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Final Order
Hearings Unit: Final Order
 
In the Matter of
GEOFFROY ENTERPRISES, INC.,
dba Babe´s Cabaret, and Richard D. Geoffroy, Respondents.

Case Number 16-96
Final Order of the Commissioner
Jack Roberts
Issued September 30, 1996.

 
FINDINGS OF FACT
ULTIMATE FINDINGS OF FACT
CONCLUSIONS OF LAW
OPINION
ORDER

 

 
SYNOPSIS
 
SYNOPSIS
 
Two wage claimants, who worked as nude dancers at Respondents´ bar, were employees and not independent contractors. Respondents failed to pay Claimants all wages due upon termination in violation of ORS 653.025(3) (minimum wages) and 652.140(1) and (2). Respondents´ failure to pay the wages was willful, and the Commissioner held Respondents liable for civil penalty wages, pursuant to ORS 652.150. ORS 652.140(1) and (2), 652.150, 653.025(3), 653.045, 653.055(1).
 

 
The above-entitled contested case came on regularly for hearing before Alan McCullough, designated as Administrative Law Judge (ALJ) by Jack Roberts, Commissioner of the Bureau of Labor and Industries for the State of Oregon. The hearing was held on March 28 and 29, 1996, in the Bureau of Labor and Industries conference room of the State Office Building, 165 E. 7th Avenue, Eugene, Oregon.
 
The Bureau of Labor and Industries (the Agency) was represented by Judith Bracanovich, an employee of the Agency. Melody Ann Cornelius (Claimant Cornelius) was present throughout the hearing. Jennifer Huston Brown (Claimant Brown) was present during the first day of the hearing, but not on the second day. Geoffroy Enterprises, Inc., dba Babe´s Cabaret (Respondent GEI) and Richard D. Geoffroy (Respondent Geoffroy) were represented by Brian Cox, Attorney at Law. Richard D. Geoffroy was present throughout the hearing.
 
The Agency called as witnesses Claimant Cornelius; Claimant Brown; Alan Nott, Respondents´ former disk jockey; and Eduardo Sifuentez, Compliance Specialist for the Agency.
Respondent called as witnesses Rebecca Lynn Driessen, a nude dancer at Babe´s Cabaret; George Turney III, doorman for Babe´s Cabaret; and Richard D. Geoffroy.
 
Having fully considered the entire record in this matter, I, Jack Roberts, Commissioner of the Bureau of Labor and Industries, makes the following Findings of Fact (Procedural and on the Merits), Ultimate Findings of Fact, Conclusions of Law, Opinion, and Order.
 
 
1) On July 28, 1995, Claimant Cornelius filed a wage claim with the Agency. She alleged that she had been employed by Respondents and that Respondents had failed to pay wages earned and due to her. At the same time that she filed the wage claim, Claimant assigned to the Commissioner of Labor, in trust for Claimant, all wages due from Respondents.
2) On October 23, 1995, Claimant Brown filed a wage claim with the Agency. She alleged that she had been employed by Respondents and that Respondents had failed to pay wages earned and due to her. At the same time that she filed the wage claim, Claimant assigned to the Commissioner of Labor, in trust for Claimant, all wages due from Respondents.
3) On September 27, 1995, through certified mail, the Agency served on Respondents an Order of Determination based upon the wage claim filed by Claimant Cornelius and the Agency´s investigation. The Order of Determination found that Respondents together owed a total of $8,122 in wages and $855 in civil penalty wages. The Order of Determination required that, within 20 days, Respondents either pay these sums in trust to the Agency, or request an administrative hearing and submit an answer to the charges.
4) On September 28, 1995, Respondents, through their attorney, filed an answer to the Order of Determination. Respondents´ answer also contained a request for a contested case hearing in this matter. Respondents´ answer denied that Respondent owed Claimant Cornelius unpaid wages or civil penalty wages, and further set forth the affirmative defenses that Richard D. Geoffroy was not the real party in interest, that Claimant Cornelius was an independent contractor, that Claimant Cornelius had filed the wage claim for the purposes of harassing Respondents, and that any monies owed Claimant Cornelius had been previously paid.
5) On November 11, 1995, through certified mail, the Agency served on Respondents an Order of Determination based upon the wage claim filed by Claimant Brown and the Agency´s investigation. The Order of Determination found that Respondents owed a total of $3,363 in wages and $855 in civil penalty wages. The Order of Determination required that, within 20 days, Respondents either pay these sums in trust to the Agency, or request an administrative hearing and submit an answer to the charges.
5) On November 21, 1995, Respondents, through their attorney, filed an answer to the Order of Determination. Respondents´ answer also contained a request for a contested case hearing in this matter. Respondents´ answer denied that Respondents owed Claimant Brown unpaid wages or civil penalty wages, and further set forth the affirmative defenses that Richard D. Geoffroy was not the real party in interest, that Claimant Brown was an independent contractor, that Claimant Brown had filed the wage claim for the purposes of harassing Respondents, and that any monies owed Claimant Brown had been previously paid.
6) On January 31, 1996, at the Agency´s request, the Hearings Unit issued a Notice of Hearing to the Respondents, the Agency, and the Claimants indicating the time and place of the hearing. Together with the Notice of Hearing, the Forum sent a document entitled "Notice of Contested Case Rights and Procedures" containing the information required by ORS 183.413, and a copy of the Forum´s contested case hearings rules, OAR 839-50-000 to 839-50-420.
7) On February 20, 1996, the ALJ issued a discovery order to the participants directing them each to submit a summary of the case, including a list of the witnesses to be called, and the identification and description of any physical evidence to be offered into evidence, together with a copy of any such document or evidence, according to the provisions of OAR 839-50-210(1). The summaries were due by March 11, 1996. The order advised the participants of the sanctions, pursuant to OAR 839-50-200(8), for failure to submit the summary.
8) On March 8, 1996, the Agency case presenter made an oral motion on behalf of the Agency and Respondents for postponement of the hearing based on additional time required to complete discovery. The motion was granted and the hearing was reset to convene on March 28, 1996. The due date for case summaries was revised to March 19, 1996.
9) The Agency and Respondents each submitted a timely case summary.
10) On March 20, 1996, Respondents submitted an addendum to their case summary and moved that the hearing be reset for hearing before an ALJ who was not located in the same office as the Agency Case Presenter, citing perceived inappropriate communications between the Case Presenter and ALJ by Respondents´ counsel as the basis for the motion.
11) On March 21, 1996, the ALJ denied Respondents´ motion to reset the hearing before a different ALJ on the basis that the perceptions of Respondents´ counsel were mistaken.
12) At the commencement of the hearing, Respondents´ counsel stated he had received the Notice of Contested Case Rights and Procedures and had no questions about it.
13) At the commencement of the hearing, pursuant to ORS 183.415(7), the ALJ explained the issues involved in the hearing, the matters to be proved or disproved, and the procedures governing the conduct of the hearing.
14) At the conclusion of the hearing, the ALJ requested that Respondents and the Agency submit closing arguments in writing by April 29, 1996. Written closing arguments were timely submitted by both parties.
15) During the hearing, the ALJ made rulings on certain motions of the participants which are set out in the next section of this Order. These rulings are hereby confirmed.
16) On May 10, 1996, Respondent GEI filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, staying the issuance of an Order against Respondent GEI.
17) On June 28, 1996, the ALJ issued a Proposed Order in this matter. Included in the Proposed Order was an Exceptions Notice that allowed ten (10) days for filing exceptions. The Hearings Unit received no exceptions.
 
