|TEXAS APPEALS COURT RULES $5 PER PATRON “STRIP CLUB TAX” LEGALA $5-per-customer tax at Texas strip clubs is legal, a state appeals court has ruled.
A three-judge panel of the Austin-based 3rd Court of Appeals rejected arguments from attorneys for strip club owners who argued it was an improper occupation tax and unconstitutional. The law affects more than 200 clubs that offer nude entertainment and sell alcohol or allow the customers to bring in their own alcohol.
What has become known as the “pole tax” was passed by Texas lawmakers in 2007. The law earmarks the first $25 million of the tax every two years to a sexual assault prevention program.
The ruling Friday can be appealed to the Texas Supreme Court, although attorneys for club owners have not indicated whether they will do so.
The Texas high court already has upheld the law once, ruling in 2011 that the fee doesn’t violate the U.S. Constitution’s protection for free expression.
In this latest appeal, the Texas Entertainment Association, a state chapter of ACE National, argued the tax was an improper occupation tax. The appeals court ruling characterized it as a proper excise tax.
The appeals court also rejected claims the tax unconstitutionally targeted nude entertainment businesses that had two or more customers, and improperly excluded other erotic businesses like lingerie modeling studios or movie arcades that typically cater to an individual patron.
According to the ruling written by Appeals Justice Scott Field, the Texas Supreme Court upheld the fee because it “was imposed to address the adverse secondary effects of combining nude entertainment with alcohol consumption, both by discouraging the activity through higher taxation and by generating revenue for programs designed to address the social harms that result.”
Some club owners have been collecting the fee. Others have not, waiting until the court challenges are resolved.
State Comptroller Susan Combs last month sent letters to strip clubs asking them pay up, even though the court appeal was pending.
State figures show about $17 million has been collected and kept in an account while the issue is in the courts.
The total, however, is short of the $44 million that had been anticipated.
As Elizabeth Nolan Brown sums up in REASON: “Just in case there was any doubt in anyone’s mind about the purpose of this tax on strip clubs, the Third Court of Appeals lays it out nice and clear: “The primary purpose of the sexually-oriented-business tax is not to tax these businesses for the privilege of providing nude entertainment in the presence of alcohol consumption,” the court wrote. “Rather, the tax’s primary purpose is to discourage this type of business activity altogether while also generating revenue to ameliorate the type of social ills that are associated with this type of business.”
WASHINGTON, D.C. CLUB OPERATORS FORM LOCAL CHAPTER OF ACE
Without facing the proverbial bullet to their heads in terms of legislation or other restrictions, almost half of D.C.’s club operators met at the law office of Randy Weiss with ACE National executives, and voted unanimously to begin a local district chapter of ACE.
“I tried to do this decades ago,” says Dan Harris, owner of Archibald’s. “I feel that monitoring our interests at the local level and staying in communication with each other is a direction we need to take.”
Weiss concurs, “Angelina and I were talking on the phone about some other industry related issues when she asked for help organizing a chapter. I thought it was a great idea -and when I heard she’d be in town, we brought in lunch and invited the owners. The meeting was informative and we have some great ideas. I’m thrilled that ACE exists -and the association, along with this woman, does an amazing job.”
ACE Advisory attorney Brad Shafer was also in town for business and came to the meeting. He broke down some of the concerns business owners had regarding best business practices and industry trends -laying out details and rulings of particular cases involving the independent contractor versus employee issue.
“I cannot stress enough the importance of being up to date and aware of the changes taking place in this industry,” he told the audience. “Being part of a local chapter -a chapter that has access to national resources, is one of the best ways to stay informed,” he added.
Additionally, Michael Ocello, Chairman of the COAST Program shared the success ACE has had with regard to human trafficking outreach and education in the industry.
“Being able, as a legitimate business owner, to participate with law enforcement, and show them we are part of the solution, not the human trafficking problem is a win-win. We get a seat at the table and we learn steps to ensure we are running a good business. No legitimate operator in our industry condones the act or slavery in their club because it simply isn’t a good business model.”
“I think the development of COAST is BRILLIANT!” Adds Weiss. “I think this program is such a great way to participate in the civic and social justice arenas like the industry has never before been able to do. When I heard about this program, it blew me away.”
Angelina Spencer, ACE Executive Director, gave details about ACE National and offered suggestions to the group for dues structuring, trade association filing and encouraged everyone to consider attending this year’s ED Industry Expo held in Las Vegas in August.
The next DC Chapter meeting will take place at the end of June or early July. Details will be announced in our next newsletter.
