Temptations

National Labor Relations Board - Board Decisions

Dec 20, 2001

337 N.L.R.B. 376 (N.L.R.B. 2001)

376 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Jonbruni, Inc., d/b/a Temptations and Hima
Narumanchi and Tracy Buel. Cases 20–CA–
28393 and 20–CA–28525
December 20, 2001
DECISION AND ORDER
BY CHAIRMAN HURTGEN AND MEMBERS LIEBMAN
AND WALSH
On November 2, 1999, Administrative Law Judge
Mary Miller Cracraft issued the attached decision. The
General Counsel filed exceptions and a supporting brief,
and the Respondent filed a brief opposing the exceptions.
Additionally, the Charging Parties and the Respondent
filed cross-exceptions, and the Respondent filed a brief
supporting its cross-exceptions.
The Board has considered the decision and the record
in light of the exceptions, cross-exceptions and briefs,
and has decided to affirm the judge’s rulings, findings,1
and conclusions and to adopt the recommended Order.
We find it unnecessary to consider the judge’s finding
that the Respondent’s dancers are employees within the
meaning of Section 2(3) rather than independent contrac­
tors. Assuming for purposes of disposition of this case
that the dancers are statutory employees, we agree with
the judge’s determination that the Respondent’s annual
gross volume of business does not meet the Board’s re-
tail standard for discretionary jurisdiction.
The jurisdictional issue the judge decided was whether
compensation paid by the Respondent’s customers di­
rectly to employees—in this case the dancers’ tips and
fees—should be included in calculating the Respondent’s
gross volume of business. As fully set forth in her deci­
sion, the judge found it inappropriate to include these
funds, relying primarily on Love’s Wood Pit Barbecue
Restaurant, 209 NLRB 220 (1974). The relevant holding
in Love’s is that employer deductions from employees’
pay for tips (so-called “tip credits”) do not count in the
calculation of the employer’s gross business volume be-
cause the tips themselves—a part of employees’ com­
pensation paid by customers—do not count in these cal­
culations. Id. at 221.
Our dissenting colleague would assert jurisdiction, re-
lying primarily on certain cases from the taxicab indus­
try. Those cases, as interpreted by our colleague, do cast
some doubt on the propriety of excluding this kind of
1 The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an adminis­
trative law judge’s credibility resolutions unless the clear preponder­
ance of all the relevant evidence convinces us that they are incorrect.
Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362
(3d Cir. 1951). We have carefully examined the record and find no
basis for reversing the findings.
employee compensation from gross volume calculations.
However, in those cases the Board did not address ex­
plicitly the question of customer-paid emp loyee compen­
sation, such as tips, in the context of gross business vol­
ume. In contrast, the Board in Love’s did explicitly con­
sider the central issue presented in this case.2 Following
Love’s, moreover, is consistent with the Board’s basic
policies regarding discretionary jurisdiction.
Siemons Mailing Service, 122 NLRB 81 (1958), is the
seminal Board decision concerning current discretionary
jurisdictional standards. The Board observed there that
the goal of these standards was a more efficient focus of
the Board’s resources on the resolution of substantive
legal issues. This would be accomplished because the
new, bright-line standards would avoid the protracted
investigation and litigation of preliminary jurisdictional
matters that had plagued the Board in the past. Id. at 83–
84. In a companion case to Siemons, Carolina Supplies
& Cement Co., 122 NLRB 88 (1958), the Board estab­
lished the current discretionary standard for retail enter­
prises: $500,000 in gross volume of business. Consistent
with the Siemons goal of swift determination of discre­
tionary jurisdictional questions, the Board noted that the
new standard dispenses with previous, time-consuming
methods of evaluating retail jurisdiction, because gross
business volume calculations “are readily obtainable and
their production places no hardship upon employers.” Id.
at 89.
In this case, considerable time and resources have been
spent in litigating the question of whether the dancers’
tips and fees should be calculated in the Respondent’s
gross volume of business. It is fair to assume that consid­
erable resources were also spent in investigating this
question. The protracted nature of this preliminary, non-
substantive litigation has been due in large part to the
fact that the funds in question were never in the Respon­
dent’s possession, and thus the calculations were not
“readily obtainable.”
As indicated above, our dissenting colleague’s position
lacks controlling support in Board precedent. In addition,
by advocating an assertion of jurisdiction based on the
record in this case, he is endorsing an approach which is,
2 We see no basis for distinguishing Love’s on the basis that tip in-
come there was only part of employees’ compensation. The issue is
whether customer-paid employee compensation must be counted to-
ward gross business volume. What matters is the form of the compen­
sation, not the proportion of an employee’s total earnings that it repre­
sents.
Nor does it matter that the tip credits in Love’s were deducted from
employee paychecks. A deduction from employee pay constitutes more
revenue for the employer, and yet that revenue was not considered as
gross business volume for jurisdictional purposes.
337 NLRB No. 35
TEMPTATIONS 377
at the very least, inconsistent with Siemons, Carolina,
and fundamental Board jurisdictional policy.
ORDER
The recommended Order of the administrative law
judge is adopted, and the complaint is dis missed.
MEMBER WALSH, dissenting.
The consolidated complaint in this case alleges that the
Respondent violated Section 8(a)(1) of the Act by termi­
nating alleged discriminatee Hima Narumanchi and by
refusing to reinstate alleged discriminatee Tracey Buel
because of their activities on behalf of the Exotic Danc­
ers Alliance and other protected, concerted activity.
However, the judge did not resolve these issues. After
counsel for the General Counsel presented his case in
chief, the judge granted the Respondent’s motion to dis­
miss the complaint. In this regard, although the judge
found that Narumanchi and Buel were statutory employ­
ees entitled to the protection of the Act, and not inde­
pendent contractors as the Respondent contended, she
further found that the Respondent’s gross annual income
did not satisfy the Board’s discretionary jurisdictional
standard for retail stores ($500,000), which the parties
agreed is applicable here. My colleagues summarily
adopt the judge’s dismissal of the complaint.
Contrary to the judge and my colleagues, I find that the
Respondent’s gross annual income satisfies the Board’s
discretionary jurisdictional standard and that therefore
the Board should assert jurisdiction here. As set forth
below, the judge erroneously failed to consider the mo n­
ies received by the dancers themselves as compensation
for the purposes of determining whether the Board
should exe rcise its discretion to assert jurisdiction. The
judge’s conclusion was based both on a misreading of
Board precedent, and on a failure to fully appreciate that
the purposes behind the Board’s discretionary jurisdic­
tional standards would be best served by including the
receipts of the dancers in that determination. Because, as
the judge acknowledged, the Respondent’s total receipts
clearly satisfy the Board’s retail standard for asserting
jurisdiction if the receipts of the dancers are included, I
would reinstate the consolidated complaint and remand
the case to the judge for resolution of the 8(a)(1) allega­
tions contained therein.