RULINGS ON MOTIONS AND OBJECTIONS
 
Agency Objection to Certain Evidence
At the outset of the hearing, the Agency objected to the presentation of any evidence by Respondents purporting to show that any party other than Respondents owned Babe´s Cabaret ("Babe´s") during the period encompassed by the Claimants´ wage claims, claiming prejudice based on inability to prepare due to lack of prior notice of this affirmative defense. Respondents´ counsel confirmed that Respondents intended to present evidence tending to show that Kim Burnett, Rick Geoffroy, or Jim Hansen were owners and real parties in interest, based on a lawsuit filed three months earlier against Respondent Geoffroy in which Hansen asserted ownership of Babe´s based on an assignment from Burnett and Geoffroy. Respondents´ counsel confirmed that he had been aware of this lawsuit for three months, but had not brought it to the Agency´s attention prior to the morning of the hearing. The ALJ ruled that Respondents would not be allowed to present any evidence showing that anyone besides Respondents were owners of Babe´s during the period encompassed by the Claimants´ wage claims, citing prejudice to the Agency and Respondents´ failure to raise this affirmative defense issue in their answers or case summary.
Agency Objection to Respondents´ Proffered Memorandum of Law
At the outset of the hearing, Respondent offered the Forum a Memorandum of Law concerning the legal definitions of "employee" and "independent contractor". The Agency objected to their submission. The ALJ postponed ruling on the matter until the close of the hearing. At the close of the hearing, the ALJ ruled that the Memorandum would not be accepted. Subsequently, the Memorandum was submitted and accepted by the Forum as part of Respondents´ Closing Argument.
Agency Motion to Amend
At the conclusion of the Agency´s case, the Agency moved to amend the Order of Determination related to Claimant Cornelius to lower the amount of wages claimed due and owing to $5,900. The motion was granted.
 
