Terry v. Sapphire Gentlemen's Club , 2014 NV 87 ( 2014 )

130 Nev., Advance Opinion Si
IN THE SUPREME COURT OF THE STATE OF NEVADA
ZURI-KINSHASA MARIA TERRY, No. 59214
INDIVIDUALLY; MARLENE NUNO,
INDIVIDUALLY; MICHELE COSPER,
INDIVIDUALLY; SELENA DENISE ALE
PELAEZ, INDIVIDUALLY; JESSICA
ANNE MORGAN, INDIVIDUALLY; OCT 3 0 2014
AND TINA CHAREST, INDIVIDUALLY, TBZiCA: K. LINBEMAN
CLEi
AND ALL ON BEHALF OF CLASS OF BY
SIMILARLY SITUATED INDIVIDUALS,
Appellants,
vs.
SAPPHIRE/SAPPHIRE GENTLEMEN'S
CLUB, A BUSINESS ORGANIZATION
FORM UNKNOWN; AND SHAC, LLC,
AN ACTIVE NEVADA DOMESTIC
LIMITED LIABILITY COMPANY D/B/A
SAPPHIRE/SAPPHIRE GENTLEMEN'S
CLUB,
Respondents.
Appeal from a district court summary judgment holding that
appellants were independent contractors and not employees within the
meaning of NRS Chapter 608. Eighth Judicial District Court, Clark
County; Jerome T. Tao, Judge.
Reversed and remanded with instructions.
Christensen Law Offices, LLC, and Thomas Christensen, Las Vegas;
Rusing & Lopez and Michael J. Rasing and Sean E. Brearcliffe, Tucson,
Arizona; The Law Offices of Robert L. Starr and Robert L. Starr,
Woodland Hills, California,
for Appellants.
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Greenberg Traurig, LLP, and Mark E. Ferrari° and Tami D Cowden, Las
Vegas,
for Respondents.
BEFORE THE COURT EN BANC,
OPINION
By the Court, PICKERING, J.:
This case presents the question of whether appellants,
performers at Sapphire Gentlemen's Club, are Sapphire employees within
the meaning of NRS 608.010 and thus entitled to the minimum wages
guaranteed by NRS Chapter 608. Because NRS 608.010's definition of
employee hinges on NRS 608.011's definition of employer, we must decide
the larger issue of when an entity is an employer under NRS 608.011, and
in particular whether Sapphire is the performers' employer under that
section. Given that the Legislature has long used federal minimum wage
laws as a platform for this state's minimum wage scheme, that the
statutes in question do not signal any intent to deviate from that course,
and that for practical reasons the two schemes should be hasmonious in
terms of which workers are entitled to protection, we herein adopt the Fair
Labor Standards Act's "economic realities" test for employment in the
minimum wage context. 29 U.S.C. §§ 201-219 (2012). Under that test, the
performers are Sapphire's employees within the meaning of NRS 608.010.
We therefore reverse and remand.
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I.
Sapphire Gentlemen's Club contracts for semi-nude
entertainment with approximately 6,600 performers. Under these
contracts, the performers may determine their own schedules (but agree to
work a minimum shift length of six hours any day they decide to work
unless they advise a Sapphire employee of their early clock-out); set prices
for their private performances (provided that they comply with the club's
established minimum charge); control the "artistic aspects" of their
performances (though the club D.J. chooses the music they dance to, and
they must obey club rules as to body positioning and physical contact with
customers); and perform at other venues should they wish to. The
performers also agree to abide by certain "house rules," including a
minimum standard of coverage by their costumes and a minimum heel
height; payment of a "house fee," which ranges in amount, any night they
work; and performing two dances per shift on the club stage unless they
pay an "off-stage" fee.
Sapphire pays no wages to the performers; their income is
dependent upon tips and dancing fees paid by Sapphire patrons. In the
district court, the performers challenged this practice, claiming that they
were "employees" within the meaning of NRS 608.010 and thus
guaranteed a minimum wage. The district court applied a five-factor test
formerly , used to determine employment status under the Nevada
Industrial Insurance Act, now codified at NRS Chapters 616A-616D, see
Sims v. Gen. Tel. & Elecs., 107 Nev. 516, 528, 815 P.2d 151, 159 (1991),
overruled by Tucker v. Action Equip. & Scaffold Co., Inc., 113 Nev. 1349,
951 P.2d 1027 (1997), overruled by Richards v. Republic Silver State
Disposal, Inc., 122 Nev. 1213, 148 P.3d 684 (2006), and found that the
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performers were not "employees" within the meaning of NRS Chapter 608.
