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Strip club vs. labor laws: Exotic dancer sues Davenport club over unfair labor practices. Debate over worker misclassification spreading across country

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After a 10-hour shift stripping at Tuxedos Show Club in Davenport, Sadie Yvonne McLaren would make the required rounds, doling out a portion of the tips she earned, first to pay the house, then the bouncers, then the DJ. 

By the end of her rounds, McLaren would be left with about one-third of the money she had earned that night. On a busy day, she could go home with $200. Other days, she'd take home $18. 

Signs plastered on the club's walls were a regular reminder of the house rules. Dancers who weren't nude by the end of their last song would be charged a higher stage fee. Dancers who missed a shift or walked off the stage early would be charged up to $200. 

Other rules were unwritten. Breaks were unauthorized or limited to 10 or 15 minutes. It didn't matter how busy the club was; dancers had to stay on stage. Strippers could stop customers from touching them, but it was likely to come at a cost. 

"If you take the job itself out of it, who would put up with that? Being told where to be and when, and that you can't leave. Being told you're going to get fired because you can't pay your stage fee because only two guys walked in all night," McLaren said. "And it's not just here; it's everywhere. Dancers all over the country have the same issues."

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This notice was posted on the wall of Tuxedos, a Davenport strip club. Former exotic dancer turned union organizer Yvonne McLaren sued the club over unfair labor practices, and this photo was included in the court documents.

Two years ago, McLaren walked off the stage and past the house rules for the last time. Her experiences are the basis of a class action lawsuit she led against Tuxedos for violating fair labor standards. Now she’s working full time to help bolster a movement to protect dancers' rights and unionize workers in the adult entertainment industry. 

At the heart of the movement — championed by dancers in California, Oregon and elsewhere — is the debate over whether strippers should be classified as independent contractors or employees.

This year, workers across the country, including Uber drivers and others in the new "gig economy" have brought national attention to the issue of worker misclassification. A gig economy is one in which temporary positions are common and organizations contract with independent workers for short-term engagements.

McLaren said exotic dancers finally have been given space to have their voices heard and to be seen as more than just dancers or strippers, but as legitimate workers with human rights. 

‘Red flags everywhere’ 

McLaren, a native of Germany, worked as a waitress and exotic dancer in Chicago before moving to Davenport in 2011. She was hired at Tuxedos within a week. 

Thousands of clubs across the country have house rules and requirements similar to those posted at Tuxedos. But McLaren quickly learned dancing at a strip club in Iowa comes with added pressure.

Unlike strip clubs in Portland, Las Vegas and other larger metropolitan areas, clubs in the Quad-Cities struggle to attract crowds of new customers, she said. And Tuxedos' BYOB liquor policy means dancers are essentially tasked with bringing in all of the money.  

"Nobody knows that we put up with so much, and we work really hard because so much of our money gets taken," McLaren said. "You have to work really hard to make someone else money before you can make your own money. It starts to become a toxic environment. Nobody seems happy, and it feels like you're in hell." 

In 2016, McLaren was searching online when she learned of the International Entertainment Adult Union, which had been federally recognized the previous year. Digging through the union's website, she not only discovered she had specific rights as an independent contractor, but that they were potentially being violated. 

"The more I learned about labor laws and rights, the angrier I got," she said. “It just made me want to do something.”

Independent contractors include laborers across several industries, such as truck drivers, construction workers, janitors, hairdressers, warehouse workers and exotic dancers.

Federal and state laws have various requirements for how an employer must classify and treat employees and independent contractors, said Matthew Pappas, an employment lawyer in Rock Island. If workers are classified as independent contractors, the Internal Revenue Service dictates that employers can control only the result of the work, not what will be done or how it will be done.

McLaren argued the postings on the wall detailing her club owner’s requirements and strict scheduling were clear evidence of the dancers being misclassified as contractors.

“As far as clubs are concerned, they label us as independent contractors, make us sign a form that we agree we’re independent contractors, but then make us work a schedule. And you’re penalized if you miss one of your days. That’s an employee,” she said. “So that’s a huge red flag, and it spirals downward from there. There are red flags everywhere.”

Independent contractors are exempt from protections under laws governing minimum wage, overtime compensation, family and medical leave, unemployment insurance and safe workplaces, according to the Department of Labor.