FINDINGS OF FACT -- THE MERITS
 
1) Respondent Geoffroy opened Babe´s Cabaret as a nude dancing bar in Eugene, Oregon, in February 1994 and operated Babe´s as a sole proprietorship, with himself as the sole owner, through June 6, 1995. On June 7, 1995, Geoffroy Enterprises, Inc. (GEI), an Oregon corporation, assumed ownership of Babe´s. Respondent Geoffroy was GEI´s corporate president, sole shareholder, and the manager of Babe´s.
2) Respondent Geoffroy employed Kim Burnett, his daughter-in-law, as manager of Babe´s from the time Babe´s opened until the end of November 1994. During that time, Geoffroy lived in Arizona and infrequently came to Eugene.
3) Claimants Cornelius and Brown had both worked as nude dancers at Jiggles and the Great Alaska Bush Company, other nude dancing establishments in Eugene owned by Jim Hansen, immediately prior to working at Babe´s Cabaret.
4) Prior to Babe´s opening, Burnett solicited Claimants and a number of other nude dancers who had worked at Hansen´s establishments to work at Babe´s, promising some dancers wages and other normal employee benefits, such as workers´ compensation coverage, at the time of hire and promising others wages in the future for their work at Babe´s. Claimants had not received wages at Hansen´s establishments and the issue of whether or not they were entitled to receive wages for their work at Hansen´s establishments was being litigated at that time.
5) At Burnett´s request, both Claimants filled out employment applications, W-4 forms, and INS Employment Eligibility Forms before starting work at Babe´s.
6) Claimant Cornelius danced at Babe´s from February 19, 1994, through July 18, 1995. She regularly worked Tuesday through Friday nights, six hours each night. She danced under the stage name "Melody". She also worked as a cocktail waitress for a brief period of time in January 1995, which was reflected on Babe´s payroll records.
7) Claimant Brown danced at Babe´s from February 19, 1994, through April 7, 1995. She regularly worked Friday and Saturday nights, six hours each night. She danced under the stage name "Jenny".
8) Neither Claimant maintained a contemporaneous record of the specific hours and dates they worked at Respondents.
9) Respondents did not maintain a record of the specific hours and dates Claimants or any other dancers worked for Respondents.
10) Alan Nott, Respondents´ principal disk jockey, maintained a notebook from May 3, 1994, through June 21, 1995, in which he accurately wrote down what time dancers were scheduled to start work each night, the order in which they appeared in the nightly dance rotation, and the songs to which they danced. Nott regularly worked Tuesday through Friday, from 6 p.m. until closing, which varied from 2 a.m. until 2:30 a.m.
11) Approximately two dozen dancers worked at Babe´s at any given time while Claimants worked there. Other than the wage claimants and Rebecca Lynn Driessen, who had worked for Respondents since February 1994, there was no specific testimony presented showing how long other dancers had worked for Respondents.
12) Respondents´ policy throughout Claimants´ work at Babe´s was that dancers were prohibited from dancing at any of Jim Hansen´s establishments if they wanted to continue working at Babe´s. However, on rare occasions dancers danced at other nude dancing establishments for brief periods of time.
13) Respondent had several primary set shifts for which dancers were scheduled to work: 11:30 a.m. to 6 p.m., 4 p.m. to 10/12 p.m., 6 p.m. to midnight/2 a.m., and 8 p.m. to 2 a.m.
14) Dancers, including Claimants, requested the days and shifts they wanted to work by writing down their shift requests on a piece of paper and placing it in an envelope provided by management prior to the next week´s schedule being posted.
15) Dancers, including Claimants, were generally given the shifts they requested, but sometimes management would ask dancers to work unpopular shifts if not enough dancers had signed up for those shifts.
16) Dancers, including Claimants, were expected to perform several kinds of dances while working at Babe´s: (a) Individual "stage" dances, which consisted of 8 to 10 minutes of dancing to two different songs on stage while in a set rotation with all other dancers working at the time; (b) "Table" dances, which were dances performed by individual dancers at a customer´s table, at the customer´s request; and (c) "Party" dances, where all dancers were required to perform simultaneously for the benefit of one or more customers, typically for a bachelor or birthday party.
17) Dancers, including Claimants, received tips from customers for "stage" dances and table dances, but were required to perform "party" dances for free. There was a minimum tip of $5 for a topless and $10 for a nude "table" dance that was set by management, although the dancers could receive a larger tip for "table" dances. Babe´s received $15 to $25 for "party" dances, of which the dancers received nothing.
18) Dancers, including Claimants, received greater tips from "table" dances than "stage" dances. However, if a dancer´s turn in the rotation for "stage" dances came up while the dancer was doing a "table" dance, the dancer had to abandon the "table" dance and perform her "stage" dance.
19) The 8 to 10 minutes each dancer danced on stage in rotation was a period of time that was set by management, over which dancers had no control.
20) Dancers provided their own costumes, but were asked by management to change costumes during shifts.
21) Dancers, including Claimants, generally chose the songs to which they danced. These songs were played from CD´s (compact disks) that either belonged to Babe´s or the individual dancer. However, management reserved the right to censor songs, and in fact prohibited some songs from being played based on their style and content.
22) There were three stages at Babe´s upon which nude dancing was performed. Dancers, including Claimants, had no control over the number of stages that were open at any given time.
23) Although Babe´s served alcohol and food and had pool tables, television, and darts, nude dancing was the primary form of entertainment. Babe´s could not have remained in business without nude dancing.
24) Dancers did not need any specialized training or prior experience to work as nude dancers at Babe´s.
25) Dancers, including Claimants, had no money invested in Babe´s and no opportunity for profit or loss.
26) Claimants did not believe they could hire anyone to perform, or help perform, their work at Babe´s.
27) Respondents provided the stages, tables, lights, and stereo that the dancers, including Claimants, used in their performances, as well as the building in which the dances were performed.
28) Respondents advertised nude dancing in local periodicals. The Claimants never advertised themselves as nude dancers while they worked at Babe´s. However, Claimants were never told they couldn´t advertise themselves.
29) Dancers, including Claimant Cornelius, sometimes left Babe´s between stage rotations. Sometimes they were warned about leaving Babe´s too much.
30) Dancers, including Claimants, could leave work before their scheduled shift ended, but were expected to get permission first from Respondents´ doorman, bartender, or manager.
31) Dancers, including Claimants, were expected to "tip out" the bartender, doorman, and disk jockey by giving them approximately 10 percent of their tips. Burnett told Claimant Cornelius there would be repercussions, including not being allowed to leave early, or retaliation from the bartender, doorman, or disk jockey if she didn´t "tip out".
32) Dancers, including Claimants, regularly "tipped out" the bartender, doorman, and disk jockey.
33) While Claimants worked at Babe´s, management held periodic "staff" meetings that the bar staff, disk jockey, doorman, and dancers were required to attend.
34) Respondents also brought in "feature" nude dancers. Respondents contracted with these dancers to perform a specific number of days and hours and advertised their appearance. These dancers would perform longer stage sets and were allowed greater latitude in their physical contact with customers than Claimants and Respondents´ other regularly scheduled dancers.
35) Every February, a loggers´ convention (Loggers) is held in Eugene for several days. Loggers was the most lucrative time of year for dancers at Babe´s in 1994 and 1995. Claimants did not attend a "staff" meeting held just before Loggers in February 1995. As a result, they were barred by management from dancing at Babe´s during the Loggers. By arrangement of Babe´s management, both claimants danced at the Silver Dollar Saloon in Eugene during Loggers.
36) "Staff" meetings were conducted by management, who discussed OLCC regulations and "house rules" that applied to dancers and other persons employed by Respondents.
37) Nott kept notes of "staff" meetings held on July 18, 1994, October 10, 1994, February 8, 1995, and February 12, 1995. During the meetings, Nott wrote down "what was essentially said" in the same notebook in which he wrote down the time dancers were scheduled to start work each night, the order in which they appeared in that night´s dance rotation, and the songs to which they danced.