The district court then granted a motion for summary judgment brought
by Sapphire The performers appeal.
Only an "employee" is entitled to minimum wages under NRS
Chapter 608. NRS 608.250, superseded in part by constitutional
amendment as recognized in Thomas v. Nev. Yellow Cab Corp., 130 Nev.
, 327 P.3d 518 (2014). NRS 608.010 defines employees as "persons in
the service of an employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written, whether lawfully or
unlawfully employed." Sapphire argues that the performers had no
"contract of hire" and alternatively that the performers were not "in the
service of' Sapphire. But these arguments lack merit. First, the signed
entertainment agreement, which describes in detail the terms under
which Sapphire permits the performers to dance at its facility, is an
express contract of hire, despite that therein the parties state that they
"intend that the relationship created [by the agreement] will be only that
of Sapphire and Entertainer and not any other legal relationship."
Particularly where, as here, remedial statutes are in play, a putative
employer's self-interested disclaimers of any intent to hire cannot control
the realities of an employment relationship. See Rutherford Food Corp. v.
McComb, 331 U.S. 722, 729 (1947); Real v. Driscoll Strawberry Assocs.,
Inc., 603 F.2d 748, 755 (9th Cir. 1979); Wirtz v. Lone Star Steel Co., 405
F.2d 668, 669 (5th Cir. 1968). Thus, Sapphire's protestations that the
performers "never intended to be employees," and agreed to be
independent contractors are beside the point.
Second, ordinarily one is "in the service of' another where one
is "of use" to that person. See Merriam-Webster's Collegiate Dictionary
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1137 (11th ed. 2007) (defining "serve" and "service"). And given that
Sapphire concedes that the performers "are an important part of the
business of a gentlemen's club, and moreover, that it is . . . the dancers
that patrons come to see," the performers undeniably are "of use" to
Sapphire, Sapphire's claims that the performers only "provided services to
their own customers at Sapphire's facility" notwithstanding. Thus,
whether the performers are "employees" under NRS 608.010 turns on
whether Sapphire is their "employer."
As relevant to this appeal, an employer "includes every person
having control or custody of any employment, place of employment or any
employee." NRS 608.011. One has control where one has the "power to
govern the management and policies of a person or entity." Black's Law
Dictionary 378 (9th ed. 2009); see also Merriam-Webster's Collegiate
Dictionary 272 (11th ed. 2007) (defining "control" as "power or authority to
guide or manage"). Custody is "Mlle care and control of a thing or person
for. . . preservation, or security." Black's, supra, at 441; see also Merriam-
Webster's, supra, at 308 (defining "custody" as the "guarding" or
"safekeeping" by one with authority). In the abstract, these definitions
may sufficiently describe an employment relationship as one where a
person has the power to direct the management of or the policies
governing a worker, or is to some extent responsible for that worker's
preservation and security. But this court is faced with a practical
problem; namely, identifying which workers, and specifically whether
these workers, are entitled to minimum wage protections. And our
interpretation of NRS 608.011 must provide a structure that lower courts
may also use to assess the realities of various working relationships under
the section. Viewed with an eye toward such practical necessities, it is
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clear that these definitions are insufficiently precise—a security guard, for
example, may be somewhat responsible for the safety of employees in the
facility he or she guards and thus fall within the definition of "employer"
suggested by the conventional dictionary definition of "custody," but it
seems unreasonable to deem such an individual responsible for the wages
of his or her coworkers. Thus, the interpretation to which these
definitions lead is not tenable. See Harris Assocs. v. Clark Cnty. Sch.
Dist., 119 Nev. 638, 642, 81 P.3d 532, 534 (2003) (explaining that this
court eschews interpretations that produce unreasonable results).
