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Contract’s Arbitration Provision Doesn’t Stop New Jersey Dancer from Pursuing Her Minimum Wage Lawsuit

The issue of compliance with overtime and minimum wage requirements is an emerging one within the realm of certain adult entertainment businesses. Many exotic dancers have begun taking their employers to court to claim that the pay they receive doesn’t satisfy the minimum wage. Some clubs have used the “employee versus independent contractor” argument to attempt to escape liability. Others have inserted in their agreements with their dancers clauses requiring arbitration of disputes.

In the case of one Rahway dancer, the dancer was able to avoid being forced into arbitration after the Third Circuit Court of Appeals ruled that arbitration clauses must have specific language to include statutory claims like minimum wage and discrimination, and the dancer’s clause didn’t have that wording. The dancer’s victory here shows once again that, in many employment cases, the difference between success and defeat is in the details, which is why you need a knowledgeable New Jersey employment attorney on your side.

Alissa was an exotic dancer at a men’s club in Rahway. As is often common in this business field, this club required their dancers to sign contracts that stated that the dancers were independent contractors who were merely renting performance space inside the club. The contract also had another common provision:  the arbitration clause. This clause stated that either party could seek to compel arbitration of any dispute that arose under the terms of the contract.

Eventually, a dispute did arise. Alissa sued the club, claiming that its payment to dancers like her violated the minimum wage requirements contained within both federal (Fair Labor Standards Act) and state (New Jersey Wage Payment Law) statutes. The club filed a motion asking the court to dismiss the case. The arbitration provision applied, and that meant that the dispute must be heard by an arbitrator, rather than a judge, the employer argued.

The District Court agreed, but, after an appeal by the dancer, the Third Circuit reversed, giving her lawsuit new life. Under New Jersey law, there are certain things that must be in a contract’s arbitration provision for the provision to apply to a statutory violation claim (like a minimum wage claim). One of those things is that the clause must explicitly say that the provision covers statutory claims and that the employee/contractor is waiving her rights to bring her statutory claims in court instead of through arbitration.

In reaching this decision, the court placed statutory claims like minimum wage actions under the Wage Payment Law in the same category as discrimination lawsuits brought under the Law Against Discrimination. In 2001, the New Jersey Supreme Court issued a ruling that went in favor of an employee who sued under the LAD. An important fact that worked in that employee’s favor was that the clause in her contract did “not mention, either expressly or by general reference, statutory claims redressable by the LAD.”

The contract in Alissa’s situation was similar. Although it was an independent contractor agreement, rather than an employment contract, it had a similar arbitration clause, and that provision similarly was lacking in specific statutory claims that were covered by the clause. Alissa’s provision simply said it covered any “dispute between Dancer and Club under this Agreement.” This raised the implication that the clause intended to cover only terms and conditions of the contract, rather than statutory claims like discrimination or minimum wage.

The skillful New Jersey wage violation attorneys at Phillips & Associates have been working for many years to protect the rights of workers throughout New Jersey. Whether you’ve suffered from illegal discrimination, non-payment of overtime, or compensation below the minimum wage, reach out to our team online or at (609) 436-9087 today to set up a free and confidential consultation.

More blog posts:

Third Circuit Revives Employee’s Discrimination Action in ‘Mixed-Motive’ Case, New Jersey Employment Lawyer Blog, Aug. 9, 2017

Company VP Entitled to Litigate His New Jersey Wage Dispute in Court Despite the Existence of Arbitration Clause in Employment Contract, New Jersey Employment Lawyer Blog, May 18, 2017

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