Exotic Dancers’ Misclassification Claim Certified in Salazar v. VIP Showgirls

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On August 5, 2015, after nearly five years of litigation and following a remand from the California Court of Appeal, a class of exotic dancers was finally certified in Salazar v. VIP Showgirls, aka Victory Entertainment, No. BC445154 (Los Angeles Super. Ct., filed Sept. 10, 2010).  In 2010, Salazar, an exotic dancer, sued VIP Showgirls aka Victory Entertainment, Inc. (“VIP”), an adult entertainment club, alleging wage-and-hour violations arising from the club’s misclassification of dancers who performed at the club.  VIP required its dancers to sign a standard agreement identifying them as independent contractors, and the agreement provided that either party could terminate the relationship at will.

Salazar moved to certify a class of “[a]ll persons who are employed or have been employed and who have worked one or more shifts as a ‘dancer’ for [VIP] in the State of California.” In its initial determination of whether the class certification requirements had been met, the trial court applied the common law test for whether an employee relationship existed between Salazar and VIP.  See S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).  Defendant-employers frequently succeed in arguing that that the multi-factor Borello test, often called the “economic realities” test,[1] creates individual issues of fact which predominate over common questions, hindering class certification.  The Salazar trial court thus denied certification because it found that the dancers’ relationships with VIP under the Borello test would require individual inquiries at trial.  Salazar then appealed, and, in 2014, the Court of Appeal reversed the order denying certification in an unpublished decision and remanded to the superior court.  Salazar v. Victory Entertainment, Inc., No. B249888 (2nd Dist. Div. 7 Dec. 15, 2014) (slip op. available here). 

In reversing the trial court, the Court of Appeal cited its opinion in Dynamex Operations West, Inc. v. Superior Court, 230 Cal. App. 4th 718 (2014), which had been decided after the Salazar trial court denied certification.  In Dynamex, the Court of Appeal held the Industrial Welfare Commission (“IWC”) definition of an employment relationship applied to claims falling within the scope of an IWC wage order.  Dynamex at 734; see also Martinez v. Combs, 49 Cal. 4th 35, 64 (2010).  For claims falling outside the scope of a relevant wage order, the common law test for an employment relationship applies.  Dynamex at 734; see Ayala v. Antelope Valley Newspapers, Inc., 59 Cal. 4th 522, 531-532 (2014).  The Salazar Court of Appeal concluded that both Wage Orders 5 and 10 appeared to apply to the exotic dancers and both define the word “employ” as “to engage, suffer, or permit to work” and define an “employer” as any person “who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.”  Interpreting this same language, the California Supreme Court in Martinez previously concluded that “[t]o employ, then, under the IWC’s definition, has three alternative definitions[]: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.”  Martinez, supra, 49 Cal. 4th at 64.  The Martinez test of employment is far simpler than the Borello test and is easier to prove with common evidence.  The Salazar appellate court concluded that because the trial court had applied only the common law test, reversal was required in order to determine whether the dancers’ claims fell within the IWC Wage Orders and were thereby governed by the IWC employment test.  The Salazar appellate court instructed the trial court to determine on remand whether the IWC definitions applied, and if so, whether common issues predominated.

Applying the standards for determining employment articulated by the appellate court, the Salazar trial court held that the dancers’ claims fell within the Wage Orders and that common issues predominated, and on that basis reversed its March 2013 decision and certified the class.  This case highlights the significance of the simplified employment test announced in Martinez, which eases the burden of obtaining class certification.  This ruling is also a victory for a group of long-suffering workers who often endure difficult workplace conditions and deserve the rights and protections afforded employees under the California Labor Code. 

Authored By:
Robert Drexler, Senior Counsel

Editors’ note: the Order in Salazar is not yet publicly available and will be posted as soon as is practicable.

[1] In applying the economic realities test, factors that may be considered include: (1) whether the employer or principal has the right to control the worker (both as to the work done and the manner and means in which it is performed); (2) whether the person performing services is engaged in an occupation or business distinct from that of the principal; (3) whether or not the work is a part of the regular business of the principal or alleged employer; (4) whether the principal or the worker supplies the instrumentalities, tools, and place for the person doing the work; (5) whether the service rendered requires a special skill; among others.  See http://www.dir.ca.gov/dlse/faq_independentcontractor.htm