In 2006, Nevada voters provided a new baseline minimum
wage law, Article 15, Section 16 of Nevada's Constitution (the Minimum
Wage Amendment), and a definition of "employer" to accompany that
platform. This definition does not control the analysis here—the
performers do not raise their right to minimum wages under the Minimum
Wage Amendment; and though this court has recognized that the text of
the Minimum Wage Amendment supplants that of our statutory minimum
wage laws to some extent, see Thomas v. Nev. Yellow Cab Corp., 130 Nev.
, 327 P.3d 518, 522 (2014) (holding that "Mlle text of the Minimum
Wage Amendment. . . supersedes and supplants the taxicab driver
exception set out in NRS 608.250(2)"), the Department of Labor continues
to use the definition of "employer" found in NRS 608.011, not that in the
Minimum Wage Amendment. NAC 608.070. Still, because of the overlap
between the Minimum Wage Amendment and NRS Chapter 608, the
Minimum Wage Amendment's definition of employer could be instructive,
were it not equally, if not more, tautological than NRS 608.011—
"Ielnaployer' means any. .. entity that may employ individuals." Nev.
Const. art. 15, § 16(C). Thus, apart from signaling this state's voters' wish
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that more, not fewer, persons would receive minimum wage protections,
see Nev. Yellow Cab Corp., 130 Nev. at 327 P.3d at 520-21 (relying on
the "broad" definition of employee in the Minimum Wage Amendment to
identify the voters' intent to extend minimum wage protections to taxicab
drivers), the Minimum Wage Amendment offers little elucidation. So it is
that a more concrete interpretative aid—one extrinsic from Nevada's
statutory and constitutional minimum wage frameworks—is required.
The performers urge this court to adopt the economic realities
test that federal courts use under the federal Fair Labor Standards Act
(FLSA), 29 U.S.C. §§ 201-219 (2012), as that interpretive aid. Though the
parties argue to the contrary, this court has not yet decided the
applicability of this federal test under our minimum wage laws. In Prieur
v. MCI. Plasma Center of Nevada, Inc., we stated that the existence of an
employment relationship was determined by looking to the "economic
reality" of said relationship, but we did so only in dicta. 102 Nev. 472,
473, 726 P.2d 1372, 1373 (1986). And, while we later denied that Prieur
had adopted the economic realities test to resolve minimum wage
disputes, we did not reject the test in its entirety. Boucher v. Shaw, 124
Nev. 1164, 1170-71 n.27, 196 P.3d 959, 963 n.27 (2008). It must be said
that the language of NRS 608.011 and the relevant FLSA provisions
differs—the FLSA defines an "employer" as one who suffers or permits
another to work. 29 U.S.C. § 203(d) & (g) (2012). But the Legislature has
long relied on the federal minimum wage law to lay a foundation of worker
protections that this State could build upon, see 1965 Nev. Stat., ch. 333, §
2, at 696 (extending Nevada's minimum wage protections to those not
covered under the FLSA), and so in many significant respects, Nevada's
minimum wage laws and those set federally run parallel. See, e.g., NRS
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608.250 (directing the Labor Commissioner to set the minimum wage "in
accordance with federal law"); see also Hearing on A.B. 219 Before the
Assembly Labor & Mgmt. Comm., 58th Leg. (Nev., February 18, 1975)
(testimony by Raymond D. Bohart, Federated Employers of Nev.)
(acknowledging that the bill in question, which extended Nevada's
minimum wage statutory protections to both men and women, was "a
duplication of the [FLSAl in many aspects"). Such parallels are part of a
larger national pattern of laws that have emerged to deal with common
problems in the minimum wage context, and many other states have
adopted the economic realities test to determine whether an employment
relationship exists under their respective state minimum wage laws. See,
e.g., Campusano v. Lusitano Const. LLC, 56 A.3d 303, 308 (Md. Ct. Spec.
App. 2012); Cejas Commercial Interiors, Inc. v. Torres-Lizama, 316 P.3d
389, 394 (Or. Ct. App. 2013); Commonwealth, Dep't of Labor & Indus.,
Bureau of Labor Law Compliance v. Stuber, 822 A.2d 870, 873 (Pa.
