BURRELL v. TOPPERS INTERNATIONAL INC et al

Filing 81

ORDER granting 80 Motion for Reconsideration re the Court's oral ruling on 63 MOTION for Partial Summary Judgment filed by CHRISTIE BURRELL to the extent set forth in the Order. Ordered by US DISTRICT JUDGE CLAY D LAND on 04/18/2017. (CCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
CHRISTIE BURRELL, individually
and on behalf of all others
similarly situated,
Plaintiff,

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*
*

vs.

*

TOPPERS INTERNATIONAL, INC.,
DARNELL LEWIS GARDNER, and
SANDRA GARDNER,

*

Defendants.

CASE NO. 3:15-CV-125 (CDL)

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*
O R D E R

During the pretrial conference in this matter, the Court
denied Plaintiffs’ partial summary judgment motion in an oral
ruling from the bench.

Min. Order, Apr. 4, 2017, ECF No. 78.

Plaintiffs filed a motion for reconsideration.

The motion (ECF

No. 80) is granted to the extent set forth in this Order.
I.

Plaintiffs Are Employees, Not Independent Contractors
Defendant

Toppers

International,

Inc.

is

an

adult

night

club.

Plaintiffs are entertainers at the club, and they contend

that

Toppers

improperly

classified

them

as

independent

contractors and did not pay them minimum wage as required by the
Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219.

It is

undisputed that Toppers does not pay any wages to entertainers,
and it does not include entertainers in payroll.

Pretrial Order

Ex. A, Material Undisputed Facts ¶ 7, ECF No. 79-1.

Instead,

entertainers rely solely on tips from customers to earn money
for their work at Toppers.

Id. ¶ 8.

Plaintiffs argue that the

undisputed facts demonstrate that they are employees within the
meaning of the FLSA, not independent contractors.

The Court

agrees.
“To determine whether an individual falls into the category
of

covered

courts

‘employee’

look

to

the

or

exempted

‘economic

‘independent

reality’

of

the

contractor,’
relationship

between the alleged employee and alleged employer and whether
that relationship demonstrates dependence.”
Knight,

Inc.,

721

F.3d

1308,

1311

(11th

Scantland v. Jeffry
Cir.

2013).

“This

inquiry is not governed by the ‘label’ put on the relationship
by the parties or the contract controlling that relationship,
but rather focuses on whether ‘the work done, in its essence,
follows the usual path of an employee.’” Id. (quoting Rutherford
Food Corp. v. McComb, 331 U.S. 722, 729 (1947)).
The courts consider six main factors in determining the
economic reality of the parties, and the Court will address each
factor in turn.
A.

Nature and Degree of Control

The first factor is “the nature and degree of the alleged
employer’s control as to the manner in which the work is to be
performed.”

Id.

at

1312.

It

2

is

undisputed

that

Toppers

exercised

significant

control

over

entertainers’ work was performed.

the

manner

in

which

the

Toppers set the entertainers’

schedules and would not permit entertainers to work busy shifts
unless

they

also

Facts ¶¶ 38-41.

worked

slower

shifts.

Material

Entertainers were fined if they arrived late,

left early, missed a shift, or missed a stage call.
43, 55.

Undisputed

Id. ¶¶ 42-

Entertainers had to pay a mandatory “house fee” at the

beginning of each shift, a mandatory “tip out” at the end of
each shift, and various fees to other individuals who worked at
Toppers. Id. ¶¶ 35, 37, 61-63.
table

dances

and

lap

dances,

Toppers set minimum prices for
had

rules

on

how

entertainers

danced on the main stage, and required entertainers to share
tips with other entertainers who shared the main stage with
them.

Id. ¶¶ 5, 56-57, 59.

apparel, hair, and nails.
written

policies

and

disciplined—including
and procedures.

Id.

Toppers had rules on entertainers’
Id. ¶¶ 51-52.

procedures,

and

terminated—for

Toppers also had

entertainers

violating

¶¶ 66, 68-69.

could

those

be

policies

Based on all of these

undisputed facts, Toppers exercised significant control over the
work

of

its

entertainers.

This

factor

weighs

in

favor

of

finding that the entertainers are employees.
B.

Opportunity for Profit or Loss

The second factor is “the alleged employee’s opportunity
for

profit

or

loss

depending

upon

3

[her]

managerial

skill.”

Scantland, 721 F.3d at 1312.

Although the entertainers could

negotiate the rate customers paid them for dances (above the
minimum rate set by Toppers), they had limited opportunities to
increase their profit.

And, other than the mandatory fees they

had to pay to dance at Toppers, the entertainers had no risk of
loss.

In

contrast,

Toppers

had

extensive

control

over

the

entertainers’ opportunity for profit because Toppers controlled
the location, facilities, marketing, and inventory of beverages
for the club.

And Toppers had a much bigger risk of loss than

the entertainers because Toppers was responsible for all rents,
utilities, maintenance, insurance, and advertising for the club.
Thus,

this

entertainers

factor
are

weighs

in

economically

favor

of

dependent

finding
on

Toppers

that

the

and

are

therefore its employees.
C.

Investment in Equipment

The third factor is “the alleged employee’s investment in
equipment or materials required for his task, or his employment
of

workers.”

Scantland,

721

F.3d

at

1312.

