LINCOLN, Neb. – In a case which may hold instructive lessons for other segments of the adult entertainment industry, the Nebraska Supreme Court last week upheld a trial court’s ruling that an exotic dancer was an employee of the club where she danced, not an independent contractor.

While the case involved an exotic dancer and the club where she danced, the same legal test the court employed in making its determination in this case applies in any dispute over whether a worker is an employee or an independent contractor – including, presumably, performers in adult videos and webcam shows.

Elizabeth Mays, now a resident of Wisconsin, danced at Shaker’s, a “juice bar featuring all-nude dancers” located near Waverly, Nebraska, from 2012 to 2014. According to court documents, Mays performed at Shaker’s under two 1-year “Independent Artist Lease Agreements” with Midnite Dreams, the company which owns Shaker’s.

Under the agreements, Mays paid Shaker’s a flat nightly fee for use of the club’s stage and dressing room, with an additional fee paid for each use of Shaker’s private or “VIP” rooms. The agreements did not include any payment from Shaker’s to Mays, nor did it include any defined schedule or minimum work requirements.

In addition to the artist lease agreement, Mays was notified of over 50 additional “house rules” – rules on which the club’s manager and principal owner, Daniel Robinson, “provided inconsistent testimony as to whether these rules were mandatory or merely ‘suggestions,’” the court noted in its ruling.

Mays testified the rules were “enforced by Robinson and his employees and that failure to follow the house rules would result in discipline through belligerent reprimands, impositions of fines, and threats to terminate the agreements, which were terminable at will.”

The house rules covered everything from dancers’ shift-arrival times to “hair, makeup, lotion, and dress requirements.” The rules also defined the “number and order of sets the dancers performed during a shift; the method of payment the dancers could accept from customers; cleaning duties; the price the dancers could charge for private and ‘VIP’ room dances; off-stage dancer conduct; and conduct during onstage performances, specifying clothing items the dancers were expected to remove during certain sets.”

While Shaker’s appeared to believe it could set these rules without losing the ability to classify dancers as independent contractors, the trial court “concluded that by instituting and enforcing the house rules, the appellants transformed Mays into an employee and themselves into employers.”

In upholding the lower court’s determination that Mays was an employee of Shaker’s and not an independent contractor, the state supreme court noted that “No single test exists for determining whether one performs services for another as an employee or as an independent contractor.” Instead, the court must apply a multi-factor test which weighs, among other things, “the extent of control which, by the agreement, the employer may exercise over the details of the work.”

“The court’s decision strongly relied on a finding that the ‘house rules’ imposed on Mays controlled almost every aspect of her employment,” the Supreme Court wrote of the trial court’s ruling. “The court correctly noted that the ‘right of control is the chief factor distinguishing an employment relationship from that of an independent contractor.’”

Another factor in the test is “whether the one employed is engaged in a distinct occupation or business” – and as the court noted, it’s difficult for a topless juice bar to argue it’s engaged in an occupation or business which is distinct from the occupation or business of the topless dancers who perform therein.

“(T)he appellants were in the business of operating a club which offered fully nude, live entertainment,” the court wrote in its decision. “Mays’ work was a vital part of that regular business.”

Another factor the court weighed was whether the “the work is usually done under the direction of the employer or by a specialist without supervision.”

With respect to this factor, Shaker’s argued that the club “did not control the means and methods of the dancers’ performances,” but the court found that this argument “is not supported by the record, does little to undercut the well-reasoned analysis of the court, and fails to address the existence of the ‘house rules.’”

The court found that the house rules “significantly controlled the manner in which the dancers performed their work, including the dancers’ movement on stage and inside the club, the type of dress worn by the dancers, the dancers’ cleaning duties, their schedule of performing, their contact with customers, the rates they charged, the method of payment, their cell phone usage, the types of lotions they used, the music they danced to, and their attendance at mandatory meetings.”

Another important aspect of the case is the way in which the court set aside Shaker’s argument that its contract with Mays and the fact she accepted compensation for her work should preclude the possibility of her arguing she was an employee.

“The appellants contend that because of the agreements entered into by the parties, as a matter of law, Mays cannot be considered an employee,” the court wrote. “They argue that the parties’ constitutional right to contract supersedes the policy statement in § 48-1201. This argument, however, relies on a presumption that the (Wage and Hour Act) permits an employee to forfeit the protections afforded to him or her by the WHA through contract. The appellants fail to cite any authority for their argument that the protections of the WHA may be waived, and we find no basis for such in the WHA.”

The bottom line, the court ruled, is “parties may not contract away the protections afforded by the WHA.”

“It is the function of the Legislature, through the enactment of statutes, to declare what is the law and public policy of this state,” the court wrote. “And a contract which is contrary to public policy is void.”

Image © Peter Skadberg.