Commw. Ct. 2003), affd, 859 A.2d 1253 (Pa. 2004); Anfinson v. FedEx
Ground Package Sys., Inc., 244 P.3d 32, 40-41 (Wash. Ct. App. 2010), affd,
281 P.3d 289 (Wash. 2012). Where, as here, a statute that requires this
court's interpretation implicates broad questions of public policy, the
divergent acts of foreign jurisdictions dealing with similar subject matter
may properly inform that interpretation. See Schimek v. Gibb Truck
Rental Agency, 174 A.2d 641, 643 (N.J. Super. Ct. App. Div. 1961); cf.
Klamath Cnty. v. Laborers Int'l Union of N. Am., Local No. 915, 534 P.2d
1169, 1172 (Or. Ct. App. 1975) (holding that the National Labor Relations
Act was relevant to interpret a differently worded state labor relations
statute).
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True, this court has signaled its willingness to part ways with
the FLSA where the language of Nevada's statutes has so required. See
Dancer I-VH v. Golden Coin, Ltd., 124 Nev. 28, 32-34, 176 P.3d 271, 274-
75 (2008); Boucher, 124 Nev. at 1170-71 n.27, 196 P.3d at 963 n.27. Thus,
in Golden Coin, this court held that Nevada law excluded tips from the
calculation of an employee's minimum wages—contrary to the rule under
the FLSA—because the language of the relevant statutes was entirely
conflicting. 124 Nev. at 32-33, 176 P.3d at 274-75; compare 29 U.S.C. §
203(m) (2012) (stating that the minimum wage calculation includes "the
cash wage paid" plus "the tips received"), with NRS 608.160(1)(b) (making
it "unlawful for any person to .. . pply as a credit toward the payment of
the statutory minimum hourly wage. . . any tips or gratuities bestowed
upon the employees of that person"). And in Boucher we determined that
the language of NRS 608.011 was not intended to "pierce the corporate
veil and extend personal liability to individual managers" for unpaid
minimum wages because the Legislature had specifically excluded all
references to "manager[s]." 124 Nev. at 1170, 196 P.3d at 963. Again, the
FLSA's rule runs contrary, but the relevant statutory language expressly
states that "any person acting directly or indirectly in the interest of an
employer in relation to an employee" can also be held liable for back
wages. 29 U.S.C. § 203(d), 206 (2012). Here, and in contrast to the
circumstances of Golden Coin and Boucher, given the breadth of NRS
608.011's definition and the lack of direction it provides, we cannot say
that there is any language in NRS 608.011 so "materially different" from
that of 29 U.S.C. § 203(d) and (g) that it would caution this court against
adopting the economic realities test to interpret the former. See Rivera v.
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Peni & Sons Farms, Inc., 735 F.3d 892, 900 (9th Cir. 2013), cert. denied,
573 U.S. , 134 S. Ct. 2819 (2014).
Moreover, it seems that our Legislature intended that MRS
608.011 would encompass as many or more entities as the FLSA
definition, see Hearing on A.B. 219 Before the Assembly Labor & Mgmt.
Comm., 58th Leg. (Nev., February 20, 1975) (testimony by Stan Jones,
Nev. State Labor Comm'r) (explaining that the bill that added the
definition was necessary because "there are many workers in Nevada that
the people in Washington have forgotten"), and to avoid preemption, our
state's minimum wage laws may only be equal to or more protective than
the FLSA. See 29 U.S.C. § 218 (1967); Golden Coin, 124 Nev. at 32-33, 176
P.3d at 274-75. In accordance with the FLSA's remedial purpose, 29
U.S.C. § 203(d) and (g) are necessarily broad, Zheng v. Liberty Apparel
Co., 355 F.3d 61, 66 (2d Cir. 2003); indeed, it has been said that "a broader
or more comprehensive coverage of employees [than that provided in the
FLSA's definitions] would be difficult to frame." United States v.
Rosenwasser, 323 U.S. 360, 362 (1945) (internal quotations omitted). And,
recognizing that "a constricted interpretation of the phrasing by the courts
would not comport with [such a] purpose," the Supreme Court has
indicated that it fashioned the economic realities test to be wide-reaching.