“If they’re not classified as employees, they don’t have any protections in the workplace,” said Boston labor lawyer Shannon Liss-Riordan, who represented McLaren in the class action lawsuit. “Not only do they not have wage protection, they don’t have protection against discrimination or if they get injured. It’s extremely important for labor rights to be enforced. I’m a strong believer those protections are paramount.”

The misclassification of workers has been around as long as worker protections, said David Steen, attorney for Iowa Workforce Development. The state developed the Iowa Misclassification Task Force in 2008, and as job growth continues, Steen said, investigation and enforcement efforts have become stronger.

He said lines are blurred in several ways when employers classify workers. And often, he argued, workers “don’t understand the distinction, and many have told investigators that they felt they had no choice in the matter.

“Many employers simply don’t understand they cannot just reclassify a worker from employee to contractor and avoid taxes,” he said. “They’ve seen competitors do it, or read about it somewhere, and they decide it would be a good way to reduce overhead. Some do it because they know it’s not lawful, but they want to try to get ahead.”

In 2015, for example, the task force reported Iowa employers failed to report more than $6 million in wages for unemployment tax purposes. That resulted in more than $389,000 in unpaid unemployment taxes, penalties and interest.

In the class action complaint filed last fall, McLaren claimed Tuxedos misclassified its exotic dancers as independent contractors, paid dancers less than the minimum wage, failed to pay them overtime compensation, and took unlawful deductions from dancers’ pay in violation of Iowa law.

In court, the club argued dancers were properly classified, and as a result, were not subject to minimum wage and overtime protections. Documents also state the club did not mandate the tip-outs made by the dancers, and on many occasions, dancers’ earnings exceeded the minimum wage.

Club owner Ron Farkas did not return calls for comment. His attorney, William Breedlove, declined an interview.

‘A terribly broken industry’

Independent contractors also lack protections against sexual harassment and assault in the workplace, which McLaren said is rampant in strip clubs.

“Clubs are rife with abuse, harassment and discrimination,” said Liss-Riordan, McLaren's attorney. “Just because a woman works at one of these clubs doesn’t mean she is opening herself up to harassment. This is real work. People are supporting themselves and their families off this work, and they need protection under the law.”

McLaren said she’s spent her career watching dancers as young as 18 and up to their 40s being grabbed and assaulted, then shrugging it off and staying silent. She’s seen others penalized for speaking up.

“There is potential for a lot of disrespect in and outside of the club, including traumatizing things like sexual harassment and assault,” said Karly Voss, an exotic dancer in Oklahoma City. “This job is not easy; it is incredibly emotionally, mentally and physically exhausting. It is expensive to be a stripper, and not just financially.”

Now volunteering full time as an officer of the International Entertainment Adult Union, McLaren said she’s dedicating her career to informing dancers, a historically marginalized group, of their rights.

“They have to be humanized to society, but also to themselves in a way,” she said. “A lot of them are conditioned to think that somebody grabbing you is normal. It’s not. That guy should have the cops called on him. People only see the job for what it is. They don’t think about how these women work really hard under rough conditions and put up with a lot of abuse.”

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Former exotic dancer turned union organizer Yvonne McLaren sued Tuxedos, a strip club in Davenport, over unfair labor practices. McLaren now volunteers full time as an officer of the International Entertainment Adult Union.

McLaren said she filed the lawsuit against the Davenport club because she wanted to “expose a terribly broken industry” and prove labor rights are being violated in strip clubs across the country, including in rural Iowa.

“We’re working a job that most people don’t understand is extremely taxing. Not everybody is made for it,” she said. “I’m the only union officer in the Midwest, but I’m trying to bring these issues to light here. And at the same time, I’m trying to let dancers know there are people out there working to protect them and their rights.”

A common thread

Over the past 20 years, Liss-Riordan has made a legal career largely focused on independent contractor misclassification cases, representing everyone from restaurant workers to delivery drivers.

She’s gone after national companies, including FedEx and Starbucks, for misclassifying workers to avoid paying benefits and taxes. Liss-Riordan is now known across the country for taking on gig economy companies such as Uber, Lyft and Postmates.

She said her career took an interesting turn about 15 years ago when an exotic dancer walked into her office.

