Appellate Court Renews Dancers’ Claim Against Men’s Club; Mary Kay Sellers Take Note

10.04.2017


By Liz Carey

Rahway, NJ (WorkersCompensation.com) –  The ruling in a New Jersey appellate court in a case by two dancers against a men’s club is not only going back to court, but also is generating interest from some Mary Kay Cosmetics sellers. 

In August 2015, Alissa Moon and Yasmeen Davis filed suit in District Court against Breathless Men’s Club, claiming that the club illegally misclassified them as independent contractors to avoid payment of hourly wages, workers’ compensation coverage and other benefits provided under the Fair Labor Standards Act (FLSA), New Jersey Wage and Payment Law and the New Jersey Wage and Hour Law. 

Moon started at the club in August 2013. Two years later, the club forced her to sign an “independent dancer’s rental agreement,” where Moon was required to pay the club in order to perform and to agree to binding arbitration in the event a disagreement came up between the two parties.

In September, the club moved to have the case dismissed on the grounds that Moon and Davis had agreed to arbitration instead of going to district court, but the court denied their motion. In July 2016, the court ruled in favor of the club, writing “There was no genuine dispute as to whether Plaintiff’s claims fall within the scope of the arbitration provision.” 

In August 2016, Moon appealed and a year later, the United States 3rd Circuit Court of Appeals found in Moon’s favor. Judge Susan D. Wigenton found that despite the club’s claim that Moon was an independent contractor, Moon’s claim for lawful wages and benefits fell under the FLSA and state statutes, and not the club’s agreement.

Yasmeen Davis did not join in the appeals process.

Wigenton wrote “Similarly, Moon’s claim here is that she should receive certain wages and benefits as an employee under the FLSA despite her agreement stating otherwise. Because she relies ‘solely on [her] statutory, rather than [her] contractual, rights to recovery, . . . [she] may proceed on [her] FLSA claims without first seeking arbitration.’”

Workers’ compensation attorneys Steven Petrillo and Scott Goldberg said “Employers should be aware that they cannot compel employees to relinquish their rights and expect such a waiver to be legal.”

The case has drawn the attention of another case pending in New Jersey District Court, this one against Mary Kay Cosmetics.

Ina Collins, the leader of a proposed class action lawsuit against Mary Kay, Inc., says the decision in the Moon case should revive her case, which was thrown out in January.

In September 2015, Collins filed suit in New Jersey District Court against the cosmetics giant citing FLSA and New Jersey Wage Payment laws. Collins said the company misclassified her as an independent contractor, and unfairly forced to purchase Mary Kay material, such as marketing material and samples, as part of their employment. Collins claimed she and tens of thousands of beauty consultants had been misclassified.

“As a result of defendants’ conduct, the class members have endured significant economic damages, including all the money they needlessly spent on meeting quotas for product purchases, on overpaying for car leases, on paying for their own advertising, on having to pay taxes on overvalued gifts to them, and on having to pay all of their Social Security taxes as if they were self-employed,” the complaint said. “Mary Kay Inc. exercises extensive control and direction over the manner of performance of plaintiff and all class members and leaves very little to their discretion.”

US. District Judge Madeline Cox Arleo threw Collin’s suit out in June 2016, finding that the consultants signed contracts that provided that any suits filed must be settled in Texas, the cosmetics company’s home base.

Ravi Sattiraju, Collins attorney, said in an interview with WorkersCompensation.com an appellate argument had already been made against Mary Kay on behalf of his client, but that he filed a supplemental argument in regards to the Moon case. Sattiraju said he and his client were still waiting to hear from the appellate court.

But, he said, the Moon decision is an important one. 

“I think it’s a very important decision because it gives clarity to some of the issues facing New Jersey workers in similar situations,” he said.

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