Cf. United States v. Silk, 331 U.S. 704, 711-12 (1947), superseded by
statute as recognized in Donovan ix Agnew, 712 F.2d 1509, 1513 (1st Cir.
1983). Thus, the economic realities test examines the totality of the
circumstances and determines whether, as a matter of economic reality,
workers depend upon the business to which they render service for the
opportunity to work. See Goldberg v. Whitaker House Coop., Inc., 366 U.S.
28, 32-33 (1961); Juino v. Livingston Parish Fire Dist. No. 5, 717 F.3d 431,
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434 (5th Cir. 2013). Given this backdrop, this court has difficulty
fathoming a test that would encompass more workers than the economic
realities test, short of deciding that all who render service to an industry
would qualify, a result that NRS Chapter 608 and our case law specifically
negate. See MRS 608.255; Prieur, 102 Nev. at 474, 726 P.2d at 1373.
Thus, to the extent that our test could only, from a pragmatic
standpoint, seek to be equally as protective as the economic realities test,
and having no substantive reason to break with the federal courts on this
issue, "judicial efficiency implores us to use the same test as the federal
courts" under the FLSA. See Moore v. Labor & Indus. Review Comm'n,
499 N.W.2d 288, 292 (Wis. Ct. App. 1993) (adopting, for analogous state
law purposes, the test used by federal courts to determine whether
someone is an employee for the purpose of a claim under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000e (2012)). That the Legislature
repeatedly heard testimony as to the burden on businesses and potential
confusion should Nevada's Minimum Wage Act and the FLSA fail to
operate harmoniously—see, e.g., Hearing on A.B. 219 Before the Assembly
Labor & Mgmt. Comm., 58th Leg. (Nev., February 24, 1975) (testimony by
Stan Warren, Nev. Bell) (discussing his concern that if the FLSA and
Nevada's Minimum Wage Act were inharmonious it would "increase their
operation costs and bring about inefficiency" because "they would have to
keep two sets of books"); id. (testimony by Louis Bergevin, Nevada
Cattlemen's Association) (suggesting that the bills in question "be
amended to read as the FLSA reads" for clarity)—and that it responded to
these concerns by amending the bill in question-1975 Nev. Stat., ch. 353,
§ 1, at 500-01 (clarifying the protections to which employees that fell
under the FLSA were entitled)—reflects and further illuminates this
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administrative need, and further supports our adoption of the federal
standard in this instance.
Inasmuch as the Legislature borrowed the language of NRS
608.010 from Nevada's workers' compensation statute, NRS 616A.105, see
A.B. 48, 72d Leg. (Nev. 2003), the district court's adoption of the test
formerly applied to NRS 616A.105 under NRS Chapter 608 was somewhat
logical. But NRS Chapter 608 and the Nevada Industrial Insurance Act
(NIIA) are not in pani materia because the underlying purpose of this
state's workers' compensation laws—to wit, to limit "private controversy
and litigation between employer and employee" and to give workers the
right to compensation regardless of fault, Pershing Quicksilver Co. v.
Thiers, 62 Nev. 382, 389, 152 P.2d 432, 436 (1944)—is distinct from that of
the statutory minimum wage scheme, which seeks to safeguard the
"health and welfare of persons required to earn their livings by their own
endeavors." See NRS 608.005. And, while labor and employment laws
that effectuate different goals "should not be entirely discounted, we must
remain cognizant that they were not enacted for precisely the same
purpose as the Minimum Wage Act." Stuber, 822 A.2d at 872-73. With
this in mind, other states utilize different tests for employment under
their respective minimum wage and workers' compensation schemes.
Compare id. (adopting the economic realities test to determine
employment under Pennsylvania's minimum wage act), with Southland
Cable Co. v. W.C.A.B. (Emmett), 598 A.2d 329, 330-31 (Pa. Commw. Ct.
'Thus, Sapphire's advancement of the Meers v. Haughton Elevator,
101 Nev. 283, 701 P.2d 1006 (1985), "normal work" test—the test for
employment under this state's current workers' compensation statutes—is
likewise unavailing.