“I listened to her story and realized it was the same scam we’re seeing with so many different industries, where they don’t get paid by the company and they don’t get to keep all of their tips,” she said. “I took that case, and one case led to another, and before I knew it, I had sued just about every club in Massachusetts.”

A few years ago, she tackled similar issues in California, where Deja Vu, a company that owns dozens of strip clubs, has been entangled in lawsuits with thousands of dancers. In 2017, a Michigan judge approved a $6.5 million class action settlement the company later appealed.

Liss-Riordan said the company has been avoiding lawsuits and agreeing to settlements of “ridiculously low amounts,” spread out over as many as 28,000 dancers.

The debate has been heightened in California as employers deal with the 2018 state Supreme Court’s Dynamex decision, making it more difficult to classify workers as independent contractors. The ruling instructs California businesses to use a three-pronged test to determine whether a worker is an independent contractor.

The requirements, which are much clearer than those under federal law, include businesses proving a worker is free from the company’s control, is doing work that isn’t central to the company’s business, and has an independent business in that industry.

In the meantime, following the lawsuits, Liss-Riordan said Deja Vu posted signs on doors of clubs across California explaining dancers would be reclassified as employees.

“They sent a ‘this is what happens when you enforce your rights’ type message,” she said. “They came after the dancers, changed their pay structure and slashed their pay, where they walked out the door with hundreds of dollars less than before. Dancers were confused and outraged by this.”

While Liss-Riordan continues to sue the company for its actions, protests have broken out across the state. Some dancers, arguing the clubs were retaliating against them, have fought to remain independent contractors. Other protesters continue to tout necessary benefits and protections that go along with employee status. And others are encouraging all dancers to unionize.

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Former exotic dancer turned union organizer Yvonne McLaren is suing a strip club in Davenport over unfair labor practices. McLaren last worked at Tuxedos in Davenport two years ago. 

A bill that's moving through California's state legislature would codify the Dynamex decision and potentially reclassify millions of California workers. The new restrictions have caused strip club owners and gig economy businesses to worry about increased costs, and some employers fear other states will follow California’s lead.

‘Change is inevitable’

Watching as dancers have quit their jobs in California after getting their wages slashed, McLaren said she worries the fallout in California could reach Iowa.

“Dynamex has caused a huge mess out there, and it would be terrible if it happened all over the country,” she said. “Here in Iowa, with liquor laws how they are, if there was a Dynamex-type ruling and dancers were reclassified as employees, probably most of the clubs here would close. They don’t have the liquor sales to pay anybody. Thousands of people would lose their jobs.”

Liss-Riordan, on the other hand, is advocating for other states to adopt similar rulings, and she hopes eventually a federal law will tighten the standards that dictate who is classified as an independent contractor and who receives employment protections.

“We commend bill author Lorena Gonzalez, D-San Diego, and members of the Assembly who voted for the bill for their advocacy of fundamental worker protections like a minimum wage, overtime pay, workers’ compensation, unemployment insurance, and the right to collectively bargain,” the California Labor Federation said in a statement. “This measure would immediately benefit working people who are living on the edge every single day as a result of being misclassified as independent contractors.”

While McLaren wants worker protections to be expanded, she said in states like Iowa, where higher costs would cripple clubs, many dancers want to remain independent. But if they’re classified as independent contractors, they need to be treated as such.

“Tear up the rules, rip up the schedule, and get rid of the mandated tips,” she said.

“Most strippers do not want to be employees. We want to work on our terms, as is our right,” said Voss, the exotic dancer in Oklahoma City. “But we need the club owners to obey the law and respect us for that to happen. Without us, they wouldn’t have clubs to own, but the way they treat us makes it really seem like they have forgotten that fact.”

McLaren pointed to some clubs she argued “do it right,” such as Woody’s Show Club in Cedar Rapids.

“Clubs need to decide what they want the girls to be and stick with it. If they want us to be contractors, stop being greedy and follow the laws,” she said. “Woody’s is a great example. They outsource security, so you don’t just have a random person being hired as a bouncer. They let girls come and go as they please, and let them take breaks. They’re an example of a place that’s doing it right.”