38) Kim Burnett presided over the July 18, 1994, and October 10, 1994, "staff" meetings. Respondent Geoffroy was living in Arizona at the time and not actively managing Babe´s and did not participate in these meetings. On December 1, 1994, Respondent Geoffroy began actively managing Babe´s and actively managed Babe´s throughout the remainder of Claimants´ work at Babe´s. Respondent Geoffroy was present at the February 8 and 12, 1995, meetings.
39) Some of the "house rules" applicable to dancers that were discussed at the July 18, 1994, "staff" meeting were as follows:
"(6) ´Trips´ [by dancers] to store are to be cut back to one trip/night.
"(7) You ask for the shifts, you must work them, or you will be fined.
"(8) Do not go to the store in your costumes. You must wear street clothes.
"(14) Boyfriends are allowed in only to drop you off and pick you up.
"(31) Table dance prices. $10.00 minimum. D.J.s are to announce this.
"(34) Dancers wanting to go home when there are no costomers [sic]. Summertime is slow. Work with it."
40) Some of the house rules applicable to dancers that were discussed at the October 10, 1994, "staff" meeting were as follows:
"(5) ´Going to the store´ -- Dancers abusing the privelege [sic].
"(6) Clothing on floor -- one outfit per night? Change your costumes more often.
"(7) Day girls -- no more table dances in far corner until doorman shows up."
41) Some of the house rules and statements applicable to dancers that were discussed at the February 8, 1995, "staff" meeting were as follows:
"(5) Kim is in charge of the dancers, and they are now employees."
41) Some of the house rules and statements applicable to dancers that were discussed at the February 12, 1995, "staff" meeting were as follows:
"-- Dancers -- tip our doormen, via Dick. They cover your asses.
"-- No stage dances during Loggers.
" -- No V.I.P. from bookings during Loggers.
"-- Do not go outside alone. A doorman will walk you out.
"-- Boy Friends [sic] are allowed in the building only 30 min. after he drops you off, or 30 min. before he picks you up.
" -- Notes w/Dick
" -- House Rules
"(1) Phone in if you will be late, or absent, 1/2 hr. before your scheduled shift. If you don´t call: 1st time warning; second time supensions [sic]; 3rd time fired.
"(5) If a customer grabs you, use discretion about hitting him.
"(11) See previous note about boyfriends.
"(14) Dancers will be paid from the time you are ready to dance until the time you finish your last set?"
42) Claimant Cornelius worked 1,242 hours at Babe´s. This number of hours was arrived at by calculating the total number of hours she would have worked at her regular schedule (see Finding 6), and subtracting those days she could recall being absent, plus any additional Tuesdays, Wednesdays, Thursdays, or Fridays in which her name had not been written down in Nott´s notebooks.
43) 84 of the hours worked by Claimant Cornelius were worked after June 6, 1995.
44) Claimant Cornelius earned a total of $5,899.50 while working at Babe´s. This sum was arrived at by multiplying 1,242 hours worked by $4.75 per hour. $5,500.50 of this sum was earned between February 19, 1994, and June 6, 1995.
45) Claimant Brown worked 708 hours at Babe´s. This number of hours was arrived at by calculating the total number of hours Brown would have worked at her regular schedule (see Finding 7), and subtracting those days Brown could recall being absent, plus any additional Fridays and Saturdays which Nott had worked and not written down her name in his notebooks.
46) Claimant Brown earned a total of $3,363 while working at Babe´s. This sum was arrived at by multiplying 708 hours worked by $4.75 per hour.
47) At times material, the minimum wage in Oregon was $4.75 per hour, pursuant to ORS 653.025(3).
48) Claimant Cornelius´s last day of work at Babe´s was on July 18, 1995. Respondent Geoffroy told her she would not be scheduled for work again after she sent a written demand to him for her wages on July 19, 1995.
49) Claimant Brown quit work at Babe´s on April 7, 1995, without prior notice.
50) Claimants were not paid any wages for their work as nude dancers at Babe´s.
51) Civil penalty wages were computed, in accordance with Agency policy, as follows: 6 hours (average number of hours worked each day) x $4.75 = $28.50 (average daily rate of pay) multiplied by 30 days = $855. This figure is set forth in the Order of Determination.
52) Respondents did not allege in their answers an affirmative defense of financial inability to pay the wages due at the time they accrued; nor did they provide any such evidence for the record.
53) The testimony of Claimant Cornelius was found to be generally credible, except that the Agency´s summary of her hours worked, based primarily on Nott´s records, showed she missed considerably more work than she testified to. The remainder of her testimony was found to be credible.
54) The testimony of Claimant Brown was found to be credible. She had the facts readily at her command and her statements were supported by documentary records. There is no reason to determine the testimony of the Claimant Brown to be anything except reliable and credible.
55) The testimony of Alan Nott was found to be credible. He had the facts readily at his command, and his statements were supported by his contemporaneous, handwritten, uncontrovert- ed notes. There is no reason to determine the testimony of Nott to be anything except reliable and credible.
56) The testimony of Eduardo Sifuentez was found to be credible. He had the facts readily at his command, his computations were accurate, and he was readily able to explain the basis of his computations. There is no reason to determine the testimony of Sifuentez to be anything except reliable and credible.
57) The testimony of Rebecca Driessen was not entirely credible. At the time of her testimony, she was still working at Babe´s. Her testimony was inconsistent on important points, and she tended to shade her testimony to favor Respondents. Her testimony was sometimes contradicted by the testimony of other witnesses, including Turney and Geoffroy. For example, she testified that attendance at "staff" meetings was not mandatory, a statement that was contradicted by every other witness, including herself when she subsequently testified that sometimes signs announcing the meetings were entitled "Mandatory Meeting." She testified that she had gone out for drinks with Claimant Cornelius, usually "more than 15 minutes", then later testified that she couldn´t specifically recall how long Cornelius left Babe´s for during her shift. Her memory, particularly with regard to "house rules", was selective. Finally, her demeanor was suspect, in that she became progressively more uncomfortable as she was asked specific questions. Accordingly, the Forum has disbelieved all of her testimony except that which was corroborated by other credible evidence or was uncontested.
58) The testimony of George Turney III was generally credible, with one significant exception. He testified that attendance at "staff" meetings was mandatory, but that there were no consequences for failure to show up. Based on his position at Babe´s, he had to have been aware that both Wage Claimants were barred from working at Babe´s during the lucrative 1995 loggers convention based solely on their failure to attend a "staff" meeting.
59) The testimony of Richard D. Geoffroy was inconsistent on important points, contradicted other credible testimony, and on one critical point (transfer of assets) was simply unbelievable. For example, he testified that he never referred to dancers as "employees" and did not recall being at a "staff" meeting where that was announced. Yet Nott´s notes from the February 8, 1995, "staff" meeting which Geoffroy attended, indicates dancers were told they "are now employees". He testified that a "set number of dancers" could sign up for a shift, then later denied having made that statement. He denied conducting a "staff" meeting on February 12, 1995, where dancers were told the consequences of being touched, for not showing up for work, and where other house rules were reiterated. However, Nott´s notes and testimony reveal that Geoffroy in fact made these statements. Finally, Geoffroy´s assertion that all of his ownership interest in Babe´s was transferred to Respondent GEI on July 7, 1994, the date GEI incorporated, is simply unbelievable in light of documents showing that GEI did not apply for a liquor license until late March 1995, that the document purporting to transfer all of Geoffroy´s assets to GEI on July 7, 1994, was not executed until July 8, 1995, and that Geoffroy did not transfer the lease rights to the property on which Babe´s was physically located until June 7, 1995. Accordingly, the Forum has disbelieved all of his testimony except that which was corroborated by other credible evidence or was uncontested.
 