As an initial matter, I agree with the judge that Naru­
manchi and Buel are statutory employees entitled to the
protection of the Act. In reaching this conclusion, I rely
especially on the judge’s findings, in applying the analy­
sis set out in the Restatement (Second) of Agency, Sec­
tion 220, that the Respondent is in business as a club
providing erotic dance performances, that “[t]he dancers
‘are’ the [Respondent’s] business,” and that “absent ex­
otic dancers, Respondent would not be in business.” I
rely on these factors especially because where the per­
formances of individuals is the “product” of the business,
where, indeed, as here, the performances are the busi­
ness, there is a strong mutual interest between the owners
of the business and the performers who produce its
“product” to ensure the success of the business. In these
circumstances, it would flaunt reality to define the exotic
dancers as independent contractors.
Having found that the exotic dancers, including Naru­
manchi and Buel, the alleged discriminatees here, are
statutory employees entitled to the Act’s protection, the
judge then deprived them of that protection by finding
that the Respondent’s gross annual income did not satisfy
the Board’s discretionary jurisdictional standard for retail
stores.1 Contrary to the judge, I find that the Respon­
dent’s gross annual income satisfies the Board’s discre­
tionary standard.
The issue here is whether the Board should include the
dancers’ compensation in the Respondent’s gross annual
income for the purpose of determining whether the Re­
spondent satisfies the Board’s discretionary jurisdictional
standard of $500,000. My colleagues adopt the judge’s
finding that this compensation should not be so included.
I disagree.
The facts, in brief, are as follows. The parties stipu­
lated that the Respondent’s gross revenues for 1997 were
$352,221.96. This amount includes the $50 performance
or stage fee which the dancers pay to the Respondent
each evening that they perform, but does not include the
dancers’ compensation, which the judge found to be
$162,000 for calendar year 1997. As to the dancers’
compensation, the dancers receive “tips” from the Re­
spondent’s customers.2 The dancers also receive fees
from individual customers with whom the dancers ar­
range to perform lap dances. (While the dancers arrange
with customers on an individual basis the amount of the
lap dance fees, the Respondent sets the parameters for
1 As explained by the judge at fn. 11 of her decision, the Respondent
admitted, in effect, that it satisfies the Board’s statutory jurisdictional
standard and therefore that is not an issue here.
2 I shall use the term “tips” to denote the moneys which the dancers
receive for their dance performances from customers because that is the
term used by the judge in her decision. However, the term “tips” is
misleading because it implies that the dancers receive compensation
from the Respondent and that the “tips” are simply an addition to that
income, much as tips are additional income to waiters and waitresses.
However, that is not the case here. The dancers’ “tips,” along with
their lap dance fees (see above), are the dancers’ sole source of income.
Thus, the “tips” which the dancers receive from customers are the
dancers’ compensation, not an addition to their compensation. As
explained below in the discussion of Love’s Wood Pit Barbecue Res­
taurant, 209 NLRB 220 (1974), the judge failed to make this distinc­
tion and therefore erred in her analysis of that case.
378 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
those fees and the Respondent also offers customers lap
dance sales, i.e., two lap dances for the price of one,
without prior notice to the dancers.)
While the judge found that the $50 performance or
stage fees which the dancers paid to the Respondent
should be included in the Respondent’s gross annual in-
come, she further found that the rest of the dancers’
compensation,3 the tips, and lap dance fees, which they
received from customers should not be included in the
Respondent’s gross annual income. The judge’s sole
basis for reaching this conclusion was that the employ­
ees’ compensation goes directly to the employees from
the Respondent’s customers rather than first to the Re­
spondent and then to the employees.
For the reasons explained below, I find that the judge
erred in her analysis of the relevant cases and that, based
on her misreading of those cases, she made analytically
determinative the fact that the dancers did not pass on to
the Respondent the money which they received as tips
and lap dance fees. Since a proper reading of these cases
establishes that this fact is analytically meaningless in
resolving the issue presented, the judge reached the
wrong conclusion.
While the judge found that “[n]one of the authorities
cited [by counsel for the General Counsel and the Re­
spondent] is clearly controlling,” she found specifically
that the taxicab cases relied on by counsel for the Ge n­
eral Counsel, Supreme, Victory, & Deluxe Cab Cos., 160
NLRB 140 (1966) (Supreme), and Major Cab Co. 255
NLRB 1383 (1981),4 were not analogous to the present
case. Rather, she found that in those cases, Supreme and
Major Cab, the taxicab drivers passed their fares on to
the companies and that it was on that basis that the driv­
ers’ fare receipts were included in the companies’ gross
annual income. As explained below, the judge’s analysis
of these cases is flawed because she clearly erred in find­
ing that the taxicab drivers, the employees, passed their
fare earnings on to the companies, the employers.
3 I find that the $50 stage fees which the dancers pay to the Respon­
dent should be included in the dancers’ compensation because it is clear
that the dancers pay the $50 stage fees out of the money which they
receive from customers each evening. That is, although on some eve­
nings dancers may not be able to cover the stage fee out of the money
they earn that evening, as a general rule the dancers must be able to pay
the $50 stage fee out of their earnings for that evening or they would
never earn any money at all.
4 Although the judge also discussed Checker Cab Co., 141 NLRB
583 (1963), I find that case distinguishable because while here the issue
is whether the compensation of employees should be attributable to the
employer, there the Board specifically found “Checker and each of its
members to be joint employers . . . and therefore deem[ed] it appropri­
ate to combine the gross revenues of all members for jurisdict ional
purposes.” Id. at 587 (footnote omitted, emphasis added).
In Supreme , the taxicab companies, which the Board
found to be a single employer, stated that their only in-
come was from the franchise fees which the cab owners
paid to the companies and from the sale of gasoline to
the taxicab drivers. Since the amount of the franchise
fees ($129,360 annually) and the amount of the gasoline
sales ($92,708) did not satisfy the Board’s discretionary
standard of $500,000, the Board considered whether it
would be appropriate to include the gross receipts of all
the drivers (i.e., the rent-drivers and driver-owners) in
determining whether the companies’ volume of business
satisfied the Board’s dis cretionary jurisdictional stan­
dard. The Board found that it would be appropriate to
include the drivers’ gross receipts in making this deter­
mination because “the relationship which exists between
the Companies and the rent-drivers and driver-owners is
one of employment.” Supreme , 160 NLRB at 143–144
(footnote omitted).