As legislation progresses, Tina Chomas, secretary of the adult entertainment union, said it likely will take time for those in the industry, strippers and club owners, to accept dancers as employees.

“It’s hard convincing dancers or any adult entertainer that you are actually classified as employees,” she said. “It doesn’t benefit them to go along with these employers. Many just don’t know their rights or what it means.”

As technology and jobs transform, Pappas argued, worker classification laws have not kept up, especially as gig economy jobs have taken over a growing sector of the market.

“Fifteen years ago, it was not as easy as a few clicks and a car with insurance to become a productive money-earning worker who can set one’s own schedule and work hours,” Pappas said. “Technology has made it much easier to participate in the economy on one’s own terms.”

But the law, he said, “seems to have two buckets: employees in one and independent contractors in the other.

“Uber drivers, for example, seem to fit best in a third bucket,” he said. “Unlike most employees, they set their schedule, set the number of hours, use their own equipment, and can work for Uber competitors at the same time. But unlike more traditional independent contractors, they do not own a business per se, don’t have employees, and cannot set their own rates."

As business and technology continues to evolve, and as the IRS and other agencies work to crack down on misclassification cases and capture lost tax revenue, Pappas argued, “change is inevitable.”

“There needs to be a systematic, thoughtful legislation or regulation as opposed to a knee-jerk reaction to perceived problems,” he said.

In her run for U.S. Senate, which was announced in May, Liss-Riordan said she’s bringing worker classification and labor rights to Washington. And she’s inviting everyone from Uber drivers to exotic dancers to rally behind her.

“There are so many workers that have been marginalized in the name of progress for these companies,” she said. “If these companies are going to survive and succeed, they need to play by the rules, and we need to enforce these rules. People who work hard and provide services should have guaranteed protections.”

‘This industry was built by the people they abuse’

In the final two years McLaren worked at Tuxedos, she said she wasn’t dancing for the money anymore.

“I was dancing for research,” she said.

She studied the customers who would come in and the dancers who would act as their therapists. She observed moms, women living in hotels and 18-year-olds just months away from graduating from high school working the stage for hours. And she watched as club owners took a majority of their tips and penalized them for running late, not having shoes, or calling in sick.

“I really took an interest in the psychology of it all,” she said. “Most of us really do love the work — we just don’t always love the club owners. Many are dancing their way through school or have plans of doing something else. But that gets difficult as time goes on because the job takes so much out of you. There are so many dancers sealing their fates because they’re running on fear, fear of losing their job.”

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Former exotic dancer turned union organizer Yvonne McLaren is suing a strip club in Davenport over unfair labor practices.

McLaren is now volunteering full time for the union while caring for her two children and writing a book, desperate to expose the industry and win protections for the workers it often exploits. She said she’s “lucky enough” to have a husband who can support the family while she advocates for her fellow dancers.

“This industry was built by the people they abuse,” she said. “These are hardworking people. They don’t deserve to be pushed around, abused and assaulted because they chose to dance for a living.”

Most recently, McLaren and the other union officers launched a program for dancers to form their own limited liability corporation, or LLC, to file taxes and receive some protections.

“You can be an independent contractor for the club, but also your own employee, so you can file taxes in a way that an employee does and reap the benefits,” she said. “And we cover them and protect them with all of the programs we have in the union.”

McLaren said the program is just one of the successes the union has seen so far, even as officers struggle to encourage more dancers and adult entertainers to join. She’ll also participate in panel discussions this coming fall, where the union hopes to spark a more public conversation about industry issues.

“(McLaren) is so passionate and she really just wants to change Iowa for all of the girls,” said Chomas, union secretary. “She works hard. She has a good grasp on what we’re trying to accomplish, and she goes out and fights for girls every single day. We could use 10 more of her.”

This past month, the class action lawsuit against Tuxedos was settled, and a judge ruled compensation of $50,000 be paid to McLaren and one other dancer.

McLaren hopes changing legislation, as well as the gig economy bringing worker misclassification issues to the national stage, will continue to open up a space for dancers to address industry issues and make their stories known.

At the very least, she hopes it’ll mean the schedules are torn off the wall. 

"There has to be a way to put a stop to it," McLaren said. "So the best way that I or anybody can think of is to start drawing attention, whether it be through lawsuits, striking, anything.

"And it’s working."

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