 
1) From February 19, 1994, through June 6, 1995, Respondent Geoffroy was a person doing business as Babe´s Cabaret, a nude dancing bar, in the State of Oregon, and engaged the personal services of one or more persons in the operation of that business.
2) From June 7, 1995, through July 18, 1995, Respondent GEI was an Oregon corporation engaged in the operation of Babe´s Cabaret, a nude dancing bar, and engaged the personal services of one or more persons in the State of Oregon.
3) During the period of the wage claim, Claimant Cornelius was not an independent contractor. Respondents exercised significant control over her work. Her investment in the business was minor, consisting primarily of her costumes. Her opportunity for profit and loss was determined to a significant degree by Respondents. The performance of her job required little skill. She was retained for an indefinite period and worked for 16 months before her termination. As a matter of economic reality, she was dependent upon Respondents.
4) Between February 19, 1994, and June 6, 1995, Respondent Geoffroy suffered or permitted Claimant Cornelius to render personal services to him wholly in this state.
5) Between June 7, 1995, and July 18, 1995, Respondent GEI suffered or permitted Claimant Cornelius to render personal services to it wholly in this state.
6) During the period of the wage claim, Claimant Brown was not an independent contractor. Respondents exercised significant control over her work. Her investment in the business was minor, consisting primarily of her costumes. Her opportunity for profit and loss was determined to a significant degree by Respondents. The performance of her job required little skill. She was retained for an indefinite period and worked for 14 months before her termination. As a matter of economic reality, she was dependent upon Respondents.
7) Between February 19, 1994, and April 7, 1995, Respondent Geoffroy suffered or permitted Claimant Brown to render personal services to him wholly in this state.
8) The state minimum wage during 1994-1995 was $4.75 per hour.
9) During the period February 19, 1994, to June 6, 1995, Claimant Cornelius earned $5,500.50. Respondent Geoffroy owes Claimant Cornelius $5,500.50 in earned and unpaid compensation.
10) During the period June 7, 1995, to July 18, 1995, Claimant Cornelius earned $399. Respondent GEI owes Claimant Cornelius $399 in earned and unpaid compensation.
11) During the period February 19, 1994, and April 7, 1995, Claimant Brown earned $3,363. Respondent Geoffroy owes Claimant Cornelius $3,363 in earned and unpaid compensation.
12) Claimant Cornelius ceased her employment with Respondent Geoffroy on June 6, 1995.
13) Claimant Cornelius was discharged from her employment with Respondent GEI on or about July 21, 1995.
14) Claimant Brown quit her employment with Respondent Geoffroy on April 7, 1995.
15) Respondent Geoffroy willfully failed to pay Claimant Cornelius $5,500.50 in earned, due, and payable wages after she ceased employment with Respondent Geoffroy on June 6, 1995, and more than 30 days have elapsed from the due date of those wages.
16) Respondent GEI willfully failed to pay Claimant Cornelius $399 in earned, due, and payable wages immediately when she was discharged, and more than 30 days have elapsed from the due date of those wages.
17) Respondent Geoffroy willfully failed to pay Claimant Brown $3,363 in earned, due, and payable wages within five days, excluding Saturdays, Sundays and holidays, after she quit, and more than 30 days have elapsed from the due date of those wages.
18) Both Claimants had an average daily rate for the wage claim period of employment of $28.50. (6 hours per day x $4.75/hr. = $28.50.) Civil penalty wages, computed pursuant to ORS 652.150 and agency policy, equal $855 (Claimants´ average daily rate, $28.50, continuing for 30 days).
19) Respondents did not allege in their answers an affirmative defense of financial inability to pay the wages due at the time they accrued. Respondents did not provide any such evidence for the record at the hearing.
 
