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A class action lawsuit involving strippers classified as "contractors" resulted in a $13 million settlement against 16 strip clubs across the country.
The strippers' suit alleged they were actually employees, not contractors, and should have been entitled to the benefits that employees typically receive, the Ventura County Star reports.
While most strip clubs probably do not have in-house counsel, the strip club class action is still important to GCs, as it shows how damaging the improper classification of workers can be.
It wasn't reported how many strippers comprised the class. However, as only 16 employers were sued nationwide, the total number of strippers involved could not have been that many -- think tens or hundreds of individuals instead of thousands. Yet, the hiring clubs were still on the hook for millions, according to the Star.
Class action wage and hour lawsuits have resulted in some of the largest (and costliest) lawsuits against companies. These types of suits are now more common than ever, Fortune reports.
The proper classification of workers gets at the heart of many wage and hour issues. As a reminder, if workers are employees, they are generally entitled to all the protections of wage and hour laws like minimum wage, overtime pay, meal breaks, rest breaks, and some leaves of absence. However, if the worker is an independent contractor, the worker may be entitled to none of these.
To save money, many employers simply categorize a broad swath of workers as independent contractors. However, it can be extremely difficult for a worker to legitimately be considered a contractor. Courts employ many different tests, and often focus on the degree of control the employer has over the worker.
If employers miscategorize their workers, their attempts to save money in the short run may end up costing them millions. While your company may not hire strippers, it's likely that independent contractors are part of your workforce. Make sure these individuals are properly categorized before withholding certain employee benefits.