A Lawsuit Leads To Blacklisting

SPEAKER_00 0:18

Welcome to another episode of the Employee Survival Guide, produced by Employment Attorney Mark Carey. Let's start today by having you imagine a scenario.

SPEAKER_01 0:27

Yeah, pretty stressful one, actually.

SPEAKER_00 0:28

Oh, absolutely. I want you to picture yourself working as an independent contractor. You know, you're hustling, you're putting in the hours.

SPEAKER_01 0:36

Or managing your own schedule. Or well, trying to at least.

SPEAKER_00 0:40

Right, trying to. And eventually you get into a dispute with the person who signs the checks.

SPEAKER_01 0:45

And not just a minor disagreement.

SPEAKER_00 0:47

Exactly. A serious one. We are talking about a fundamental legal dispute over unpaid minimum wages.

SPEAKER_01 0:54

Right.

SPEAKER_00 0:55

You start to realize that maybe, maybe you aren't actually an independent contractor at all. You feel like you've been misclassified.

SPEAKER_01 1:02

You feel that the control they have over you crosses a legal line.

SPEAKER_00 1:06

So you take this massive risk and you file a lawsuit. Now imagine that just a few weeks later, you suddenly find yourself blacklisted.

SPEAKER_01 1:13

Your shifts get canceled.

SPEAKER_00 1:14

Yeah, canceled at a completely different gig across town. A gig that has nothing to do with the first one except for one like tiny detail.

SPEAKER_01 1:22

The boss you just sued happens to be a business partner at this other entirely separate company.

SPEAKER_00 1:27

Exactly. So put yourself in those shoes. On the one hand, if you're the business owner, you might be thinking, well, look, this is just legal self-preservation.

SPEAKER_01 1:35

Right. Like, why in the world would I hire someone as a contractor at my second business if they are actively suing my first business?

SPEAKER_00 1:42

Aaron Powell Claiming that my standard contractor agreements are illegal. Right. But from your perspective, as the worker, you're looking at your empty bank account.

SPEAKER_01 1:51

And you're thinking, wait a minute, you are cutting off my livelihood across the board to punish me.

SPEAKER_00 1:56

Yes. This is illegal retaliation. So the question is, which is it? Is it a savvy, legitimate business decision to limit corporate liability?

SPEAKER_01 2:06

Or is it bald illegal retaliation designed to just starve a worker into submission?

SPEAKER_00 2:10

Aaron Ross Powell Exactly. And that tension right there is the central battleground of modern labor law.

SPEAKER_01 2:16

It really is. And to answer that question, we have a stack of fascinating case documents today.

SPEAKER_00 2:21

Aaron Powell We've got initial complaints, amended complaints, trial court orders, and ultimately appellate rulings from the Ninth Circuit.

SPEAKER_01 2:28

Yeah, these documents chronicle a fierce multi-year legal battle over this exact scenario.

SPEAKER_00 2:34

Aaron Powell We are going to explore how the Fair Labor Standards Act, which is commonly referred to as the FLSA, defines the boundary between an employee and an independent contractor.

SPEAKER_01 2:44

But more importantly, we are going to examine how far the anti-retaliation protections in that law actually stretch.

SPEAKER_00 2:50

Trevor Burrus Right. Especially when dealing with interconnected corporate entities and, you know, shared ownership structures.

SPEAKER_01 2:56

It gets incredibly messy.

SPEAKER_00 2:58

It really does. Okay, let's unpack this. Because on its face, it sounds a bit like getting banned from your favorite neighborhood coffee shop simply because you sued the independent bookstore next door.

SPEAKER_01 3:09

Just because they happen to share an owner.

SPEAKER_00 3:11

Right. But legally does that hold up?

SPEAKER_01 3:14

Yeah.

SPEAKER_00 3:14

Today we are taking a journey through the neon-lit world of Portland's exotic dance clubs straight into the federal courts.

SPEAKER_01 3:21

Our focus is the legal battle between an exotic dancer named Zoe Hollis and the management of two well-known Portland venues.

SPEAKER_00 3:28

Sassys and Dantes.