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1991) (adopting the common-law control test to determine employment
under Pennsylvania's workers' compensation act); also compare
Campusano, 56 A.3d at 308 (adopting the economic realities test to
determine employment under Maryland's minimum wage act), with
Mackall v. Zayre Corp., 443 A.2d 98, 103 (Md. Ct. App. 1982) (reiterating
that the control test is used to determine employment under Maryland's
workers' compensation act); also compare Cejas, 316 P.3d at 394 (adopting
the economic realities test to determine employment under Oregon's
minimum wage act), with Dep't of Consumer & Bus. Servs. v. Clements,
246 P.3d 62, 66-67 (Or. Ct. App. 2010) (applying a control-based test to
determine employment under Oregon's workers' compensation act); also
compare Anfinson, 244 P.3d at 40-41 (adopting the economic realities test
to determine employment under Washington's minimum wage act), with
DAmico v. Conguista, 167 P.2d 157, 160 (Wash. 1946) (applying the
common-law control test to determine employment under Washington's
workers' compensation act).
Moreover, prior to 2003, NRS 608.010's definition of employee
did not track that found in the workers' compensation statutes. See 2003
Nev. Stat., ch. 291, § 2, at 1518. It appears that the Legislature imported
NRS 616A.105's language to the statutory minimum wage context solely
because NRS 616A.105 had been read to encompass all workers regardless
of immigration status, Tarango v. State Indus. Ins. Sys., 117 Nev. 444,
448, 25 P.3d 175, 178 (2001), and the Legislature sought to revise the
minimum wage statutes to also protect "persons unlawfully employed."
See Hearing on A.B. 48 Before the Assembly Commerce & Labor Comm,
72d Leg. (Nev., Feb. 26, 2003). Thus, the Legislature did not have in mind
any additional interpretive gloss that this court previously gave NRS
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616A.105 or its predecessor, NRS 616.055. So, even setting the disparate
purposes of NRS Chapter 608 and NIIA aside, there is no justification for
deeming this specific post-enactment amendment to control NRS 608.010's
meaning, so as to construe the sections harmoniously, as this court might
otherwise be inclined to do. See 2B Norman J. Singer & J D Shambie
Singer, Statutes and Statutory Construction § 51:2 (7th ed. 2012) (noting
that courts "assume that a legislature always has in mind previous
statutes relating to the same subject when it enacts a new provision").
Thus, the Legislature has not clearly signaled its intent that
Nevada's minimum wage scheme should deviate from the federally set
course, and for the practical reasons examined above, our state's and
federal minimum wage laws should be harmonious in terms of which
workers qualify as employees under them. We therefore adopt the FLSA's
"economic realities" test for employment in the context of Nevada's
minimum wage laws.
While it is not necessary to list exhaustively every factor that
could be relevant in the totality of circumstances that make up a working
relationship's economic reality, there are some factors which courts nearly
universally consider:
1) the degree of the alleged employer's right to
control the manner in which the work is to be
performed;
2) the alleged employee's opportunity for profit or
loss depending upon his managerial skill;
3) the alleged employee's investment in equipment
or materials required for his task, or his
employment of helpers;
4) whether the service rendered requires a special
skill;
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5) the degree of permanence of the working
relationship; and
6) whether the service rendered is an integral part
of the alleged employer's business.
Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 754 (9th Cir. 1979);
see also Deborah T. Landis, Annotation, Determination of "Independent
Contractor" and "Employee" Status for Purposes of § 3(e)(1) of the Fair
Labor Standards Act (29 U.S.C.S. § 203(e)(1)), 51 A.L.R. Fed. 702 § 2
(1981) (collecting cases). With this in mind, we examine thefl district
court's summary judgment regarding the performers' relationship with
Sapphire de novo, Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d
1026, 1029 (2005), and because the material facts in this case are
undisputed, we decide whether an employment relationship exists
between them as a matter of law. See Randolph v. Budget Rent-A-Car, 97
F.3d 319, 325 (9th Cir. 1996); cf. Schlotfeldt v. Charter Hosp. of Las Vegas,
112 Nev. 42, 47, 910 P.2d 271, 274 (1996) (suggesting that the question of
whether an agency relationship exists may be a question of law where no
material facts are disputed).
