TYAD, INCORPORATED, A MONTANA CORPORATION, d/b/a THE PLAYGROUND LOUNGE AND CASINO Petitioner
INDEPENDENT CONTRACTOR CENTRAL UNIT Respondent/Insurer.
Submitted: March 29, 2005
FINDINGS OF FACT, CONCLUSIONS OF LAW AND
Five exotic dancers filed wage claims against the
establishment where they danced. The claims were referred to
the Independent Contractor Central Unit (ICCU) of the
Department of Labor and Industry for a determination as to
whether they were employees or independent contractors. After
the ICCU determined they were employees, the establishment
petitioned the Workers' Compensation Court for a de
(1) Under a 2001 amendment to the Workers' Compensation
Act, the Workers' Compensation Court has jurisdiction
over independent contractor disputes involving not only
workers' compensation and unemployment insurance issues
but also those involving wage claims. § 39-71-415(3),
MCA (2001-2003). (2) Where a strip club controls the daily
times dancers perform, provides significant equipment and
services essential to the dancers performing, and can
terminate dancers at any time without liability simply by
giving written notice, the dancers are employees, not
Jurisdiction: Independent Contractor
Disputes. Under a 2001 amendment to the Workers'
Compensation Act, the Workers' Compensation Court has
jurisdiction over independent contractor disputes involving
not only workers' compensation and unemployment insurance
issues but also those involving wage claims. §
39-71-415(3), MCA (2001-2003).
Constitutions, Statutes, Rules, and Regulations:
Montana Code Annotated: 39-71-415(3), MCA
(2001-2003). Under a 2001 amendment to the
Workers' Compensation Act, the Workers' Compensation
Court has jurisdiction over independent contractor disputes
involving not only workers' compensation and unemployment
insurance issues but also those involving wage claims.
Independent Contractor: Right of Control.
Where a strip club controls the daily times dancers perform,
provides significant equipment and services essential to the
dancers performing, and can terminate dancers at any time
without liability simply by giving written notice, the
dancers are employees, not independent contractors.
The trial in this matter was held in Great Falls, Montana, on
March 29, 2005. The respondent was represented by Mr. Brian
J. Hopkins. Its president, Mr. David Blackwell, was also
present. Respondent was represented by Mr. Arthur M. Gorov.
Exhibits: Authentication objections made to some
exhibits were withdrawn and all exhibits were admitted with
the proviso that the Court will consider only relevant
documents. The Court noted that many of the documents, such
as the determinations of the Wage and Hour Unit, appear
largely or wholly irrelevant to the present proceedings and
also noted that the Court's jurisdiction in this case is
de novo, thus the prior findings and conclusions of
the Independent Contractor Central Unit are not entitled to
weight or deference in the Court's deliberations and
Witnesses and Depositions: David Blackwell, Sharon
Peterson, Chad Taylor, Renne Smith, and Billy Young
testified. No depositions were submitted.
Issues Presented: The issue, as stated in the Final
Pretrial Order, is as follows:
Whether the exotic (topless and nude) dancers performing at
the Playground Lounge in Great Falls were independent
contractors or employees.
Pretrial Order at 5.) While the parties have further parsed
that issue, that parsing simply invokes the independent
contractor analysis required under section 39-71-120, MCA
Having considered the Final Pretrial Order, the testimony
presented at trial, the demeanor and credibility of the
witnesses, the exhibits, and the arguments of the parties,
the Court makes the following:
The issue in this case is whether five "exotic
dancers" who filed wage claims against the Playground
Lounge and Casino (Playground) in Great Falls, Montana, were
employees of that establishment. The Playground contends that
the claimants, and other similarly situated dancers, were
The Playground is a bar and casino that offers adult
entertainment, viz., strip shows where the dancers remove
their clothes during their dances, concluding their dance
routines either wholly nude or topless.
The Playground revenues are derived from cover charges for
entrance into the establishment, from selling drinks to its
customers, and from poker and other licensed gambling
machines on the premises.
Since 2001, the Playground has been owned and operated by the
petitioner herein, TYAD, Incorporated (TYAD). TYAD also owns
and operates an adjacent establishment known as the Loading
Zone Bar and Casino. Only the Playground is involved in the
Since 2001, the Playground's overall operations have been
managed by David Blackwell (Blackwell), a shareholder and the
President of TYAD. However, Blackwell has had little contact
with the dancers, delegating primary responsibility for
dealing with dancers to the Playground's disk jockeys
(DJs). The DJs play recorded music for the dancers' dance
routines and have daily contact with the dancers. They are
responsible for obtaining the signed rental agreements
discussed hereinafter, enforcing the Playground's rules,
and settling disputes among the dancers.
Since TYAD's takeover in 2001, the Playground has used
the services of 100 to 125 dancers. Since it may have only a
dozen or so dancers at any one time, it is apparent that the
rate of turnover is high.
Upon taking over the Playground, TYAD employed dancers,
paying them wages and withholding taxes from their pay.
However, it encountered difficulty in hiring and retaining
dancers. Some dancers wanted to work only for a couple of
days and others did not wish to furnish sufficient
identification to allow the Playground to file the necessary
forms to effect employment. After approximately eight months
of ownership, Blackwell and TYAD decided to move to a new
arrangement with its dancers.
Under the new arrangement, as reflected in the written
agreements found at exhibits 5, 6, 11, 12, 17, 22, 23, 28,
and 42-44, the Playground rented its stage to dancers for a
fixed fee per day paid by the dancers to the Playground. The
fee structure changed over time, as discussed below in
Between November 13, 2003, and January 20, 2004, five dancers
who had worked at the Playground filed complaints with the
Department of Labor and Industry (DLI) seeking payment of
wages for all hours they worked. (See Exs. 34-38.) Based on
the hours each individual worked, the wages sought ranged
from $2, 782.00 to $16, 860.80. (Id.) The dates the
dancers worked encompassed January of 2003 to November 2003.
The Wage and Hour Unit referred the matter the Independent
Contractor Central Unit (ICCU) for a determination as to
whether the dancers were independent contractors.
On March 2, 2004, the ICCU determined that the five dancers
were employees, not independent contractors. (Ex. 29.) TYAD
requested a redetermination and then appealed the decision to
mediation. (Exs. 30-31.) Following mediation, it filed a
petition with this Court asking the Court to determine the
status of the five complainants. Additional facts germane to
the controversy are set out below.
Rental Agreements Made Compulsory for Dancers
Upon deciding to utilize the stage rental agreement, the
Playground required all of the dancers theretofore employed
by it to sign the rental agreements and agree to work as
independent contractors. Any dancer not agreeing to the
arrangement was not allowed to work at the Playground. The
terms of the agreements were dictated by TYAD and the
Playground and were non-negotiable.
While utilizing the rental agreements with its dancers, other
persons working at the Playground, including security
personnel (bouncers), bartenders, and DJs, were treated and
paid as employees. At present the Playground has thirty-two
employees, a number that does not include any dancers.
Facts Pertaining to Independent Trade, Occupation,
Profession, or Business
The stage rental agreements in all of its iterations
expressly provides that each dancer is an independent
contractor, not an employee. (Exs. 5, 6, 11, 12, 17, 22, 23,
28, and 42-44, ¶¶ 6 and 9.) In the recitals, the
agreements further state:
Renter is an exotic dancer, who offers her services as such
to a variety of business establishments in Montana or
elsewhere, and who desires to use a portion of TYAD's
place of business for that ...