 
1) The Commissioner of the Bureau of Labor and Industries has jurisdiction over the subject matter and the Respondents herein. ORS 652.310 to 652.405.
2) Before the start of the contested case hearing, the Forum informed Respondents of their rights as required by ORS 183.413(2). The ALJ complied with ORS 183.415(7) by explaining the information described therein to the participants at the start of the hearing.
3) ORS 653.010 provides in part:
"(3) ´Employ´ includes to suffer or permit to work; * * *.
"(4) ´Employer´ means any person who employs another person * * *."
4) ORS 652.310 provides in part:
"(1) ´Employer´ means any person who in this state, directly or through an agent, engages personal services of one or more employees * * *.
"2) ´Employee´ means any individual who otherwise than as a copartner of the employer or as an independent contractor renders personal services wholly or partly in this state to an employer who pays or agrees to pay such individual at a fixed rate, based on the time spent in the performance of such services or on the number of operations accomplished, or quantity produced or handled."
During all times material herein, Respondents were employers and Claimants were employees subject to the provisions of ORS 652.110 to 652.200 and 652.310 to 652.405.
4) ORS 653.025 requires that:
" * * * for each hour of work time that the employee is gainfully employed, no employer shall employ or agree to employ any employee at wages computed at a rate lower than:
"(3) For calendar years after December 31, 1990, $4.75."
Respondents failed to pay Claimants the minimum wage rate of $4.75 for each hour of work time.
5) ORS 652.140(1) provides:
"Whenever an employer discharges an employee, or where such employment is terminated by mutual agreement, all wages earned and unpaid at the time of such discharge shall become due and payable immediately."
Respondent Geoffroy violated ORS 652.140(1) by failing to pay Claimant Cornelius all wages earned and unpaid immediately upon her cessation of employment with him on June 6, 1995. Respondent GEI violated ORS 652.140(1) by failing to pay Claimant Cornelius all wages earned and unpaid immediately upon Claimant Cornelius´s discharge.
6) ORS 652.140(2) provides:
"When an employee who does not have a contract for a definite period quits employment, all wages earned and unpaid at the time of quitting become due and payable immediately if the employee has given to the employer not less than 48 hours´ notice, excluding Saturdays, Sundays and holidays, of intention to quit employment. If notice is not given to the employer, the wages shall be due and payable within five days, excluding Saturdays, Sundays and holidays, after the employee has quit, or at the next regularly scheduled payday after the employee has quit, whichever event first occurs.
Respondent Geoffroy violated ORS 652.140(2) by failing to pay Claimant Brown all wages earned and unpaid within five days, excluding Saturdays, Sundays and holidays, after Claimant quit employment without notice.
7) ORS 652.150 provides:
"If an employer willfully fails to pay any wages or compensation of any employee whose employment ceases, as provided in ORS 652.140 and 652.145, then, as a penalty for such nonpayment, the wages or compensation of such employee shall continue from the due date thereof at the same rate until paid or until action therefor is commenced; provided, that in no case shall such wages or compensation continue for more than 30 days from the due date; and provided further, the employer may avoid liability for the penalty by showing financial inability to pay the wages or compensation at the time they accrued."
Respondent Geoffroy is liable for a civil penalty under ORS 652.150 for willfully failing to pay all wages or compensation to Claimant Brown as provided in ORS 652.140. Respondents Geoffroy and GEI are jointly liable for the civil penalty sought by the Agency for willfully failing to pay all wages or compensation to Claimant Cornelius when due as provided in ORS 652.140.
8) Under the facts and circumstances of this record, and according to the law applicable to this matter, the Commissioner of the Bureau of Labor and Industries has the authority to order Respondents to pay Claimants their earned, unpaid, due, and payable wages and the civil penalty wages, plus interest on both sums until paid. ORS 652.332.
 
