NEW YORK (Reuters) - Exotic dancers at a Midtown Manhattan strip club will receive up to $15 million in a settlement announced on Wednesday resolving a lawsuit claiming they were employees unfairly classified as independent contractors.
The settlement, disclosed in court papers, came after a Manhattan federal judge in November awarded dancers at its Rick’s Cabaret club $10.9 million and ahead of a April 27 trial over further amounts they sought.
The lawsuit was brought on behalf of some 2,000 dancers employed at the club going back to 2005. Rick’s Caberet is owned by Peregrine Enterprises Inc, a unit of RCI Hospitality Holdings Inc.
RCI Chief Executive Eric Langan said in a statement the company believed it could ultimately pay about $9.5 million to $12.5 million, depending on the number of dancers eligible for the settlement.
“We believe it is in the best interest of shareholders to resolve this case now, to eliminate uncertainty and the ongoing cost of litigation,” Langan said.
The settlement is subject to court approval. A lawyer for the plaintiffs did not respond to requests for comment.
Shares in RCI Hospitality Holdings closed up 1.73 percent at $10.59 on the NASDAQ.
In 2013, U.S. District Judge Paul Engelmayer ruled that 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 were entitled to mininum wage protections under federal law.
In November, Engelmayer awarded the plaintiffs $10.9 million in damages for unpaid wages and withheld gratuities owed to dancers employed at Rick’s Cabaret.
The judge had left for trial whether RCI Hospitality Holdings should be jointly held liable with Peregrine Enterprises.
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.
Reporting by Nate Raymond in New York; Editing by Steve Orlofsky