Labor & Employment Law Daily Wrap Up, WAGE-HOUR—MINIMUM WAGE—S.D. Fla.: FLSA defenses survive summary judgment in part, despite adult-entertainment club’s disputed pay practices, (Aug 27, 2026)

By Ursula Furi-Perry. J.D., MBA

Factual disputes existed concerning the club’s reliance on an outside consultant and whether standard payments for dancers’ services were set by the club.

Exotic dancers who worked at an adult-entertainment club alleged that they were misclassified as independent contractors, were not paid minimum wages, and were required to surrender their tips. The dancers moved for partial summary judgment on two of the club’s affirmative defenses, arguing that the employer could not establish that it acted in good faith and could not offset minimum-wage liability with amounts the dancers received directly from customers. A federal district court in Florida granted the motion in part and denied it in part, finding factual disputes concerning the club’s reliance on an outside consultant and whether standard payments for dancers’ services were set by the club. However, amounts customers voluntarily paid above any standard price were tips and could not be used to offset minimum-wage deficits (Lopez v. JW Lee Inc. dba Scarlett’s Cabaret, No. 25-cv-20367-ALTMAN (S.D. Fla. Aug. 24, 2026)).

Misclassification claim. The plaintiffs worked as entertainers or dancers for the defendant, a gentlemen’s club. They alleged that their employer misclassified them as independent contractors, failed to pay them any minimum hourly wage, and required them to surrender tips. They filed suit claiming violations of the FLSA.

Affirmative defenses. In defense, the club asserted that it had a reasonable, good-faith belief that its practices complied with the FLSA, with the general manager noting that he relied on a consulting service for “industry answers” and payroll-related matters. That service employed attorneys and supplied the club with employment-law posters. While the manager reported that he believed the consultants would alert the defendant if its pay policies were illegal, he had not personally asked whether the club’s compensation policies complied with the FLSA, nor had he personally researched case law governing dancers or entertainers.

Payments from customers. The parties also presented conflicting evidence concerning payments that dancers received directly from customers. The general manager testified that the club did not set the prices for dancers’ services and that dancers were free to negotiate all prices with customers. According to one of the named plaintiffs, however, the club established prices for services and required entertainers to follow those prices: for example, a table dance cost $20, while the club charged $600 for 30 minutes and $1,150 for one hour in the champagne room. The plaintiff also testified that if a customer voluntarily paid more than the established price, the dancer retained the excess as a tip. The plaintiffs filed a motion for summary judgment.

Analysis. The court analyzed the procedural issue under Rule 56 of the Federal Rules of Civil Procedure, addressing whether there were no material facts in issue, so that the employer was entitled to judgment as a matter of law.

Good-faith defense. The court first declined to grant summary judgment on the club’s good-faith defense. Under the FLSA, liquidated damages are presumptively available when an employer fails to pay required minimum wages. However, an employer may avoid liquidated damages if it establishes both that it acted in good faith and that it had reasonable grounds for believing its conduct complied with the FLSA, by taking active steps to determine the FLSA’s requirements and make a genuine effort to comply with them.

Here, the general manager’s testimony did not conclusively establish or eliminate the defense, the federal court held. Although he had not personally conducted legal research or asked whether the club’s policies complied with the FLSA, his testimony also did not establish that no one else acting for the company had sought legal advice. The consultant employed attorneys, provided the club with employment-law materials, and was a source on which the club relied for industry guidance. The record therefore left unanswered whether the consultant held itself out as an expert on FLSA matters, whether its attorneys advised the club, whether other company representatives communicated with the consultant, and whether the club received legal advice from another source. Construing those uncertainties in the club’s favor at the summary-judgment stage, the court found a genuine factual dispute concerning the nature of the employer’s reliance on outside expertise.

Setoff defense. The court next considered the club’s setoff defense, noting that Department of Labor regulations distinguish tips from service charges: tips are presented by a customer as a gratuity, with both the decision whether to give it and its amount determined solely by the customer. Compulsory service charges, by contrast, are not tips and, under appropriate circumstances, may be used to satisfy an employer’s monetary obligations under the FLSA.

In this case, the general manager testified that entertainers set all prices themselves, while a dancer testified that the club established mandatory prices that dancers were required to charge. If the club imposed a standard price for a particular service, the corresponding payment could potentially constitute a service charge because the customer did not independently determine whether or how much to pay. The factual dispute therefore mattered as to whether those payments could be credited toward any minimum-wage liability.

The court reached a different result, however, for payments above any standard price. The dancers acknowledged that if a dance cost $20 and a customer voluntarily paid $30, the additional $10 was a tip. Because such excess payments were made on the customer’s own initiative and the customer determined their amount, they fell within the definition of tips. Those amounts therefore could not be used to offset any minimum-wage deficit, the court held. The club could continue to assert that standard payments for services constituted service charges, but it could not claim an offset for amounts voluntarily paid above those standard prices.

Accordingly, the court denied the dancers’ motion for summary judgment in part and granted it in part.

The case is No. 25-cv-20367-ALTMAN.

Judge: Altman, R.

Attorneys: Carlos V. Leach (The Leach Firm) for Dana Lopez. Gary Scott Edinger (Benjamin, Aaronson, Edinger & Patanzo) for JW Lee Inc. dba Scarlett’s Cabarett.

Companies: JW Lee Inc.; Scarlett’s Cabarett

Cases: WageHour MinimumWage FloridaNews