 
Claimants Worked As Employees
Respondents contend that Claimants were not employees, but independent contractors. The Agency takes the opposite position.
In the past, this Forum has relied on Oregon case law that focuses on the employer´s retained right (emphasis added) to control the details and manner of performance of the claimant´s work to determine whether wage claimants were employees or independent contractors. Three primary questions have been asked to determine the employer´s retained right of control. Those questions, and their applicability to this case, are outlined below.
(1) Did the Employer have the right to detail how the Claimants would perform their work, or did the Claimants use their own methods, with the Employer having no control except as to the ultimate result?
Respondents determined the rotation of dancers on stage, the length of time each dancer could dance, the number of stages that were open, and retained the right to censor the dancer´s choice of songs. Respondents set the minimum fee for "table" dances and required dancers to interrupt the more lucrative table dances if their turn in the stage rotation came up while they were table dancing. Respondents required all dancers to perform "party" dances for free. Dancers decided which costumes they would wear, but were told to wear more than one costume per shift. Respondents retained the right to regulate how often dancers could leave the premises. The only part of the job Claimants and other dancers retained absolute control over was the content of their choice of costumes and content of their dances, subject to OLCC and vice regulations.
(2) Could the Claimants employ workers to perform, or help perform, the Claimant´s work for the Employer?
No evidence was presented to show that Claimants or other dancers ever employed anyone either to perform or help perform their work. However, due to the personal nature of the dancers´ work and the working arrangements at Babe´s, it strains the imagination to determine a capacity in which they could have employed someone to perform, or assist in performing their work.
(3) Who furnished the equipment, tools and materials the Claimants used in the work they performed for the Employer?
Claimants furnished their own costumes and bodies, and occasionally their own CDs. Respondents furnished the building, the stage, the lights, the stereo system, most of the CDs, and the inventory of beverages and refreshments.
The answers to these questions establish that Respondents retained the right to control and direct the details and manner in which Claimants performed their work to a substantial degree. Under the All Season tests, the Forum concludes that Claimants were employees, not independent contractors.
In its review of All Season and prior cases in which the All Season tests have been applied, the Forum finds that the tests are inherently impractical in the wage claim setting. This problem was first noted in All Season, where the forum found it could only determine the employer´s retained right to control the detail of how claimant performed his work by looking "to what actually occurred between the Claimant and the Employer." This was because there was no explicit agreement as to this right. Likewise, whether or not the claimant could employ workers to perform, or help perform, the claimant´s work for the employer could only be inferred from the circumstances, including the claimant´s subjective belief, because there was no specific agreement between the claimant and employer.
The Forum now abandons the All Season standard and in its place adopts the "economic reality" test used by federal courts for determining employee status under the Fair Labor Standards Act (FLSA). The FLSA test eliminates the problems cited above in applying the All Season tests by focusing on what actually occurred. Whereas the tests adopted by the Forum in All Season involved interpretations of statutes dealing with workers´ compensation issues and tax law, the FLSA test is specifically tailored to the resolution of wage claims. In addition, the relevant definitions of "employer" and "employ" in ORS chapter 653 were taken from the FLSA. While federal case law interpreting federal statutes and regulations that are similar to Oregon´s laws are not binding on the Forum, they are instructive and may be adopted as precedent in Oregon cases.
Federal courts have adopted an expansive interpretation of the definition of "employer" under the FLSA in order to effectuate "its broad remedial purposes." In Circle C Investments, Inc., 998 F2d 324 (5th Cir 1993), a case similar to this one, the court used the "economic reality" test to determine that nude dancers were employees under the FLSA. The focal point of the test was "whether the alleged employee, as a matter of economic reality, is economically dependent upon the business to which she renders her services". The court considered five factors to gauge the degree of the worker´s economic dependency, with no single factor being determinative. Those factors were:
"(1) The degree of control exercised by the alleged employer;
"(2) The extent of the relative investments of the worker and alleged employer;
"(3) The degree to which the worker´s opportunity for profit and loss is determined by the alleged employer;
"(4) The skill and initiative required in performing the job;
"(5) The permanency of the relationship."
This test is both easier to apply and more directly related to the definitions of "employer" and "employ" in ORS chapter 653 than the "retained right to control" test. The Forum adopts the "economic reality" test as articulated in Circle C Investments, Inc., for use in this and future wage claim cases to determine whether a claimant is an employee or independent contractor.
Application of the "economic reality" test to this case yields the following results:
(1) The degree of control exercised by the alleged employer.
Dancers (this term hereafter includes Claimants) were required to attend employee meetings, with consequences if they failed to attend. Dancers were limited in the number of times they could leave Respondents´ premises during their shifts. Respondents exercised censorship over the dancers´ choice of songs. Respondents established shifts with specific hours, from which dancers could choose which shift to work. Respondents determined the rotation of dancers on stage, the length of time each dancer could dance, and the number of stages that were open. Respondents set the minimum fee for "table" dances and required dancers to interrupt the more lucrative table dances if their turn in the stage rotation came up while they were table dancing. Dancers decided which costumes they would wear, but were told to wear more than one costume per shift. In contrast, the only parts of the job dancers absolutely controlled were the types of costume they wore and the content of their dances, subject to OLCC and vice regulations. In short, Respondents exercised control over the claimants and other dancers in a number of significant ways that indicate an employer-employee relationship.
(2) The extent of the relative investments of the worker and alleged employer.
Dancers furnished their own costumes and bodies, and occasionally their own CDs. Respondents furnished the building, the stage, the lights, the stereo system, and most of the CDs. Respondents also owned the liquor license, the inventory of beverages and refreshments, and advertised in the local media. The dancers´ investment was minor relative to Respondents´ and indicates employee status.
(3) The degree to which the worker´s opportunity for profit and loss is determined by the alleged employer.
Respondents´ responsibility for advertising, location, business hours, maintenance of facilities, aesthetics, and inventory of beverages and food played a significant role in attracting customers to the business. Once customers arrived at Respondents´ business, a dancer´s initiative, hustle, and costume significantly contributed to the amount of her tips. The record does not establish which of these factors contribute most substantially to a dancer´s opportunity for profit. However, dancers could only earn a profit or suffer a loss (which would presumably be limited to receipt of insufficient tips to cover costume expenses) because Respondents provided them with facilities in which to dance. This indicates an economic dependence by the dancers on Respondents.
(4) The skill and initiative required in performing the job.
Dancers required no specialized training or prior experience to perform their duties. Their initiative was limited to decisions involving costumes, dance routines, and the development of and maintenance of a rapport with customers. These facts indicate employee status.
(5) The permanency of the relationship.
Claimant Brown had worked at Babe´s for 14 months and Claimant Cornelius for 16 months when they stopped working at Babe´s. Rebecca Driessen had worked at Babe´s for 26 months as of the date of the hearing. These lengths of tenure are indicative of employee status.
After analyzing these factors, the Forum concludes that here, as in Circle C Investments, Inc., "the economic reality is that the dancers are not in business for themselves but are dependent upon finding employment in the business of others." Consequently, the dancers must be considered to be employees, not independent contractors.
Hours Worked
ORS 653.045 requires an employer to maintain payroll records. Where the Forum concludes that a claimant was employed and was improperly compensated, it becomes the burden of the Respondent to produce all appropriate records to prove the precise amounts involved. Where the employer produces no records, the Commissioner may rely on the evidence produced by the Agency "to show the amount and extent of [claimant´s] work as a matter of just and reasonable inference," and "may then award damages to the employee, even though the result be only approximate." Based on these rulings, the Forum may rely on the evidence produced by the Agency regarding the number of hours worked and rate of pay for Claimant.
Here, neither Respondents nor the Claimants maintained any contemporaneous record of hours or dates worked by the Claimants. At the Agency´s direction, Claimants recreated a record of hours worked based on their regular work schedule. When Respondents produced notebooks kept by their disk jockey reflecting most of the days that Claimants were present or absent, the Agency and Claimants conceded that it was an accurate record and modified the wage claims accordingly. There was no evidence presented of any specific dates that either Claimant was absent except those dates testified to by Claimants or those shown in Nott´s notebooks. Consequently, the Forum accepts those dates contained in Exhibits A-34 and A-39 as the dates actually worked by Claimants. As for the hours worked on each of those dates, Respondents presented no evidence to contest Claimant Brown´s claim for hours worked, but presented testimony that Claimant Cornelius worked fewer hours than those claimed because she took long breaks and sometimes left early. Claimant Cornelius herself acknowledged that she left Babe´s during shift and left work early on occasion. However, the forum has no way of determining which days she left Respondents´ premises during her shift, how long she left for, when she left early, and at what time she left. The burden is on Respondents to provide this evidence, and it has not been provided due to their failure to maintain records or produce persuasive "evidence to negative the reasonableness of the inference to be drawn from the employee´s evidence." Therefore, the forum accepts those hours contained in Exhibits A-34 and A-39 as the hours actually worked by Claimants.
Wages Due
ORS 653.025 prohibits employers from paying their workers at a rate less than $4.75 for each hour of work time. ORS 653.055(1) provides that "[a]ny employer who pays an employee less than the [minimum wage] is liable to the employee affected: (a) For the full amount of the wages, less any amount actually paid to the employee by the employer; * * *." In this case, it is undisputed that Respondents paid Claimants nothing. Therefore, Respondents owe Claimants Cornelius and Brown unpaid wages in the respective amounts of $5,899.50 and $3,363, plus penalty wages.
Penalty Wages
Awarding penalty wages turns on the issue of willfulness. Willfulness does not imply or require blame, malice, wrong, perversion, or moral delinquency, but only requires that that which is done or omitted is intentionally done with knowledge of what is being done and that the actor or omittor be a free agent. Respondents, as employers, had a duty to know the amount of wages due to their employee. Here, evidence established that Respondent Geoffroy or his agent knew he was not paying Claimants wages for their work and intentionally failed to pay any wages. Likewise, Respondent GEI, through its agent Richard D. Geoffroy, had knowledge that Claimants were not being paid wages for their work and intentionally failed to pay any wages. Evidence showed that Richard D. Geoffroy, as a Respondent and as an agent for Respondent GEI, acted voluntarily, and was a free agent. Respondents must be deemed to have acted willfully under this test, and thus are liable for penalty wages under ORS 652.150.
The only way an employer who has willfully failed to pay termination wages when due can avoid liability for penalty wages is to plead and prove the affirmative defense that the employer was financially unable to pay the employee the wages when due. It is a respondent´s burden to show the respondent´s financial inability to pay a claimant´s wages. Here, Respondents failed to either plead the defense in their answers or present evidence in support of that defense at the hearing. Consequently, Respondent Geoffroy is liable for $855 penalty wages to Claimant Brown, and Respondent Geoffroy and Respondent GEI are jointly liable for $855 in penalty wages to Claimant Cornelius.
 