Since the companies had no record of the taxicab own­
ers’ and drivers’ gross receipts, the Board subpoenaed
the taxicab owners and drivers to testify about their in-
come. Not all drivers responded to the subpoenas, and,
of those that did, the testimony varied widely. Taking
into account the credited testimony and making projec­
tions therefrom, the Board found that the full-time driv­
ers’ gross combined receipts would total $264,000 annu­
ally and that the part-time drivers’ gross receipts would
not be less than $271,752 annually. Adding all the re­
ceipts together gave a total of at least $535,752, substan­
tially more than the required $500,000.
The Board went on to explain that the correctness of
these calculations and projections was supported by the
fact that if the amounts which the drivers paid to the
companies for the franchise fees and gasoline were sub­
tracted from their gross receipts, the estimated gross in-
come of the drivers would be $313,752, or $3200 per
taxicab. The Board found, in effect, that this amount was
appropriate because from it the owners would have to
“obtain sufficient money to cover the cost of deprecia­
tion, repairs, new tires, and batteries. . . . [and] at least 48
full-time drivers and some 67 part-time drivers must de-
rive earnings for their work.” Id at 146 (footnote omit­
ted).
Having found that the companies satisfied the Board’s
discretionary jurisdictional standard, the Board also as­
serted jurisdiction on another basis. Citing Tropicana
Products, 122 NLRB 121 (1958), the Board stated “that
where statutory jurisdiction exists [the Board] will assert
jurisdiction in any case in which an employer has re-
fused, upon reasonable requests by Board agents, to pro-
vide the Board or its agents with information relevant to
the Board’s jurisdictional standard.” Supreme , 160
TEMPTATIONS 379
NLRB at 146. However, the Board went on in Supreme
to distinguish that case from Tropicana on the ground
that the companies in Supreme had “not refused to give
information in the sense that they had declined to pro­
duce that which they are capable of producing.” Id.
(Emphasis added.) Rather, the Board found that the “net
effect” of the absence of records and failure to respond to
subpoenas upon the Board’s ability to discharge its statu­
tory functions was little different from the refusal to sup-
ply information involved in Tropicana. Id.
From this discussion, it is apparent that the companies
in Supreme never received the taxicab owners’ and driv­
ers’ gross revenues, i.e., their fares, because if they had,
the issue would never have arisen in the first place as to
whether it was appropriate to include the drivers’ gross
revenues in determining the companies’ gross annual
income. That is, if the companies had received the driv­
ers’ fares, those revenues would automatically have been
included in the companies’ gross annual income without
discussion, just as the income from franchise fees and
gasoline sales were included. Thus, only the fact that the
companies never received the drivers’ gross revenues can
explain why the Board had to resolve the issue of
whether it was appropriate to include those revenues in
calculating the companies’ gross revenues. Further, the
fact that the Board specifically explained in its analysis
of the Tropicana issue that the companies had not re-
fused to supply this information, but were simply not
“capable” of producing it, supports a finding that the
companies never received the drivers’ gross revenues.
The Board nevertheless found that those revenues should
be included in calculating the comp anies’ gross revenues
because the taxicab owners and drivers were the em­
ployees of the companies. Major Cab Co., supra, is not
to the contrary.5
Thus, contrary to the judge’s reading of both Supreme
and Major Cab Company, a proper reading of these cases
establishes that the taxicab owners and drivers did not
pass their fares to the companies. These cases are there-
fore analogous to the present case and require a finding
5 Indeed, the judge in Major Cab Co. relied, inter alia, on the
Board’s decision in Supreme, supra, as support for the proposition that
“[g]ross receipts of all drivers [the employees] is an appropriate method
of determining whether or not a taxicab company [the employer] satis­
fies the Board’s discretionary standard.” Major Cab Co., 255 NLRB at
1384 fn. 7. While the judge stated in her decision here that there is no
evidence in Major Cab regarding whether the drivers retained their
fares, as explained at fn. 6 below, that is not the issue. The issue is
whether the drivers passed their fares on to the company. Contrary to
the judge, I find that the judge’s inclusion in Major Cab of an explana­
tion of why it was appropriate to include the fares of the drivers in
calculating the Respondent’s gross annual income, and his reliance on
Supreme in that discussion, warrant a finding that the drivers in Major
Cab, as in Supreme, did not pass their fares on to the taxicab company.
here that the compensation of the dancers, who are, after
all, employees of the Respondent, should be included in
calculating the Respondent’s gross annual income.6
The inclusion of the dancers’ tips and lap dance fees in
the Respondent’s gross revenues is not only warranted
under the taxicab cases discussed above, it is also fully
compatible with the Board’s approach, in determining an
employer’s gross annual income for discretionary juris­
diction purposes, of considering the overall scope of the
employer’s business enterprise itself, rather than just the
employer’s own receipts. In Pit Stop Markets, 279
NLRB 1124 (1986), for example, the Board held that the
total amount of the gasoline sales at the employer’s
premises were includable in the employer’s gross reve­
nues although all proceeds from the sale of gasoline were
passed on to the gasoline supplier which then remitted a
commission to the employer as its share of the gasoline
sales. As the Board explained, “it is the gross volume
sales amounts to which the Board looks in determining
jurisdiction, not profit margin or some other yardstick.”
Id. at 1125. Likewise in the present case, where the
dancers produce the “product” that is the essential busi­
ness of the Respondent, i.e, their exotic dances, a calcula­
tion of the Respondent’s gross volume sales amount
should include the tips and fees from the sale of the Re­
spondent’s product, the dances.
Further, Love’s Wood Pit Barbecue Restaurant, 209
NLRB 220 (1974), the case which the judge found was
analogous to the present case, and on which she relied to
find that the dancers’ compensation should not be in­
cluded in the Respondent’s gross annual income, is inap­
posite. In that case, the issue was whether the amount of
the meal credits and tip credits which the employer de­
ducted from its waitresses’ paychecks should be included
in calculating the employer’s gross annual income.
While the Board found that these amounts should not be
so included, that finding has no relevance here because
the issue there, unlike here, was whether amounts which
the employer deducted from paychecks should be attrib-
6 In finding to the contrary, the judge erred by relying on the Board’s
discussion of the soundness of its projections as to the drivers’ gross
income in Supreme, supra, to find that that discussion “refutes any idea
that the drivers retained their fares.” Judge’s decision at fn. 17. The
drivers did indeed pass their fare receipts on to the taxicab owners, but
the owners, contrary to the judge’s apparent conclusion, were not the
companies. As explained above, the Board specifically found in Su­
preme that the owner-drivers and rent-drivers were employees of the
taxicab companies. Thus, the fact that the drivers passed their fares on
to the taxicab owners, or, as the judge put it, that the drivers did not
retain their fares, is analytically immaterial to the issue presented. The
issue here is whether, in fact, the taxicab owners and drivers passed
their fare receipts to their employer, the companies. As shown above,
they did not.