As to the "control" factor considered under the totality of the
circumstances, at first look, the facts may appear mixed. Sapphire did not
produce a set schedule for performers, theoretically allowing them to work
any day they wished for as long as they wished, provided that they met a
six-hour shift minimum or received permission to depart early.
Additionally, though the club set a two stage-dance minimum for
performers not paying the off-stage fee, and discouraged performers from
refusing to give a lap dance if a customer requested one, the decision of
whether or not to stage dance ultimately lay in the discretion of the
performers, as did their acceptance or rejection of a patron's invitation for
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a private dance. And, while Sapphire required performers to accept
"dance dollars"—from which the club took a cut—whether or not they
preferred to, performers were also permitted to accept cash, to which the
club laid no claim.
But this court is mindful that Sapphire's supposed lack of
control may actually reflect "a framework of false autonomy" that gives
performers "a coercive 'choice' between accruing debt to the club or
redrawing personal boundaries of consent and bodily integrity." Sheerine
Alemzadeh, Baring Inequality: Revisiting the Legalization Debate Through
the Lens of Strippers' Rights, 19 Mich. J. Gender &L. 339, 347 (2013). Put
differently, Sapphire emphasizes that performers may "choose [1 not to
dance on stage at Sapphire" so long as they also "choose to pay an optional
'off-stage fee,' and similarly that a performer may "choose [ ] not to dance
for a patron she knows will pay with dance dollars, she may make that
choice," though the performer may not ask that patron to pay in cash, and
in making either choice the performers also risk taking a net loss for their
shift. But by forcing them to make such "choices," Sapphire is actually
able to "heavily monitor [the performers], including dictating their
appearance, interactions with customers, work schedules and minute to
minute movements when working," while ostensibly ceding control to
them. Id. at 342 n.12. This reality undermines Sapphire's
characterization of the "choices" it offers performers and the freedom it
suggests that these choices allow them; the performers are, for all
practical purposes, "not on a pedestal, but in a cage." Frontier° v.
Richardson, 411 U.S. 677, 684 (1973).
Added to this is the weight of other economic realities factors.
See Real, 603 F.2d at 754. First, given that the performers risked little
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more than their daily house fees, personal grooming expenditures,
costume costs, and time, and that the one who "takes the risks . . . reaps
the returns," their opportunity for profit was limited accordingly. See
Harrell v. Diamond A Entm't, Inc., 992 F. Supp. 1343, 1351-52 (M.D. Fla.
1997). That a performer might increase her profits through "hustling,"
that is using her interpersonal skills to solicit larger tips, is not
dispositive—lals is the case with the zealous waiter at a fancy, four star
restaurant, a dancer's stake, her take and the control she exercises over
each of these are limited by the bounds of good service . . . ." Id. at 1352;
see also Clincy v. Galardi S. Enters., Inc., 808 F. Supp. 2d 1326, 1345-46
(N.D. Ga. 2011).
With regard to the relative investment of the parties, we note
that Sapphire provides all the risk capital, funds advertising, and covers
facility expenses. The performers' financial contributions are limited to
those noted above—their costume and appearance-related expenses and
house fees. Thus, the performers are "far more closely akin to wage
earners toiling for a living, than to independent entrepreneurs seeking a
return on their risky capital investments," Reich v. Circle C. Invs., Inc.,
998 F.2d 324, 328 (5th Cir. 1993) (internal quotation omitted); see also
Hart v. Rick's Cabaret Intl, Inc., 967 F. Supp. 2d 901, 920 (S.D.N.Y. 2013);
Clincy, 808 F. Supp. 2d at 1347; Harrell, 992 F. Supp. at 1350; Reich v.
Priba Corp., 890 F. Supp. 586, 593 (N.D. Tex. 1995); Jeffcoat v. State, Dep't
of Labor, 732 P.2d 1073, 1077 (Alaska 1987), and this factor also weighs in
the performers' favor.
All work requires some skill, so in the economic realities
context, courts look specifically for workers' "special" skills; namely,
whether their work requires the initiative demonstrated by one in
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business for himself or herself. See Circle C., 998 F.2d at 328. Sapphire
suggests that the performers' ability to "hustle" clients is one such skill.