SPEAKER_01 3:30

Right. And the documents we have lay out two vastly different realities depending entirely on which side of the courtroom you're sitting on.

SPEAKER_00 3:37

Aaron Powell We have Hollis's amended complaint detailing allegations of extreme workplace control, unpaid wages, and retaliatory blacklisting.

SPEAKER_01 3:46

And on the flip side, we have the legal answers and affirmative defenses from the club's management.

SPEAKER_00 3:51

Aaron Powell Arguing that they operated a standard live entertainment venue, engaged performers strictly as independent contractors based on mutually signed agreements, and merely made a prudent business decision to avoid further litigation.

SPEAKER_01 4:04

Aaron Powell Yeah, they claim it was just risk management. And our goal today isn't to play judge and jury on the underlying facts themselves.

SPEAKER_00 4:11

Aaron Powell Right. We're not here to take sides on the specific claims. We're just reporting what's in the document.

SPEAKER_01 4:15

Aaron Powell Exactly. We want to explore the incredible legal mechanics of how the federal courts navigated this dispute.

SPEAKER_00 4:21

Aaron Powell Especially when it comes to defining the boundaries of retaliation in a world where business owners often have their hands in multiple different companies.

SPEAKER_01 4:29

Aaron Powell It's a really complex web.

Life At Sassy’s: Fees And Control

SPEAKER_00 4:31

Aaron Powell It is. So before we can even begin to understand the retaliation aspect, you know, the blacklist, the cancel gigs, the sister club drama, we have to establish the initial conflict.

SPEAKER_01 4:43

Aaron Powell Right. Because if we don't understand what happened at the first club, nothing that happens at the second club makes sense.

SPEAKER_00 4:48

Aaron Powell We need to set the stage. What were the working conditions at Sassy's that sparked this entire legal firestorm in the first place?

SPEAKER_01 4:55

Let's go back to the period from 2018 to February 2019 when Hollis was performing at Sassi's.

SPEAKER_00 5:01

Okay, let's start with the plaintiff's reality.

SPEAKER_01 5:04

So according to Hollis's claims in the lawsuit, the reality of working at Sassi's was defined by profound micromanagement.

SPEAKER_00 5:10

A dynamic that Hollis argues is completely at odds with the label of independent contractor.

SPEAKER_01 5:16

Absolutely. The foundational issue here is compensation.

SPEAKER_00 5:19

Right, money.

SPEAKER_01 5:20

Always. Hollis alleged that they worked at the club for multiple shifts per week, week after week, but they were never paid an hourly wage.

SPEAKER_00 5:27

Not a single cent in base pay from the club itself.

SPEAKER_01 5:31

Nothing. In fact, the financial relationship operated in the exact opposite direction.

SPEAKER_00 5:35

Wait, what do you mean?

SPEAKER_01 5:36

Hollis claimed that they had to pay what are known as house fees to sassys just for the privilege of working a shift.

SPEAKER_00 5:44

Let me stop you right there because for anyone who works a traditional W-2 job, that concept is mind-boggling.

SPEAKER_01 5:51

It really is.

SPEAKER_00 5:52

Instead of clocking in and earning money from your employer, you walk through the door, you clock in, and you instantly owe the house money before you've even started working.

SPEAKER_01 6:01

That is the core allegation, yes. And it is relatively common in this specific industry, actually.

SPEAKER_00 6:07

Wow. So where does their money come from?

SPEAKER_01 6:09

The only money Hollis took home was generated through tips directly from the customers.

SPEAKER_00 6:13

Okay, I see.

SPEAKER_01 6:14

But even those tips weren't fully theirs to keep.

SPEAKER_00 6:16

Of course not.

SPEAKER_01 6:17

Hollis's complaint alleges a strict system of mandatory tip sharing.

SPEAKER_00 6:21

Aaron Ross Powell Like tipping out the bartender at a restaurant.

SPEAKER_01 6:24

Sort of, but performers were allegedly required to pay out portions of their customer tips to the club's DJs, the bouncers, and the managers.