 
NOW, THEREFORE, as authorized by ORS 652.332, the Commissioner of the Bureau of Labor and Industries hereby orders Richard D. Geoffroy to deliver to the Business Office of the Bureau of Labor and Industries, 800 NE Oregon Street, Portland, Oregon 97232-2109, the following:
1) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR MELODY CORNELIUS in the amount of $6,355.50, less appropriate lawful deductions, representing $5,500.50 in gross earned, unpaid, due, and payable wages and $855 in penalty wages; PLUS
a) Interest at the rate of nine percent per year on the sum of $5,500.50 from July 21, 1995, until paid; PLUS
b) Interest at the rate of nine percent per year on the sum of $855 from August 21, 1995, until paid.
2) A certified check payable to the Bureau of Labor and Industries IN TRUST FOR JENNIFER HUSTON BROWN in the amount of $4,218, less appropriate lawful deductions, representing $3,363 in gross earned, unpaid, due, and payable wages and $855 in penalty wages; PLUS
a) Interest at the rate of nine percent per year on the sum of $3,363 from April 14, 1995, until paid; PLUS
b) Interest at the rate of nine percent per year on the sum of $855 from May 14, 1995, until paid.
"Dick" is Respondent Geoffroy.
Both Claimants worked six hours per day and are entitled to the same civil penalty wages.
The Order of Determination in Claimant Cornelius´s case named both Respondents as an "Employer" and sought penalty wages in the total amount of $855. The Forum notes that each Respondent, as a separate employer, is technically liable for a separate $855 in penalty wages, in as much as the computation of penalty wages is tied to the date that a Claimant ceases working for an individual employer. Claimant Cornelius ceased working for Respondent Geoffroy on June 6, 1995, by virtue of the transfer of ownership of Babe´s and has not been paid by Respondent Geoffroy, then ceased working for Respondent GEI six weeks later and has not been paid.
Bowser v. State Industrial Accident Commission, 182 Or 42 (1947); Butts v. State Industrial Accident Commission, 193 Or 417 (1951); Oremus v. Oregon Publishing Company, et al, 11 Or App 444 (1972). Herff Jones Co. v. Tax Commission, 247 Or 404 (1967). Bowser, Butts, and Oremus interpreted statutes dealing with workers´ compensation issues. Herff Jones interpreted taxation law.
In the Matter of All Season Insulation Company, Inc., 2 BOLI 264 (1982). Id. at 278.
Id.
In the Matter of Martin´s Mercantile, 12 BOLI 262 (1994); In the Matter of U.S. Telecom International, 13 BOLI 114 (1994). All Season, supra, at 274.
Id. at 275.
Bower, Butts, Oremus, supra at n.4.
Herff Jones, supra at n.4.
Northwest Advancement v. Bureau of Labor, 96 Or App 133, 136 (1989), rev den 308 Or 315 (1989).
In the Matter of Kenneth Williams, 14 BOLI 16, 25 (1995); In the Matter of C & V, Inc., 3 BOLI 152, 160 (1982).
Hale v. State of Arizona, 967 F2d 1356 (9th Cir 1992), rehearing granted, on rehearing 993 F2d 1387, cert den 114 SCt 386 (1993); Real v. Driscoll Strawberry Associates, Inc., 603 F2d 748 (9th Cir 1979).
Circle C Investments, Inc., 998 F2d 324, 327 (5th Cir 1993). Id.
Id. at 329.
Anderson v. Mt. Clemens Pottery Co., 328 US 680 (1946); In the Matter of Dan´s Ukiah Service, 8 BOLI 96, 106 (1989).
Anderson v. Mt. Clemens Pottery Co., 328 US at 687-88. Id.
Sabin v. Willamette Western Corp., 276 Or 1083, 557 P2d 1344 (1976).
McGinnis v. Keen, 189 Or 445, 221 P2d 907 (1950); In the Matter of Jack Coke, 3 BOLI 238, 242-43 (1983).
See ORS 652.150, 183.450(2), and OAR 839-50-260(3). See also In the Matter of Jorrion Belinsky, 5 BOLI 1, 10 (1985); In the Matter of Mega Marketing, 9 BOLI 133, 138 (1990).