusion that Herzfeld's wage-and-hour claims exist outside the confines of the Stage Rental/Licensce Agreement, and, consequently, are not subject to its arbitration clause.
The Court declined to address the far more interesting (but "thorny") issues "concerning the enforceability of implicit collective-action waivers."
In short, in an effort to limit its liabilities under labor-employment laws by designating its contracts with the exotic dancers as landlord/tenant leases, the Gold Club has likewise limited the scope of its arbitration clauses. The FLSA and its state counterparts cannot be so easily circumvented. The rights embodied in the FLSA—"minimum wages and maximum work hours"—are absolute and unwaivable.
So, the Court won't address the issue... but its strong language in that closing certainly sounds like the judges are skeptical of wage and hour collective action arbitration clauses.