SPEAKER_00 6:31

The managers.

SPEAKER_01 6:32

Yes. And the complaint notes that if a dancer failed to pay these kickbacks, the staff would, quote, make working there miserable.

SPEAKER_00 6:40

I mean, I can imagine. If the DJ controls your music and the bouncer controls your physical safety, you are highly incentivized to keep them happy. Extremely incentivized. But legally speaking, mandatory tip sharing with managers sounds like a minefield.

SPEAKER_01 6:56

It is a massive red flag under the Fair Labor Standards Act.

SPEAKER_00 7:00

Really?

SPEAKER_01 7:00

How so? Well, the FLSA has incredibly detailed, strict rules about tip pools. In a standard restaurant, for example, wait staff can pool tips and share them with busers or bartenders.

SPEAKER_00 7:13

Right, because they're all part of the service chain.

SPEAKER_01 7:14

Exactly, because those are all service employees who customarily receive tips.

SPEAKER_00 7:19

Makes sense.

SPEAKER_01 7:19

But you generally cannot force a customarily tipped employee to share their tips with non-service employees who don't customarily receive tips.

SPEAKER_00 7:28

Okay.

SPEAKER_01 7:28

And you absolutely cannot force them to share tips with management or ownership.

SPEAKER_00 7:32

Aaron Powell So giving a cut to the managers is a huge no-no.

SPEAKER_01 7:35

Trevor Burrus A glaring violation. If a business violates that rule, they completely lose the ability to claim what's called a tip credit toward the minimum wage.

SPEAKER_00 7:43

Aaron Powell Meaning what, practically?

SPEAKER_01 7:45

Meaning they would owe the worker the full statutory minimum wage for every hour worked retroactively.

SPEAKER_00 7:51

Aaron Powell That is a crucial distinction. So the money flows in the wrong direction, and the tips are allegedly being diverted to management. Correct. But what really caught my eye in these court filings was the sheer level of control the club allegedly exercised over the actual performance itself.

SPEAKER_01 8:07

Aaron Powell Yes, the behavioral controls.

SPEAKER_00 8:09

Aaron Ross Powell Right. Like if I hire an independent contractor to say, paint my living room, I tell them what color I want, I might tell them I need it done by Friday.

SPEAKER_01 8:17

Sure.

SPEAKER_00 8:18

But I don't stand behind them and dictate how they hold the brush or demand they paint the trim before the ceiling.

SPEAKER_01 8:24

No, you let them do their job.

SPEAKER_00 8:25

They are the expert. I leave the method to them. But at Sassy's, the control described in the complaint seemed incredibly rigid.

SPEAKER_01 8:32

It did. The complaint outlines a remarkably robust set of rules governing the dancer's behavior and performance.

SPEAKER_00 8:39

Like what?

SPEAKER_01 8:40

Well, Sassy's allegedly set the schedules, meaning performers couldn't just drop in whenever they felt like working.

SPEAKER_00 8:46

Okay, so that looks like employment.

SPEAKER_01 8:48

The club also mandated minimum prices for dances, removing the contractors' ability to negotiate their own rates based on market demand.

SPEAKER_00 8:56

Interesting. So you can't even set your own price.

SPEAKER_01 8:58

Right. But the most striking allegation is that the club controlled the sequence of clothing removal on stage.

SPEAKER_00 9:04

I read that and couldn't believe it.

SPEAKER_01 9:06

It's very specific.

SPEAKER_00 9:07

They had a literal three-song rule.

SPEAKER_01 9:09

Yes.

SPEAKER_00 9:10

According to the filings, the club dictated that during the first song, the dancer had to tease. They couldn't remove major clothing. Right. During the second song, the top had to come off. And during the third song, the bottoms came off. That is highly specific choreographic control.

SPEAKER_01 9:27

It really is.

SPEAKER_00 9:27

It's not just saying uh perform a dance. It's saying perform a dance exactly the way we have structured it.

SPEAKER_01 9:34

And the rules extended well beyond the stage performance, too.

SPEAKER_00 9:36

What else did they control?