380 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
utable to the employer in determining gross annual in-
come.
Finally, while the judge apparently relied on the state­
ment in Love’s Wood Pit Barbecue Restaurant, 209
NLRB at 220, to the effect that the tips themselves were
not included as part of the Employer’s gross volume of
sales or otherwise treated as income, to find that the tips
here, and, by extension, the lap dance fees, should not be
included in the Respondent’s gross annual income, the
judge’s reliance is misplaced. As explained above at
footnote 2, the term “tips” in the present case is not used
in the same way that it is used in Love’s Wood Pit Bar­
becue Restaurant. In Love’s Wood Pit Barbecue Restau­
rant, the tips which the waitresses received were in addi­
tion to the pay which they received from the employer.
In the present case, the tips and lap dance fees are the
dancers’ sole income.
In sum, Supreme and Major Cab fully support a find­
ing that the dancers’ tips and fees should be included in
the Respondent’s gross annual income for the purpose of
determining whether the Respondent satisfies the
Board’s discretionary jurisdiction standard. The inclu­
sion of the dancers’ tips and fees is fully justified be-
cause, as the Board explained in Pit Stop Markets, the
Board considers an employer’s “gross volume sales
amounts” in determining whether the employer satisfies
the Board’s discretionary jurisdiction standard. This is
because the purpose of the Board’s discretionary stan­
dards is to determine whether the Respondent does suffi­
cient business, in the aggregate, for us to conclude that
any unfair labor practices it has committed could have
had enough of an effect on interstate commerce that it
would effectuate the purposes and policies of the Act for
us to take jurisdiction. In this case, the monies received
by the dancers, who are the essence of the Respondent’s
business, must be included for us to make that determina­
tion. As set forth above, this result is fully compatible
with Board precedent. As established by the taxicab
cases, it is immaterial whether or not the receipts first
pass through the hands of the employer before they are
received by the employees as compensation. And in my
view, by failing to include the dancers’ receipts, the
judge and the majority have abdicated their responsibility
in this case to look at the totality of the Respondent’s
business in order to determine whether, in our discretion,
we should assert jurisdiction and decide the unfair labor
practice allegations. An examination of the total receipts
of the Respondent’s business in this case leads to the
inescapable conclusion that we should indeed assert ju­
risdiction.
For all these reasons, I would reverse the judge’s dis­
missal of the consolidated complaint, reinstate the con­
solidated complaint, and remand the case to the judge for
resolution of the unfair practice violations alleged
therein.
Margaret M. Dietz, Esq., for the General Counsel.

Robert Leinwand, Esq. and Bethany M. Kaye, Esq. (Littler

Mendelson), of San Francisco, California, for the Respon­
dent.
DECISION
STATEMENT OF THE CASE
M ARY M ILLER CRACRAFT, Administrative Law Judge. These
cases were tried in San Francisco, California, on June 22–25
and July 12–13, 1999. Hima Narumanchi, an individual, filed
the charge in Case 20–CA–28393 on March 30, 1998. Tracey
Buel, an individual, filed the charge in Case 20–CA–28525 on
June 12, 1998. The consolidated complaint issued on March 17,
1999, alleges that Jon Bruni, Inc. d/b/a Temptations (Respon­
dent) violated Section 8(a)(1) of the National Labor Relations
Act1 by terminating Narumanchi and refusing to reinstate Buel
because of their activities on behalf of the Exotic Dancers Alli­
ance and other protected, concerted activity. At the close of the
General Counsel’s case in chief, Respondent moved to dismiss.
The hearing was adjourned to consider the motion. For pur­
poses of ruling on this motion, the evidence will be viewed in a
light most favorable to the General Counsel.
Three issues are raised by the motion to dismiss: whether
Narumanchi and Buel are employees within the meaning of
Section 2(3) of the Act;2 if so, whether Respondent meets the
Board’s retail jurisdictional standard; and, if so, whether Re­
spondent’s actions were violative of the Act.
The parties were afforded full opportunity to appear, to in­
troduce relevant evidence, to examine and cross-examine wit­
nesses, and to argue the merits of their respective positions. On
the entire record, including my observation of the demeanor of
the witnesses,3 and after considering the briefs filed by counsel
for the General Counsel and counsel for Respondent, I make
the following
FINDINGS OF FACT
The two jurisdictional issues raised by Respondent, em­
ployee status and gross volume of sales, are somewhat con­
nected. Counsel for the General Counsel concedes that if the
exotic dancers are not employees within the meaning of Section
2(3) of the Act, their tips may not be attributed to Respondent
and, thus, Respondent will not have sufficient gross volume of
1 Sec. 8(a)(1) prohibits an employer from in terfering with, restrain­
ing, or coercing employees in the exercise of their rights, inter alia, to
self-organization and to engage in activities for their mutual aid and
protection.
2 Sec. 2(3) of the Act provides, inter alia, “The term ‘employee’ shall
include any employee, and shall not be limited to the employees of a
particular employer, unless the Act explicitly states otherwise . . . but
shall not include . . . any individual having the status of an independent
contractor. . . .”
3 All evidence has been viewed in a light most favorable to the Gen­
eral Counsel’s theory of the case based upon a review of the entire
record and all exhibits in this proceeding.
TEMPTATIONS
business to satisfy the Board’s discretionary retail standard.
Accordingly, initially it must be determined whether the exotic
dancers meet the statutory definition of employee, as General
Counsel contends, or whether, on the other hand, they are inde­
pendent contractors, as Respondent asserts.
I. JURISDICTION—EMPLOYEE STATUS
Overview
Located in the North Beach area of San Francisco, Califor­
nia, Respondent operates a club providing erotic performances
of lap dancing and nude stage dancing.4 The club opened in
April 1997. After an initial interview and audition, exotic danc­
ers are engaged by Respondent to perform at the club. Dancers
pay Respondent a stage fee of $50 (originally $40) each eve­
ning that they perform.5 Generally, at opening time, Respon­
dent conducts a “roll call” to introduce the dancers and then a
rotation of the dancers begins in which each dancer strips on
stage. Dancers are then free to contract with customers on an
individual basis to provide lap dances. Dancers supply their
own music,6 costumes and stage props. At the time of hire,
dancers confer with Respondent about scheduling. However,
dancers may report to the club when not scheduled. If there is
room on the schedule to accommodate the additional dancer,
she is free to appear. Respondent charges a premium of $20
over the usual stage fee for unscheduled appearances.