King of Diamond’s in Miami Hit with Proposed Collective Action in Federal Court
A Florida strip club was hit with a proposed collective action in federal court last week by exotic dancers who claim they
were stiffed on wages and overtime in violation of the Fair Labor Standards Act – two years after the club’s parent company reached a $1.55 million settlement in a similar suit in Georgia.
Six adult entertainers who work at Miami-based gentleman’s club King of Diamonds sued the club, parent company Galardi South Enterprises Consulting Inc. and various executives and managers, asserting that they have been mischaracterized as independent contractors so that the defendants can deny them regular wages and overtime.
“The adult entertainers are paid no wages, receive no overtime pay and are required to remain at the club during hours in which it is impossible for them to earn gratuities as the club is closed for business,” the complaint said. “These requirements are direct violations of the FLSA.”
Despite the exotic dancers’ independent contractor status, the defendants dictate their conduct onstage, require them to wear certain types of clothing and require them to attend unpaid staff meetings, the suit said.
The dancers must also pay a “house fee” ranging from $75 to $500 in order to perform during a given shift and are fined between $25 and $100 for failing to show up for a scheduled shift, according to the complaint.
While tips are the dancers’ only source of income from working at King of Diamonds, the club’s security staff collects the tips from the stage and individual “table dances” and takes them to managers to be counted and distributed at the end of each shift, the suit said. The entertainers “were not given a true and verifiable accounting of the gratuities transported from the stage of the floor to the office or count room,” according to the complaint.
“Defendants knew or should have known that misclassifying plaintiffs as ‘independent contractors’ instead of the appropriate employee designation was a violation of the FLSA,” the complaint said. “As a result, defendants failed to pay the required minimum wage and failed to pay overtime wages as required by the FLSA.”
The named plaintiffs sued on behalf of themselves and other similarly situated individuals “who are current and former adult entertainer employees of defendants within the meaning of the FLSA.” The suit seeks unpaid back wages, overtime pay, liquidated damages attorneys’ fees and court costs.
FLORIDA HOUSE BILL 1440 HAS DIED: Ladies & Gentlemen, as we previously reported -and we were WRONG, the senate bill requiring age verification for all adult clubs in the state has DIED. It could not pass the chamber: Prohibiting the employment of minors in adult theaters; requiring adult theaters to verify the ages of employees and independent contractors and maintain specified documentation; eliminating the statute of limitations for prosecutions under a specified human trafficking provision; providing for expunction of criminal history records of certain criminal charges against victims of human trafficking that did not result in convictions.
FLORIDA HOUSE BILL 161 has DIED: Increases classification of second & subsequent violations of provision prohibiting unlawful exposure of sexual organs;
FLORIDA HOUSE BILL 456 HAS DIED: Increased Minimum Wage to $10.10/hour
OKLAHOMA House Bill 3241 on Nuisance Abatement was KILLED in Committee.
RHODE ISLAND Senate Bill 2030: An act relating to labor and labor relations (would establish the e-verify compliance act which would require all non-governmental employers within the state with 3 or more employees to apply to participate in the federal e-verify program and to agree to participate in the program if accepted). This act would establish the e-Verify compliance act which would require all non- governmental employers within the state with three (3) or more employees to apply to participate in the federal e-Verify program and to agree to participate in the program if accepted. This act would take effect upon passage.
RHODE ISLAND SENATE BILL 2409: An act relating to labor and labor relations — employee classification (this act would grant jurisdiction to the workers’ compensation court to decide whether an individual is an employee or an independent contractor in a number of various labor contexts.). This act would grant jurisdiction to the workers’ compensation court to decide whether an individual is an employee or an independent contractor in a number of various labor contexts. This act would take effect upon passage.
RHODE ISLAND SENATE BILL 2421: An act relating to alcoholic beverages – retail licenses (this act would require proof of liquor liability insurance in order for a license to be issued or renewed for the manufacture, importation, wholesale, or retail sale of alcoholic beverages.). This act would require proof of liquor liability insurance in order for a license to be issued or renewed for the manufacture, importation, wholesale, or retail sale of alcoholic beverages. This act would take effect upon passage.
SOUTH CAROLINA HOUSE BILL 5221: Fraudulent misclassification of workers protection act. A bill to amend the code of laws of South Carolina, 1976, so as to enact the “fraudulent misclassification of workers protection act” by adding chapter 5 to title 41 to prohibit the fraudulent misclassification of workers; to create a related private cause of action; to prohibit retaliatory conduct by an employer; to provide related penalties and remedies; to prohibit the contravention of waiver of the provisions of this act by private agreement; to impose certain record keeping requirements; and to create a nonlapsing fund comprised of civil penalties collected for violations for use by the department of labor, licensing and regulation to partially offset the administration, investigation, and other expenses incurred by the department in implementing this chapter.