At

Toppers,

entertainers are responsible only for their own makeup, hair,
and

apparel.

responsible

Material
for

all

Undisputed

other

Facts

investments

¶ 77.

Toppers

necessary

for

was
the

entertainers to do their work, including the facility, stage,
marketing, bar, and security.

This factor weighs in favor of

4

finding

that

the

entertainers

are

economically

dependent

on

Toppers and are therefore its employees.
D.

Special Skill

The fourth factor is “whether the service rendered requires
a special skill.” Scantland, 721 F.3d at 1312.

It is undisputed

that no prior experience or formal training is required to work
as an entertainer at Toppers.
79.

Rather,

entertainers

it

are

appears
selected

willingness to disrobe.

Material Undisputed Facts ¶¶ 78-

that
are

the

only

physical

criteria

on

attractiveness

which
and

a

This factor weighs in favor of finding

that the entertainers are employees.
E.

Permanency and Duration of the Relationship

The fifth factor is “the degree of permanency and duration
of the working relationship.” Scantland, 721 F.3d at 1312.
general,

a

longer

working

relationship

finding that the worker is an employee.

militates

In

toward

a

Here, there is evidence

that many entertainers worked at Toppers for at least a year.
Material Undisputed Facts ¶ 83.
indicate
Toppers

whether
was

the

The present record does not

entertainers’

exclusive,

and

it

working

does

not

relationship

establish

that

with
the

entertainers had a contract with Topers for a specific term.
The Court finds that this factor is neutral.

5

F.

Integral Part of Business

The

sixth

rendered

is

factor

an

is

“the

integral

extent

part

of

to

the

business.” Scantland, 721 F.3d at 1312.

which

the

alleged

service

employer’s

Toppers agrees that

entertainers are integral to the operation of Toppers; without
the entertainers, Toppers cannot operate its business as a strip
club.

Material Undisputed Facts ¶¶ 86, 88.

This factor weighs

in favor of finding that entertainers are employees.
G.

Summary

As discussed above, the undisputed facts and the Scantland
factors weigh in favor of finding that the entertainers were
economically dependent on Toppers.
for”

themselves;

rather,

they

They were not “in business

were

employment in the business of others.”

“dependent

upon

finding

Scantland, 721 F.3d at

1312 (quoting Mednick v. Albert Enters., Inc., 508 F.2d 297,
301–02 (5th Cir.1975)).

For these reasons, the Court concludes

that, as a matter of law, Plaintiffs were employees within the
meaning of the FLSA.
II.

Defendants are Not Entitled to an “Offset” Defense
Plaintiffs argue that to the extent that Defendants are

asserting an
Defendants

“offset”

did

not

defense, they are not entitled to it.

respond

to

this

argument

or

present

evidence to create a genuine fact dispute on this issue.

6

any

Under

the

offset

defense,

an

employer

may

offset

its

minimum wage obligations with “service charges" that become part
of the employer’s gross receipts and are distributed by the
employer to its employees.

29 C.F.R. § 531.55(b).

On the other

hand, tips do not count toward the offset defense.1

Here, it is

undisputed that the entertainers at Toppers rely solely on tips
from

customers

to

earn

Undisputed Facts ¶ 8.
and

Toppers

does

money

for

their

work.

Material

The tips go directly to the entertainers,

not

include

these

amounts

in

its

gross

receipts; no one at Toppers tracks how much entertainers receive
in tips.

Id. ¶¶ 93, 96.

For these reasons, the tips received

by Toppers entertainers do not qualify as “service charges” that
can

be

counted

Plaintiffs

the

to

satisfy

federal

Defendants’

minimum

wage.

obligation
Plaintiffs’

to

pay

summary

judgment motion on this issue is therefore granted.
III. Remaining Issues
Plaintiffs also sought summary judgment on two additional
issues: (1) whether Darnell Lewis Gardner and Sandra Gardner are
“employers”
Defendants

within
acted

the

meaning

willfully.

of

the

Because

1

FLSA
the

and
Court

(2)

whether

finds

that

In general, tips cannot be counted toward an employer’s minimum wage
requirements unless the employer meets the requirements for a tip
credit under 29 U.S.C. § 203(m).
Those requirements are: (1) the
employer must pay a “tipped employee” a cash wage and (2) if the cash
wage plus tips are not enough to meet the minimum wage, the employer
must pay an additional amount to meet the minimum wage. Id. Neither
requirement is met here.

7

genuine fact disputes exist on both of these questions, the
Court declines to reconsider its prior ruling on these issues.2
CONCLUSION
As discussed above, Plaintiffs’ motion for reconsideration
(ECF No. 80) is granted to the extent set forth in this Order.
Based on the undisputed evidence, Plaintiffs are entitled to
summary judgment on their claim that entertainers at Toppers are
employees,

not

independent

contractors.

Plaintiffs

are

also

entitled to summary judgment on Defendants’ offset defense.

But

genuine fact disputes preclude summary judgment on the remaining
issues.
IT IS SO ORDERED, this 18th day of April, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

2

The Court further notes that Darnell Gardner has filed a Chapter 13
bankruptcy petition.
Thus, the case is automatically stayed as to
him, and the Court cannot rule on these issues as to Darnell Gardner
at this time.

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