Ninth Circuit ruling puts HR leaders on alert over retaliation and worker status – are your policies up to date?
A federal appeals court has clarified how retaliation claims under the Fair Labor Standards Act impact employer liability and worker classification for insurance HR leaders.
The case involves Zoe Hollis, a dancer at Sassy’s, a Portland strip club, who brought a collective action against the club’s owners and managers. According to the complaint, Hollis alleged that Sassy’s misclassified its dancers as independent contractors rather than employees, which, the complaint claims, allowed the club to avoid paying minimum wage and overtime. The complaint further alleges that Sassy’s required dancers to pay “house fees” for each shift and to tip bartenders, DJs, and bouncers, while enforcing detailed rules about scheduling, appearance, and conduct.
After Hollis filed the lawsuit, Frank Faillace – a partner and manager at both Sassy’s and another club, Dante’s – emailed Hollis to cancel a scheduled performance at Dante’s. In the email, Faillace cited the lawsuit against Sassy’s as the reason for the cancellation, expressing concern about legal risks for Dante’s. Hollis then amended the complaint to allege that this cancellation constituted unlawful retaliation under the FLSA.
The district court granted summary judgment to the defendants, holding that Hollis could not bring a retaliation claim because they were not employed by Dante’s at the time of the alleged retaliation. However, the Ninth Circuit reversed this decision. The appellate court held that the FLSA’s anti-retaliation provisions do not require the plaintiff to be a current employee of the alleged retaliator. Instead, the law covers retaliation by an employer or any person acting directly or indirectly in the interest of an employer in relation to an employee.
The Ninth Circuit remanded the case to the district court for further proceedings. The lower court was instructed to determine whether Hollis was an employee of Sassy’s under the “economic realities” test and whether Faillace’s actions constituted retaliation as defined by the FLSA.
For HR professionals, this case highlights the importance of correctly classifying workers and understanding the scope of anti-retaliation protections. The decision underscores that adverse actions taken against workers for filing complaints can lead to legal exposure, even if the worker is not currently employed by the person or entity taking the action.
As businesses increasingly rely on flexible and non-traditional work arrangements, the distinction between employee and independent contractor remains a critical compliance issue. The Ninth Circuit’s ruling is a reminder for HR leaders to review their classification practices and ensure that anti-retaliation policies are robust and comprehensive. The case is ongoing, with further proceedings to come, but the court’s decision has already clarified important legal standards for the HR and insurance industries.