SOUTH CAROLINA HOUSE Bill 3959 has PASSED the House Chamber and its Senate Committee: to include the appearance of a minor in a state of sexually explicit nudity in the purview of the offense; to amend section 16-15-405, as amended, relating to second degree sexual exploitation of a minor, so as to include the appearance of a minor in a state of sexually explicit nudity in the purview of the offense and increase the maximum penalty from ten to fifteen years; and to amend section 16-15-410, as amended, relating to third degree sexual exploitation of a minor, so as to include the appearance of a minor in a state of sexually explicit nudity in the purview of the offense.
SOUTH DAKOTA House bill 1196, ADULT ENTERTAINMENT RESTRICTIONS, was KILLED in Committee
NEW YORK Senate Bill 7261: Amending code: (B) CLASS B CABARET: ANY ROOM, PLACE OR SPACE IN THE CITY, WHICH IS
12 NOT LICENSED TO SELL ALCOHOLIC BEVERAGES, IN WHICH ANY ENTERTAINMENT OR
13 OTHER FORM OF AMUSEMENT IS PERMITTED IN CONNECTION WITH A BUSINESS WHEN
14 SUCH ENTERTAINMENT OR AMUSEMENT INCLUDES (I) ANY LEWD OR INDECENT
15 CONDUCT PERFORMED BY ANY PERSON EMPLOYED BY, INDEPENDENT CONTRACTOR OF
16 OR PATRON OF SUCH BUSINESS, OR (II) ANY PERSON EMPLOYED BY, INDEPENDENT
17 CONTRACTOR OF OR PATRON OF SUCH BUSINESS APPEARING UNCLOTHED OR IN SUCH
18 MANNER OR ATTIRE AS TO EXPOSE TO VIEW ANY PORTION OF THE PUBIC HAIR,
19 ANUS, VULVA, GENITALS, AREOLA OR ANY SIMULATION THEREOF.
20 S 2. The administrative code of the city of New York is amended by
21 adding a new section 20-359.1 to read as follows:
22 S 20-359.1 CLASS B CABARETS. THE DEPARTMENT SHALL ESTABLISH A SPECIFIC
23 LICENSE FOR CLASS B CABARETS, WHICH SHALL BE ISSUED PURSUANT TO THIS
24 SUBCHAPTER. EVERY CLASS B CABARET SHALL BE SUBJECT TO ALL PROVISIONS OF
25 THIS SUBCHAPTER, ANY OTHER PROVISIONS OF THIS CODE RELATING TO CABARETS
26 AND THE RULES AND REGULATIONS OF THE DEPARTMENT ESTABLISHED IN SUBCHAP-
27 TER T OF CHAPTER TWO OF TITLE SIX OF THE RULES OF THE CITY OF NEW YORK.
IMPORTANT! Dates moved up one week for 2014 Gentlemen’s Club EXPO!
-Mandalay Bay offers free hotel night to all EXPO attendees
The dates for the 2014 Gentlemen’s Club EXPO at Mandalay Bay in Las Vegas have been moved ahead one week earlier to August 17-20. ED Publications has made this change to accommodate Mandalay Bay which, at the last minute, had the opportunity to put the largest show of the year for them into their venue which will require all of their tradeshow space and hotel rooms.
As a “Thank You” to ED for making the date change, Mandalay Bay is offering all EXPO attendees one free hotel room night during the new EXPO week, and Mandalay Bay will also host the EXPO Opening Night Party at the new Light Nightclub at the hotel with a one-hour open bar.
“For over a decade Mandalay Bay has welcomed the Gentlemen’s Club EXPO and treated our attendees with the respect due professional businessmen and businesswomen, while a number of other top Vegas casino-hotels will not even bid for our show because of the industry we are in,” says ED Publisher Don Waitt. “The date change is a bit of an inconvenience, but it’s a chance for us to support a world-class venue that has always supported us.”
Aside from the date change, all of the slated EXPO 2014 events, including the Training Seminars, Tradeshow, evening parties and Awards Show -hosted by top comedian Ralphie May at the House of Blues -will all take place as previously announced. The entire EXPO 2014 Agenda, including new dates, can be viewed at www.EDPublications.com<http://www.EDPublications.com>
The free hotel room night is available to attendees who book their room before May 31 and book for three or more nights, based on availability; call Mandalay Bay room reservations at(877) 632-9001.
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601 Penn. Ave., NW Suite 900, South
Washington, DC 20004