Paul Egan

Detroit Free Press

More than 28,000 exotic dancers at Déjà Vu clubs across the country will share in a $6.5-million settlement and enjoy more employment rights under a class-action lawsuit settlement pending in federal court in Detroit.

The suit against Déjà Vu Services, related companies and club principal Harry Mohney alleges the nude and nearly nude dancers are paid no wages but required to pay rent to the clubs, plus 30% or more of their tips. The dancers also face monetary penalties for leaving early or showing up late, the suit alleges.

The case centers on whether the dancers are employees or independent contractors — a classification that affects issues such as whether the clubs must pay them a minimum hourly wage or can instead charge them for doing business inside the clubs.

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Déjà Vu maintains that despite the claims made in the lawsuit, most exotic dancers who are given the opportunity to become club employees find out they prefer being independent contractors, because they make more money that way and have more control over their hours of work.

Under the proposed settlement, Déjà Vu will assess all current and future dancers based on a set of agreed criteria — including the dancer's expressed wishes — to determine whether they should be hired or retained as employees or as independent professional entertainers. Those deemed employees will be paid minimum wage, plus bonuses including commissions of at least 20% on their private dances and drink sales, and receive club support to pay for employment-related expenses such as the purchase and cleaning of costumes and payment of required local license fees.

The dancers can also choose whether to share in a $1-million cash payment pool or instead share in a $4.5-million pool that will credit them for rent and dance fees paid to the clubs. Another $1 million will pay attorney fees and penalties.

So far, only one dancer has objected to the proposed settlement, which has received preliminary approval from U.S. District Judge Stephen Murphy as "reasonable, fair and adequate," ahead of a June 7 fairness hearing in Detroit.

Minneapolis-area dancer Stephanie Sage said that with as many as 28,177 dancers sharing in the settlement, the offer is too small.

“It was not easy to make money and there were nights that I walked out with less than what I came in with,” Sage said in a letter to the court.

The proposed settlement covers more than 60 clubs around the country, of which 11 are in Michigan, including Déjà Vu Showgirls in Highland Park, Larry Flynt's Hustler in Lincoln Park, and Déjà Vu Showgirls in Lansing.

Jesse Young, a Southfield attorney representing the plaintiffs, said many of the dancers may only receive a couple of hundred dollars, but the benefits of the settlement go far beyond the cash settlement and include future wages, unemployment insurance, and the right to unionize if they are deemed club employees.

"We've heard many stories about clubs taking advantage of dancers and exploiting them," Young said.

But in backing the settlement, Déjà Vu and Mohney deny the allegations in the suit and admit no wrongdoing.

Déjà Vu, founded in Michigan but now a national firm with offices in Michigan, California and Nevada, has operated many of its clubs under a model in which the clubs serve no alcohol but dancers disrobe completely. Until recently, Michigan law prohibited fully nude dancing at clubs where alcohol was served.

The case began in 2016, when a Bay City dancer filed suit against Déjà Vu clubs in Saginaw, but it was expanded this year to include Déjà Vu clubs and their affiliates nationwide. The lawsuit's roots go back even earlier, to a similar lawsuit filed in 2008 and settled in 2011, but that had a settlement that did not include requirements that Déjà Vu determine, going forward, whether dancers were in fact club employees or independent contractors.

Bradley Shafer, the Lansing attorney representing Déjà Vu and Mohney, said there has been a raft of similar lawsuits in a wide range of industries.

"It's not just strippers, but it's hairdressers, cab drivers, Uber drivers, home health care workers," Shafer said.

Having already gone through the 2008 lawsuit, which involved a monetary settlement, he said he was determined to resolve the current lawsuit in a way that would rule out another similar suit a few more years down the road. This settlement does that, making the case unique, he said.

Contrary to what many people might think, "the clubs would like the entertainers to be employees" because "they could then control the entertainers and the clubs would make a lot more money," Shafer said.

"For whatever reason, entertainers and exotic dancers don't want to be employees."

Young, the attorney for the plaintiffs, said that depends on the individual dancer. But the settlement provides wages and other benefits for dancers who become club employees, plus additional safeguards for those deemed independent contractors, he said.

The suit alleges violation of the Fair Labor Standards Act and state wage and hour laws.

The clubs unlawfully classified the dancers as independent contractors, rather than employees, failed to pay minimum wages, and "engaged in unlawful tip-sharing by requiring dancers ... to share gratuities given to them by patrons with defendants and their employees, such as doormen and DJs." according to the lawsuit.

"Defendants knew or should have known that the business model employed was unlawful as applicable laws confirm that all money given to dancers by patrons was defined as a gratuity and the sole property of the dancer," the suit alleges.

Dancers received no wages, but "generated their income solely through the tips received from patrons when they performed exotic table, chair, couch, lap and/or VIP room dances," the suit alleges.

The dancers can't be independent contractors under the law because the clubs "exercise control over all aspects of the working relationship," and dictate hours of operation, lengths of shifts, minimum tips for private dances, tip sharing, even dance themes and costumes, and exclusively handle advertising and promotion, the lawsuit alleges.

"Each time a dancer performs an exotic dance for a patron and receives a dance tip, the dancer is required to immediately account ... for their time and any dance tip given to them," the suit alleged.

"Additionally, defendants employ other employees called "checkers," doormen and/or floor walkers to watch dancers work, count private dancers they perform, and record the amount of any dance tips received.

At the end of each shift, "in addition to any base 'rent' payment, the dancer is required (to) pay a portion of each dance tip given to them by patrons" — typically more than 30% of the total — as additional rent, the suit alleges.

Additional "tip-outs" of about $1 per dance must be paid to other club employees such as the manager, dance checkers, bouncers and DJs, the suit alleges.

The clubs maintain that they signed legally binding contracts with each of the dancers, which have clauses requiring disputes to go to binding arbitration and which bar participation in class-action lawsuits. The clubs also maintain that the dancers are properly classified as nonemployees because they perform when, where and for whom they choose, are not paid by the hour, control their profits and losses and must show independent initiative to be successful, according to records filed in the case. They also argue that the dancers earned far more than minimum wage.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.