As a New York City “gentlemen’s club” can attest, wage lawsuits can be costly for employers. The Penthouse Executive Club recently agreed to pay its dancers a total of $8 million to resolve allegations that it failed to pay proper wages and misclassified workers as independent contractors.
The initial New York employment lawsuit was filed in 2009 by two former employees; however, it ultimately grew to a class action involving 1,245 dancers. Under the terms of the proposed settlement, each dancer will receive a minimum settlement payment of $3,727.79 for the first year of employment and $988.13 for each subsequent year thereafter.
While the case may involve the exotic-dance industry, the wage violations charges against the employer are quite common. The lawsuits allege that the Penthouse Executive Club violated the Fair Labor Standards Act and New York State labor law by failing to pay minimum wages and overtime wages, failing to reimburse employees for the purchase and cleaning of uniforms, and unlawfully retaining and withholding employee tips.
According to National Economic Research Associates, Inc.’s report, 2012 Update: Trends in Wage and Hour Settlements, the Penthouse Executive Club is not alone is paying a hefty settlement to resolve these types of allegations. It found that wage and hour settlements for U.S. companies totaled $467 million in 2012. On average, companies paid $4.8 million per case.
As these cases highlight, wage and hour issues can be particularly challenging for employers. Therefore, it is always advisable to work with an experienced employment attorney before problems arise.