Tuesday, December 3, 2013

Federal Lawsuit Shows How A Cleveland Strip Club Fleeces Money From Its Dancers

Posted by on Tue, Dec 3, 2013 at 3:32 PM

The management of Christies Cabaret in Cleveland is fleecing money from its dancers, a new lawsuit alleges. Read the full complaint at the bottom of this page.
  • The management of Christie's Cabaret in Cleveland is fleecing money from its dancers, a new lawsuit alleges. Read the full complaint at the bottom of this post.

A dancer at a local Cleveland strip club is taking her employer to court with allegations that management is fleecing hard-earned money from its dancers through a series of policies that the suit says violate federal labor laws.

Lawyers for Alexandria Cox, a dancer at Christie's Cabaret in the the Flats, filed a class action lawsuit on the behalf of their client and other dancers against the strip club's operator, Entertainment USA, Inc., and documented the shady policies management allegedly uses to to swindle money from the women and their customers. It says management compensates them below minimum wage, skims a significant portion of the tips they earn dancing to pay themselves and non-dancing employees, illegally classifies them as independent contractors to limit their rights as employees, requires dancers to pay the club to work there, doesn't pay them when they work overtime, doesn't reimburse them for mandatory expenses like buying and cleaning their outfits and issues a series of harsh mandatory fines.

"Defendant's system of fees, fines, and mandatory tips creates a realistic possibility that a Dancer may finish a shift with a negative balance, owing Defendant money from the Dancer's personal finances and taking home zero dollars" it says. (In an unrelated story from January, a dancer died at Christie's Cabaret when she fell from the second floor during a lap dance)

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Here are the specifics.

Independent contractor vs. employee status.
"Over the past two decades, the Department of Labor and courts across the country have recognized that Dancers are employees, not independent contractors, and thus entitled to protection under the various state and federal wage and hour laws," the complaint says. "Contrary to these basic protections, Defendant improperly classifies its Dancers, including Plaintiff, as 'independent contractors' despite Defendant's near total control over them" (relevant link from CNN: "Strippers win labor fight in New York").

Because of this classification, the club isn't on the hook to ensure they make minimum wage (employers are allowed to pay tipped employees below minimum wage so long as tips push their compensation to at least that), and oftentimes the dancers don't make that threshold because of the club's other policies.

Cox, and other dancers, regularly worked six or seven days each week, with a minimum daily six hour shift. They never get paid overtime, though, when they routinely worked more than 40 hours each week, it says.

Mandatory fees, assessed fines and redistributed tips
The club makes money with a hefty cover charge each customer pays to get in at the door and through selling booze and food like any traditional bar. None of that goes to the dancers the customers are coming see, however, because they get paid directly in tips and for lap dances.

But management also gets a significant cut of that money, too, in addition to the money at the door, drinks and food. Here's a chart from the suit (page nine, from the document below) detailing the cut the club automatically takes when a customer pays for a lap dance:

45_-_dance_prices.png

The strippers must also pay the club fees and share their tips with non-dancing employees, regardless of how many customers showed up and got dances from them. "Importantly, the individuals that Defendant requires its Dancers share their tips with do not provide customer service... Defendant requires Dancers to tip these individuals so that Defendant can then reduce its labor cost by having the Dancers supplement the compensation Defendant pays its other employees."

Here are two important paragraphs from the suit, detailing what they have to give to the "House Mom" and the DJ:

The number of individual Dancers are required to tip is numerous and the tip amount is significant. Defendant has a mandatory tip out policy whereby Dancers must each tip a minimum of (i) $5 to the House Mom and (ii) $10 to the club's DJ. The aforementioned amounts are the required minimum tip, and the Defendant requires Dancers to pay all the tips by a certain time during their shift, regardless of how much money the Dancer has earned up to that point in the shift.

As a result of the mandatory house fees, required tip-outs, and assessed fines, Dancers sometimes receive little to no actual compensation despite hours of work.

Those assessed fines are for if they don't check in at the front desk by at least 7 p.m. and if they don't work the full six-hour shift, despite that the club doesn't pay them for their time. That's $50 bucks they have to pay the club before they can get on stage if that happens: "Dancers are not permitted to perform if they have any outstanding fines. Indeed, Defendant maintains a list of all Dancers and the current fines owed." WIth the money they automatically owe to other non-dancing employees and for fines:

Dancers must pay all fees every night she works regardless of the amount of tips she receives. Accordingly, a Dancer must pay fees even if that means borrowing money from another Dancer must pay the fees even if that means borrowing money from another Dancer or using the club's ATM machine. Defendant's system of fees, fines, and mandatory tips creates a realistic possibility that a Dancer may finish a shift with a negative balance, owing Defendant money from the Dancer's personal finances and taking home zero dollars.

The club also requires them to wear "certain types of clothing" but doesn't reimburse them for buying or washing the outfits, and the dancers have no control over when they go on stage (that's up to the DJ).

The "Christie's Cash" exchange rate
Customers who give money to the strippers on stage or pay for lap dances at Christie's Cabaret aren't giving the dancers actual American dollars, they're handing over what are essentially vouchers called "Christie's Cash" that they already purchased from the club, and the dancers must then hand those vouchers over to the club to get paid in actual money. That system is rigged in favor of the club, it says, because of the phony exchange rate the club sets when taking money from customers and then giving it out to workers after they did actual work (bolded by Scene for emphasis):

Dancers must also accept "Christie's Cash" as a form of payment or tips from customers. Christie's Cash is purchased from the club by customers at a premium over legal currency. On information and belief, approximately $115 U.S. will purchase $100 of Christie's Cash. Dancers must exchange Christie's Cash into legal currency through Defendant at the end of their shift, at a discount. Currently, Defendant will only pay $90 U.S. for every $100 of Christie's Cash turned in by a Dancer. Dancers must accept whatever exchange rate Defendant chooses to impose.

As a result, customers using Christie's Cash who believe they are tipping or paying Dancers a certain amount are actually tipping them less, because Dancers do not get a $1 U.S.-per-1 Christie's Cash exchange. Defendant profits at the expense of the Dancers by selling the Christie's Cash to customers at a premium and redeeming it to Dancers at a discount.

The club is swindling the customers on the front end and its workers on the back end on the same transaction: a guy, who already paid to get in, gives the club $115 dollars for vouchers that are now worth $100 in the new phony currency, the customer then gives those vouchers to a dancer for a service she provides, and then the dancer redeems those same vouchers from the club for $90 based on an exchange rate they set themselves, and the club automatically pockets the $25 without doing anything.

You can read the full 19-page complaint, filed yesterday at the federal courthouse in Cleveland, below. If you have any comments, questions, or anything else you want to say, but don't feel like stating them publicly online, please feel free to send me a confidential email at dbrown@clevescene.com.

(Here's a 2004 story from former Plain Dealer columnist Connie Schultz on management at other businesses taking tips from coat-check girls.)

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