Legal Framework
In order to determine whether an individual’s relationship
with an employing entity creates a master-servant relationship
or an independent contractor relationship, general common law
agency principles apply. NLRB v. United Insurance Co. of
America, 390 U.S. 254 (1968). Application of common law
agency principles requires that all facets of the relationship be
examined and weighed. No one factor is determinative. The
Court7 and Board8 rely on the multifactor analysis set forth in
the Restatement (Second) of Agency, Section 220, as follows:
§ 220. Definition of Servant
(1) A servant is a person employed to perform services
in the affairs of another and who with respect to the physi­
cal conduct in the performance of the services is subject to
the other’s control or right to control.
(2) In determining whether one acting for another is a
servant or an independent contractor, the following mat­
ters of fact, among others, are considered:
(a) the extent of control which, by the agreement,
the master may exercise over the details of the work;
4 Respondent operated two sole proprietorships until July 1, 1997. At
that time, both operations were incorporated as Respondent.
5 During the first month of operation, the stage fees were waived by
Respondent.
6 Respondent limits the amount of Rap, Hip-Hop, and Rhythm and
Blues music allowed each evening.
7 Community for Creative Non-Violence v. Reid , 490 U.S. 730, 752
fn. 31 (1989).
8 Roadway Package System, Inc., 326 NLRB 842, 848–850 (1998);
Dial-A-Mattress Operating Corp., 326 NLRB 884 (1998).
381
(b) whether or not the one employed is engaged in
a distinct occupation or business;
(c) the kind of occupation, with reference to
whether, in the locality, the work is usually done under
the direction of the employer or by a specialist without
supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies
the instrumentalities, tools, and the place of work for
the person doing the work;
(f) the length of time for which the person is em­
ployed;
(g) the method of payment, whether by the time or
by the job;
(h) whether or not the work is a part of the regular
business of the employer;
(i) whether or not the parties believe they are creat­
ing the relation of master and servant; and
(j) whether the principal is or is not in business.
Application of Legal Principles
a. Extent of control: Dancers complete an information sheet
and are auditioned before they may perform at the club. Danc­
ers’ days of work are scheduled according to the dancers’ pref­
erences, as far as possible, within the framework of the club’s
hours of operation. However, in order to obtain scheduling for
weekend performances, the dancer must work at least 1 day
during the week. Once scheduled, Respondent requires that the
dancers participate in “roll call” at the beginning of the evening
and sometimes later in the evening. Generally, at the beginning
of each evening and throughout the evening, a “rotation” of
dancers also takes place. The order of appearance in “rotation”
is the same order that the dancers arrive at the club that eve­
ning. Occasionally, Respondent alters the appearance order to
provide diversity in the order of dancers. Lap dancing fees are
subject to negotiation between the dancer and the client. How-
ever, Respondent has cautioned dancers when it learns the
dancers have “undercharged” or “overcharged” customers.
Occasionally, Respondent runs a “2 for 1” special on lap danc­
ing pricing. Dancers are encouraged and sometimes required to
participate on stage in “bachelor boy” and “birthday boy” per­
formances. Additionally, Respondent requires that dancers be
ready to go on stage at opening time. If ready, dancers are enti­
tled to a discounted stage fee. If more than 15 minutes late,
dancers are subject to a fine, in theory. According to Respon­
dent, the fine was announced but never imposed. Respondent
does not select or require specific costumes or specific dances.
The evidence reflects that the dancers utilize their own discre­
tion and artistic preferences with regard to these matters. Danc­
ers are, however, required to totally strip during their appear­
ance in the “rotation.” Dancers furnish their own music al­
though the club has a selection of music which may be utilized
as well. Respondent restricts the amount of Rap, Hip-Hop, and
Rhythm and Blues music which may be utilized during the
evening. Respondent requests the dancers to tip the disc jockey
at the end of each shift. Respondent does not allow dancers to
return to the club when it discovers acts of prostitution. Based
upon these facts, I find that Respondent does exercise an at-
382 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tenuated control over the physical conduct of the dancers and
certainly retains a right to control the conduct of the dancers.
b. Distinct occupation or business: Dancers are free to pur­
sue outside business activities as long as it does not interfere
with their schedule for Respondent. Although, some dancers
operate as sole proprietorships for purposes of taxes and ac­
counting, there is no evidence that dancers exercise entrepre­
neurial choice in pursuing other business opportunities besides
dancing at other clubs. Essentially, the dancers perform in a
club atmosphere in order to earn a livelihood through exotic
dancing. They do not appear to be retained by Respondent in
order to exercise care and skill in accomplishing a specific
result. Rather, the dancers are apparently a function of the club
and their sole initiative is limited to selection of costumes and
dance routines. In this framework, based upon the record evi­
dence before me, I find that exotic dancers do not constitute “a
distinct occupation or business” as envisioned in the Restate­
ment.
c. Kind of occupation: Exotic dancing may be viewed as an
artistic endeavor in which the club has neither the knowledge
nor desire to interfere but which is incident to the business es­
tablishment of Respondent. Moreover, the occupation “exotic
dancer” is not one that may be viewed as a “specialist,” at least
in the context of club performances. Rather, I find that the oc­
cupation is one customarily viewed in the employer-employee
context.
d. Skill: Exotic dancers are not required to have prior training
or experience. The work of exotic dancing does not require the
services of one highly educated or highly skilled. This is not to
say that individual dancers may not study choreography and
that individual dancers are not artistically skillful. Rather, it is
merely to note that these attributes are not requirements of the
occupation. The dancers must also exercise a degree of sales
strategy and must be able to exert control, if necessary. How-
ever, this is not the kind of skill indicative of an entrepreneur.
On balance, lack of skill is a factor mitigating toward an em­
ployer-employee relationship.
e. Ownership of instrumentalities, tools and place of work:
Respondent provides the physical space for the performance of
exotic dancing. Dancers are charged a stage fee for use of the
stage space and dancers provide the music and costumes for
their performances. I find little probative value may be drawn
from the totality of the ownership arrangements in the context
of the club. On the one hand, exotic dancers “rent” their work­
ing space and provide their costumes and props. On the other
hand, Respondent furnishes the place of work and the sound
system.
f. Length of employment: Dancers tend to stay with Respon­
dent for relatively short periods of time, generally about 3
months, and not exceeding 1 year. At the time of audition, no
tenure for the relationship is discussed. The lack of a stated
length of employment could be viewed as envisioning steady
employment over a period of time. There is nothing to indicate
that dancers are hired to perform a specific, defined project.
