Strippers win $10.9 million judgment for unpaid wages from New York club

Exotic dancers at a midtown Manhattan strip club were awarded nearly $10.9 million by a U.S. judge who found they were employees unfairly classified by the club as independent contractors.

The damages cover unpaid wages and withheld gratuities dancers employed at Rick's Cabaret, U.S. District Judge Paul Engelmayer in Manhattan said. The action was brought on behalf of some 2,000 dancers employed at the club - owned by Peregrine Enterprises Inc, a unit of RCI Hospitality Holdings Inc - going back to 2005.

The award is short of the $18.8 million in damages the dancers sought, and the judge left the balance to be decided at a trial. The date will be set shortly, the court order said.

In a September 2013 ruling, Engelmayer sided with the plaintiffs, saying Rick's Cabaret exercised so much control over the dancers that they were actually employees subject to the club's rules and could not make independent decisions about their work.

The strippers did not receive salaries, only tips and fees for dances, usually $20, and payment for time spent with customers in semi-private rooms. As employees, the judge found they are entitled to mininum wage protections under federal law.

"We are looking forward to a trial," said Michelle Drake, an attorney for the dancers, who said the plaintiffs could seek more than the original damages they requested.

Among the issues the judge left for trial is whether RCI Hospitality Holdings should be jointly held liable with Peregrine Enterprises.

Shares in RCI Hospitality Holdings were down 0.44 percent to $11.23 per share in mid-day trading.

"There is no current or near term obligation to pay any sums as a result of this decision," RCI Hospitality said in a statement. "The case will be appealed once final judgment is reached after trial."

The women earn large sums of money at the club and the idea that income is not counted towards wage obligations is "fundamentally flawed," the statement said.

Strippers in other states have made similar claims. This month the Nevada Supreme Court ruled topless dancers at the Sapphire Gentlemen's Club on the Las Vegas strip were employees and also deserved wages.

The case is Sabrina Hart et al v. Rick's Cabaret International Inc., No. 09cv3043, U.S. District Court for the Southern District of New York.

(Additional reporting by Nate Raymond; Editing by Alexia Garamfalvi and David Gregorio)