But inasmuch as Sapphire does not appear to have interviewed the
performers for any indication of their hustling prowess, it is not apparent
that their work actually requires such initiative. In any case, though it
may well be that a good "hustle" is a considerable boon in the field, "the
ability to develop and maintain rapport with customers is not the type of
'initiative' contemplated by this factor." Id.
According to Sapphire, "[en ancers are itinerant because they
have the freedom to ply their dancing trade at a multitude of gentlemen's
clubs," and so the factor looking to the permanency of the relationship
should weigh in its favor. True, Sapphire allowed the performers to work
at other venues, and different performers testified that they continued
schooling or other employment during their tenure at Sapphire. But, that
the performers "were free to work at other clubs or in other lines of
work. . . doles] not distinguish them from countless workers in other
areas of endeavor who are undeniably employees ... for example, waiters,
ushers, and bartenders." Rick's Cabaret, 967 F. Supp. 2d at 921. The
ultimate inquiry is the nature of the performers' dependence on the club,
and "[elven if the freedom to work for multiple employers may provide
something of a safety net, unless a worker possesses specialized and
widely-demanded skills, that freedom is hardly the same as true economic
independence." McLaughlin v. Seafood, Inc., 861 F.2d 450, 452-53 (5th
Cir. 1988), modified on other grounds, 867 F.2d 875 (5th Cir. 1989). Thus,
though the temporary nature of the relationship at issue weighs against it
being that of employer/employee, this factor carries little persuasive value
in the context of topless dancers and the clubs at which they perform, and
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cannot alone tilt the scales in Sapphire's favor. See Priba Corp., 890 F.
Supp. at 593-94.
Sapphire contends that "[e]xotic dancing is customarily
performed by independent contractors, and therefore, is not an integral
part of Sapphire's business." Quoting Meers v. Haughton Elevator, 101
Nev.. 283, 286, 701 P.2d 1006, 1007 (1985), Sapphire argues that "the test
is not one of whether the subcontractor's activity is useful, necessary,
or even absolutely indispensable to the statutory employer's
business Li ... Lae test. . . is whether that indispensable activity is, in
that business, normally carried on through employees rather than
independent contractors." Even assuming it is true that "exotic dancing"
is typically performed by independent contractors—a tenuous proposition
given that most foreign precedent demonstrates it is performed by
employees, see, e.g., Circle C., 998 F.2d at 330 (holding that exotic dancers
were employees not independent contractors); Rick's Cabaret, 967 F. Supp.
2d at 925-26 (accord); Clincy, 808 F. Supp. 2d at 1350 (accord); Thompson
v. Linda & A., 779 F. Supp. 2d 139, 151 (D.D.C. 2011) (accord); Harrell,
992 F. Supp. at 1354 (accord); Priba Corp., 890 F. Supp. at 594 (accord);
Jeffcoat, 732 P.2d at 1078 (accord)—Sapphire cites no authority
supporting the application of the Meers "normal work" test to this factor in
the economic realities context. And to do so simply makes no sense; if we
are examining whether work is "integral" to an employer's business, the
test must be whether it is "useful, necessary, or even absolutely
indispensable" to the business. See Merriam-Webster's Collegiate
Dictionary 650 (11th ed. 2007) (defining "integral" as "essential to
completeness"). Given that Sapphire bills itself as the "World's Largest
Strip Club," and not, say, a sports bar or night club, we are confident that
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the women strip-dancing there are useful and indeed necessary to its
operation. See Linda & A., 779 F. Supp. 2d at 150 (calling it a "self-
evident conclusion that nude dancers formed an integral part of [the strip
club's] business").
Thus, based on our review of the totality of the circumstances
of the working relationship's economic reality, Sapphire qualifies as an
employer under NRS 608.011, and the performers therefore qualify as
employees under NRS 608.010. In so holding, this court is in accord with
the great weight of authority, which has almost "without
exception ... found an employment relationship and
required ... nightclub[s] to pay [their] dancers a minimum wage." See
Clincy, 808 F. Supp. 2d at 1343 (internal quotation omitted) (collecting
cases). We therefore reverse the district court's grant of summary
judgment in favor of Sapphire and remand for further proceedings
consistent with this opinion.
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