There is no evidence of a discipline system or a grievance pro­
cedure. There is no employee handbook. Nevertheless, on bal­
ance, these factors slightly favor the finding of an employee-
employer relationship
g. Method of payment: Dancers are not paid a salary or
hourly rate by Respondent nor does Respondent provide any
benefits to the dancers. Dancers contract a specific fee with
clients for individual lap dance performances and earn tips for
stage performances. Respondent does not know the amounts
earned by the dancers and does not receive any portion of these
fees or tips. For tax purposes, Respondent treats the dancers as
independent contractors. In fact, the dancers pay the employer
and they assume the entrepreneurial risk as to lap dancing.
These factors are indicative of an independent contractor rela­
tionship. However, Respondent suggests the price for lap
dances and, on occasion, Respondent offers 2 lap dances for the
price of 1 lap dance. This is done without consulting the danc­
ers. Due to Respondent’s intrusion in the pricing of lap dances,
I find that the method of payment factor is entitled to compara­
tively less weight than if the dancers were entirely free to set
prices.
h. Regular part of the business: The functions performed by
the dancers are essential to Respondent’s business operations.
Simply put, absent exotic dancers, Respondent would not be in
business. This strongly supports the finding of an employee-
employer relationship.
i. Belief of the parties: Respondent tells dancers that they
will be treated as independent contractors. Respondent requests
that the dancers obtain a business license. Dancers testified that
they felt they were employees. These beliefs in effect cancel
each other and are given no weight due to the self-serving na­
ture of the assertions.
j. Principal’s business: The principal in this case is Respon­
dent and Respondent is in business as a club providing erotic
dance performances. The dancers “are” the business.
Weighing these factors, it appears that the exotic dancers are
employees rather than independent contractors.9 Dancers’
physical activities and time are subject to Respondent’s control.
For instance, dancers are told when to report to the club, are
given a roll call and rotation assignment and are advised re­
garding the amount of the costume which must be removed in a
strip routine. The dancers are expected to “hustle” customers in
order to sell lap dance performances. However, Respondent
plays a significant role in drawing customers into the club.
Respondent, for instance, controls advertisement, location of
the club, hours of business, maintenance and décor of the facil­
ity, and service of beverages. Given Respondent’s control over
the determining factors of customer volume and demographics,
Respondent exercises a high degree of control over the dancers’
9 Cf., Strand Art Theatre, 184 NLRB 667 (1970). In Strand, the
Board found a vaudeville team (a comedian and an exotic dancer) were
independent contractors based upon the “right to control” test. The
“right to control” test was subsequently rejected in Standard Oil Co.,
230 NLRB 967, 968 (1977). See also, The Comedy Store, 265 NLRB
1422 (1982), relied upon by Respondent, finding that Mitzi Shore’s
suggestions to comedians performing at the Comedy Club were to be
accorded weight attributable to her status and position as “well­
conneceted.” The Board held that Respondent did not control the man­
ner and means of the comedians’ performances. Id.,265 NLRB 1422 at
fn.1. I find The Comedy Store distinguishable due to the weight ac­
corded Respondent’s “suggestions” by the Board in addition to the
distinctions between the two occupations and skill levels.
TEMPTATIONS 383
profit opportunities. This control substantially reduces any
opportunity for entrepreunerial risk taking. Exotic dancers are
not a highly skilled occupation. Without the exotic dancers,
Respondent would not be in business. They are an integral part
of the club’s existence. I find that these factors far outweigh the
significance of other indicia which lend support to an inde­
pendent contractor status; i.e., the method of payment, owner-
ship of the costumes and music, and rental of the stage, all of
which are relatively minor as compared to the facility and
sound system. Based upon this finding, it is therefore necessary
to consider whether Respondent meets the Board’s discretion­
ary retail standard.
II. JURISDICTION—GROSS VOLUME OF BUSINESS
Overview
The parties agree that the Board’s discretionary retail stan­
dard ($500,000 in gross revenues) applies10 and stipulate that
Respondent’s gross revenues for calendar year 1997 were
$352,221.96.11 General Counsel contends that dancers’ tips and
fees, that is, the tips paid by customers directly to dancers for
dancing on stage plus the fees for individual lap dance per­
formances, allegedly in excess of $150,000 for the calendar
year, should be added to the stipulated amount in order to qual­
ify Respondent’s operations under the Board’s retail standard.
Respondent disagrees that the tips and fees exceeded $150,000
and, in any event, asserts that these tips and fees are not prop­
erly included in its gross revenues. Before determining whether
the tips and fees should be included, it is necessary to ascertain
whether there is a sufficient monetary amount to consider.
Contentions regarding calculation of fees and tips
Counsel for the General Counsel contends that the estimates
of tips and fees provided by witnesses at the hearing for all
shifts worked during calendar year 1997 establishes that at least
$147,778.04 (the amount needed to meet the $500,000 thresh-
old) was earned in tips and fees.
Respondent contends that there is no reliable evidence upon
which to estimate the amounts of tips and fees. Respondent
asserts that all dancers unanimously agreed that tips and fees
varied depending on a variety of factors including the individ­
ual dancer’s appearance, skills and sales ability, the number of
other dancers working that evening, the day of the week, time
of year, and weather conditions. Respondent also notes that
although it subpoenaed income tax returns for both charging
parties, no such returns were produced because the charging
parties asserted that they did not file tax returns. Respondent
questions the veracity of this assertion and asks that it be dis­
credited, that any other less reliable evidence be rejected, and
that, consistent with Tropicana Products, 122 NLRB 121
10 Generally, the retail standard applies to the amusement industry.
See, e.g., Ray, Davidson & Ray, 131 NLRB 433 (1961); Coney Island,
Inc., 140 NLRB 77(1963); Aspen Skiing Corp., 143 NLRB 707 (1963).
11 This amount includes stage fees, fines, sales tax, admission fees,
nonalcoholic beverage sales, and user fees derived from the use of an
ATM machine on the premises. There is no issue as to statutory juris­
diction. Respondent admits that during calendar year 1997, it purchased
and received goods valued in excess of $2500 which originated from
points outside the State of California.
(1958), the evidence be construed against the charging parties.
Moreover, Respondent contends that all dancers who testified
provided highly improbable testimony regarding their tip in-
come.
Discussion regarding calculation of fees and tips
Prior to April 1997, Respondent utilized the club premises as
a video arcade and sex novelty store. Respondent also provided
some limited conversation booth activity. In addition, until
January 31, 1997, Respondent sold office supplies. In February
or March 1997, the club was remodeled for its current use and
opened in this form on April 23, 1997. Since April 1997, Re­
spondent’s proceeds have been from operation of the club.
