NU Online News Service, May 27, 3:31 p.m. EDT

Labor officials properly determined that a strip club can't claim its nude and topless dancers are private contractors, rather than wage employees covered by workers' compensation law, the Montana State Supreme Court has ruled.

The finding by the high court came as part of a decision in a case brought by four exotic dancers against the Playground Lounge and Casino in Great Falls, Mont.

The Playground operated by TYAD Inc. had at one point paid its dancers $5.15 an hour to perform in the lounge, but required them to pay the club a $5 fee for each lap dance they negotiated with a customer and $10 for each "hostage" dance, the decision recounted.

But on Jan. 1, 2003, the club had dancers sign a "Rental Agreement" calling them independent contractors and requiring them to pay "rent" fees for the stage and dressing room every night. Initially they were allowed to keep all tips and dance fees, but later the club began requiring dancers to pay $10 after each hostage dance.

The dancers eventually began proceedings to get thousands of dollars in regular and overtime wages and reimbursement of the stage fees.

Their case went before the state Department of Labor and Industry, the Department's Independent Contractor Central Unit and eventually the District Court of the Eighth Judicial District. The dancers were found to be employees, covered by workers' compensation law.

In their decision, the Supreme Court noted that the agreements the dancers were made to sign were designed by TYAD to "circumvent Montana wage laws and to secure the services of the dancers in a manner that financially benefitted the Playground."

"It can be logically concluded that the stage fees were paid from the only remuneration the dancers received–their tips and the portion of private dance fees they were allowed to keep. Some dancers testified that they did not earn enough in tips and dance fees on some nights to make up for the stage fee they were charged," the decision said.

The court's opinion also found "not only did TYAD fail to pay the dancers earned wages; it demanded payment for providing essential elements of employment to the dancers, i.e., a stage and a dressing room."

The Labor Department Wage Unit had found that the stage fees constituted illegal kickbacks that had to be repaid to the dancers.

While the court found mostly for the dancers, it did revise some of the amounts that the club was found to owe them.

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