Although there is substantial disagreement between the par-
ties regarding the number of dancers working each evening and
the amount of tips received by these dancers each shift, the
simple mathematics of the situation overcomes these argu­
ments. Utilizing the average of Respondent’s estimates for
number of dancers working each evening, at least 40 dancer
shifts per week,12 and utilizing the lowest average estimate of
nightly tips and fees after deduction of the stage fee, $100,13 the
amount of tips and fees from April 23 to December 31, 1997,
excluding Christmas Day (36 weeks) is approximately
$162,000.14 This sum is sufficient, when added to the stipulated
amount ($352,221.96), to meet the retail standard.
Contentions regarding inclusion or exclusion of fees and tips
Counsel for the General Counsel relies by analogy upon Ma­
jor Cab Co., 255 NLRB 1383, 1384 (1981); Supreme, Victory
12 After filing its tax returns, and unrelated to any events in this case,
Respondent destroyed its records which would have shown the number
of dancers who paid stage fees each night. Accordingly, estimates must
be relied upon. On Monday through Wednesday, Respondent’s owners
estimated, respectively, there were either 5 or anywhere from 5 to 7
dancers (average 5.5). On Thursday, there were either 6 to 7 or5 to 8
dancers (average 6.5). On Friday, there were usually 7 to 10 or as many
as 11 or 12 or 5 to 10 or 11 (average 8.25). On Sunday, there were 7 to
10 or 12 or 5 to 12 (average 8.75). On Sunday, there were 5 to 6 (aver-
age 5.5). Using the average of these amounts (Monday-Wednesday,
5.5; Thursday, 6.5; Friday, 8.25; Saturday, 8.75; Sunday, 5.5), it is
concluded that there are a minimum of 45 dancing shifts per week.
13 Estimates of nightly tips and fees varied wildly. However, it is
possible that a wild variation existed among dancers’ earnings. No
records were retained by Respondent or the dancers. Some dancers
admitted that there were rare evenings when they did not make enough
money to cover the stage fee. Buel testified that she usually averaged
$100 each evening. The most she made in one evening was $250. One
time she did not earn enough to cover the stage fee. Dancer Kitaka Gara
testified that she averaged $460 to $560 each evening. Dancer Kristina
Zinnen testified that she always earned enough to cover the stage fee
and her earnings ranged from $20 to $40 on slow nights to $200 to
$250 on better nights. For purposes of this calculation, I will utilize
Buel’s estimate as it is lower than those of the other dancers are. One
hundred dollars in earnings per evening computes as an average hourly
rate of $12.50.
14 Generally, where no annual figures are available, figures for a pe­
riod of less than 1 year, such as the amount of tips and fees for the 36-
week period, may be projected to obtain an annual figure. See, Carpen­
ter Baking Co., 112 NLRB 288 (1955). Although it is unnecessary to
rely on such a projection in this case, if the amount of fees and tips was
annualized, the amount would be $234,000.
384 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
and Deluxe Cab Cos., 160 NLRB 140, 141, 144–146 (1966),
and Checker Cab Co., 141 NLRB 583, 587 (1963). In these
cases, fares paid by customers to the taxi drivers, employees
within the meaning of the Act, were included in determining
gross revenue of the taxi company.15 Counsel for the General
Counsel asserts that the drivers retained their fares but these
fares were nevertheless counted in gross volume of business
and argues that the dancers’ fees and tips should likewise be
counted.
Respondent contends that dancers’ fees and tips should not
be counted as gross revenue because they are not income to
Respondent. Respondent relies on Love’s Wood Pit Barbeque
Restaurant, 209 NLRB 220 (1974), holding that tips, meal
credits and tip credits were an integral part of employee wage
packages and not appropriately included in gross annual vol­
ume of business. Respondent argues that dancers do not share a
percentage of their fees and tips with Respondent and do not
report these earnings to Respondent. Accordingly, the fees and
tips should not be included to Respondent’s volume of busi­
ness.
Further, General Counsel and Respondent both rely on Pit
Stop Markets, 279 NLRB 1124 (1986). There the Board ex­
plained that it looked to gross volume of sales amounts in de­
termining jurisdiction, rather than profit margins. Pit Stop Mar­
kets sold groceries and gasoline. However, it did not own the
gasoline and received only a net profit in commissions from the
gasoline supplier. Pit Stop Markets contended that the amount
of commission for gasoline sales, rather than the gross volume
of sales, was more appropriately considered for jurisdictional
purposes. The Board disagreed and held that whether the em­
ployer bought gasoline from a supplier and received a return on
its investment or received a commission from the supplier for
the amount of gasoline sold was immaterial. The sum which
most accurately represents the true amount of business con­
ducted at the employer’s operations is the sales amount.
Yet it is gross volume sales amounts to which the Board
looks in determining jurisdiction, not profit margin or some
other yardstick. . . . Whether the Employer buys gasoline from
its suppliers and receives a return on investments (as it appar­
ently does with groceries), or receives a commission from the
supplier for the amount of gasoline sold, the result in both
situations is that the Employer receives gross revenues and
obtains net income from the sale. It is clear to us that the Em­
ployer is involved in interstate commerce and meets the
Board’s jurisdictional standards.
Respondent contends that in order for a sum to qualify as a
part of gross volume of business, the employer must receive the
money from the sale and obtain net income for the sale to count
towards gross income. Because it does not receive any of the
fees and tips, it contends, pursuant to Pit Stop Markets that
these amounts do not represent sales amounts attributable to it.
15 Respondent distinguishes Major Cab, Checker Cab, and Supreme
Cab, supra, because in those cases the taxi drivers were statutory em­
ployees. Respondent also notes a trend to find taxi drivers independent
contractors rather than employees, citing Air Transit, 271 NLRB 1108
(1984), enf. denied, 679 F.2d 1095 (4th Cir. 1982); Checker Cab Co,
273 NLRB 1492 (1985); and City Cab Co., 285 NLRB 1191 (1987).
General Counsel argues that pursuant to Pit Stop Markets, the
“sales” of lap dances occur at the club and are therefore attrib­
utable to Respondent.
Discussion regarding inclusion or exclusion of fees and tips
None of the authorities cited is clearly controlling. In part,
this is due to the unique wage framework utilized by the club.
Contrary to General Counsel’s assertion, it is not possible to
analogize the taxicab fares in Major Cab, Checker Cab, and
Supreme Cab to the lap dancing fees. Two reasons preclude
such analogy. First, it is apparent from the decisions in those
cases that the taxi drivers (statutory employees) did not retain
the taxi fares. Rather, the taxi drivers turned the fares over to
their employers and were compensated on an hourly or com­
mission basis. Second, the actual issue of whether the fares
were properly included in gross volume of business was not
litigated in the initial case. It was a matter of stipulation be-
tween the parties. Nevertheless, that stipulation was relied upon
in later cases.
For instance, in the first of these cases, Checker Cab, supra,
141 NLRB 583, the issue was whether Checker Cab and its
members were joint employers. Pursuant to a stipulation, the
parties agreed that in the course of operating 900 cabs owned
by Checker Cab members, the combined gross revenue re­
ceived as fares for taxicab services was $7 million. Each mem­
ber hired and discharged his drivers and individually bargained
regarding wages and hours with his drivers. Each member
maintained his own payroll. Accordingly, a strict reading of
Checker Cab does not address whether the fares are properly
included in gross volume of business because this was not a
litigated issue. Moreover, even if the issue had been litigated,
there is nothing in the decision to indicate that drivers retained
the fares. In fact, because the members individually bargained
with their drivers regarding wages, it would appear that the
fares were not retained by drivers. If this was the case, the facts
are not analogous to those herein.
In Supreme Cab, supra, 160 NLRB 140, the Board initially
examined whether an employment relationship existed between
the taxi companies and the taxi drivers. Upon finding this issue
affirmatively, the Board turned to the independent contractor
issue and found pursuant to the “right to control” test16 that the
drivers were employees. The Board then stated, “Accordingly,
consideration of the gross receipts of all drivers is appropriate
in determining whether the Companies’ volume of business
satisfies our jurisdictional standard.” Id., 160 NLRB at 144. In
support of this assertion, the Board cited Checker Cab, 141
NLRB 583, 584, 587 (1963). Id. 160 NLRB at fn. 12. Upon
examination of the gross receipts of all drivers, the Board held
that its discretionary jurisdictional standard had been met.
Moreover, the Board noted that in any event, because there was
an absence of company records to refute the basis of the com­
putations (estimates by drivers who also had no records), it
would effectuate the policies of the Act to assert jurisdiction
16 Until 1977, the Board utilized a “right to control” test in determin­
ing whether an employer-employee relationship existed. The “right to
control” test emphasized analysis of the details of daily performance of
work. In Standard Oil Co., 230 NLRB 967 (1977), the “right to con­
trol” test was rejected in favor of the common law agency test.
TEMPTATIONS 385
where legal jurisdiction had been established. The decision
clearly states that the drivers did not retain the fares but passed
the fares on to the taxi companies.17
Finally, in Major Cab Co., 255 NLRB 1383 (1981), relying
on Checker Cab and Supreme Cab, supra, the Board found
gross receipts of drivers an appropriate method of determining
whether or not a taxi company satisfies the Board’s discretion­
ary standard. There is no evidence recited in the decision re­
garding whether the drivers retained the fares. These cases are
analogous to the facts herein only if one assumes that the taxi
drivers retained the fares but the fares were nevertheless
counted as gross receipts to the employer. This assumption
appears unwarranted and, accordingly, I reject the taxi cases as
appropriate authority.
Turning to the tip component of the dancers’ wage, it is pos­
sible to draw parallels between stage tips of the dancers herein
and the tips of the waitresses in Love’s Wood Pit Barbeque
Restaurant, supra, 209 NLRB 220. This analogy leads to the
conclusion that the dancers’ stage tips, at least, should not be
included in gross volume of business. Love’s Wood Pit Barbe­
que Restaurant indicates that these amounts are part of the
wage structure and do not count as gross sales. Accordingly, as
to stage tips, I find that they should not be included in gross
volume. Although, the lap dancing fees are not within the pa­
rameters of the holding in Love’s Barbeque it is nevertheless
possible to analogize them to tips as they are also part of the
wage structure.
Pit Stop Markets, supra, 279 NLRB 1124, is capable of vari­
ous interpretations. The Board affirmed the Regional Director’s
finding that lack of title to the goods sold was immaterial for
jurisdictional purposes. This holding has no direct application
to the facts of the instant case. However, the Board emphasized
that “the true amount of business conducted at the Employer’s
operation” is the crucial factor. That statement is interpreted by
counsel for the General Counsel as support for inclusion of lap
dancing fees, earned on the premises, as a part of gross volume.
At another point, the Board stated that receipt of gross revenue
and receipt of income are the factors which determine whether
an amount is included in gross volume of sales. If “receipt” is
17 The Board’s discussion of the soundness of the projections it made
refutes any idea that the drivers retained the fares. The drivers’ receipts
were estimated at $535,752 per year. The Board noted that annual
franchise fees and gasoline costs must be deducted from this amount
leaving $313,752 or about $3200 per taxi. “Out of this $3200 figure the
owners necessarily must obtain sufficient money to cover the cost of
depreciation, repairs, new tires, and batteries. And out of this same
figure at least 48 full-time drivers and some 67 part -time drivers must
derive earnings for their work.” 160 NLRB at 146.
the criteria, then lap dance fees should not be included because
Respondent does not ever “receive” the fees or tips.
Balancing the existing precedent and the policies underlying
discretionary jurisdictional standards, I conclude that Love’s
Wood Pit Barbeque Restaurant is the most applicable prece­
dent. Pursuant to that precedent, neither tips nor the lap dancing
fees should be included in gross volume of sales. Given my
finding that the dancers are employees, it is clear that the lap
dancing fees are an integral part, in fact, the sum total of the
dancers’ wage package. Application of Love’s Wood Pit Bar­
beque Restaurant, supra, indicates that the tips are not included
in the gross annual volume of business. Rather, these amounts
are a means of compensating employees for their services.
Extension of this rationale leads also to exclusion of lap
dancing fees from annual gross volume of business. Without
inclusion of these fees, Respondent does not meet the discre­
tionary retail standard. Accordingly, I find that it does not ef­
fectuate the purposes of the Act to assert jurisdiction in this
case. Under these circumstances, it is unnecessary to reach the
third issue raised by the motion to dismiss: the merits of the
case. CONCLUSIONS OF LAW
1. The exotic dancers who work at Respondent’s club are
employees within the meaning of Section 2(3) of the Act.
2. The tips and fees earned by exotic dancers are not prop­
erly included in Respondent’s gross volume of business. Ac­
cordingly, Respondent’s gross volume of business is insuffi­
cient to meet the Board’s discretionary retail standard. Respon­
dent is not an employer within the meaning of Section 2(2), (6),
and (7) of the Act.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended18
ORDER
Respondent’s motion to dismiss is sustained. The complaint
is dismissed.
18 If no exceptions are filed as provided by Sec. 102.46 of the Board's
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur­
poses.