SPEAKER_01 9:38

Hollis alleged they were required to keep their customer tips, specifically the$1 bills, neatly organized in bundles of 20.

SPEAKER_00 9:45

Bundles of 20. Why would the club care how you fold the money in your own bag?

SPEAKER_01 9:50

It speaks to the aesthetic and operational control the club maintained over the environment. They wanted things a certain way.

SPEAKER_00 9:56

That's incredibly granular.

SPEAKER_01 9:58

Furthermore, there were strict appearance standards.

SPEAKER_00 10:01

Which I assume aren't cheap to maintain.

SPEAKER_01 10:03

Exactly. Hollis claimed they spent roughly$500 annually of their own money on hair and makeup just to meet these standards. Wow. And that this prep time, which took about an hour per shift, was entirely uncompensated.

SPEAKER_00 10:17

So you're trepping for an hour off the clock.

SPEAKER_01 10:19

Yep. And in one highly specific instance detailed in the complaint, Hollis alleged their schedule was actually reduced as a direct penalty for choosing to wear their natural hair instead of a wig.

SPEAKER_00 10:31

A penalty for their natural hair.

SPEAKER_01 10:32

That's the allegation.

SPEAKER_00 10:33

Aaron Powell So if we look at Hollis's side of the ledger, no hourly pay, paying to work via house fees, mandatory tip kickbacks to management, strict scheduling, dictated performance steps, down to the song order.

SPEAKER_01 10:48

A currency organization.

SPEAKER_00 10:49

Right. Mandated currency organization and penalties for appearance choices. You look at that aggregate list of controls and you think, how could anyone argue this person is not an employee?

SPEAKER_01 10:59

It's a strong list.

SPEAKER_00 11:00

But of course, the lawsuit has two sides. SASEs didn't just roll over and accept this narrative. They mounted a robust defense.

SPEAKER_01 11:07

They certainly did.

The Club’s Defense And Contract Labels

SPEAKER_00 11:08

What was the defendant's reality? Let's hear their side of it.

SPEAKER_01 11:12

So the defendants' RR restaurants, which is the corporate entity operating SASI's, along with its individual managers, they paint a completely different picture in their legal answer to the complaint.

SPEAKER_00 11:23

Aaron Powell Okay. What's their main argument?

SPEAKER_01 11:25

Their primary defense is straightforward and relies on documentation.

SPEAKER_00 11:29

The contract.

SPEAKER_01 11:30

Exactly. Hollis signed an express arm's length independent contractor agreement.

SPEAKER_00 11:36

Right.

SPEAKER_01 11:36

Sassies argues that they did not control the manner or means of how the performers completed their work.

SPEAKER_00 11:42

Aaron Ross Powell They dispute the level of control.

SPEAKER_01 11:44

Trevor Burrus Completely. From their perspective, they were simply operating like any standard live entertainment venue.

SPEAKER_00 11:50

Like a comedy club or a concert hall.

SPEAKER_01 11:52

Precisely the analogy they would use. They argue that they provided the infrastructure.

SPEAKER_00 11:57

Aaron Ross Powell Meaning the building.

SPEAKER_01 11:58

They owned the building, they paid for the advertising, they provided the security personnel, the sound systems, the lighting, and the stage.

SPEAKER_00 12:05

Aaron Powell So they set the stage, literally.

SPEAKER_01 12:07

Aaron Ross Powell Yes. They facilitated a safe, regulated environment for both the customers and the performers to interact.

SPEAKER_00 12:13

Aaron Ross Powell But the artistic performance itself.

SPEAKER_01 12:15

That was left entirely up to the independent contractors. They viewed Hollis the same way a theater views a touring band or a guest comedian.

SPEAKER_00 12:24

Aaron Powell Ah, okay. The theater provides the mic and the audience, but the comedian writes their own jokes.

SPEAKER_01 12:31

Aaron Ross Powell That's their argument, exactly.

SPEAKER_00 12:33

Aaron Ross Powell In their legal filings, the defendants listed what are called affirmative defenses.

SPEAKER_01 12:37

Yes. Standard practice in these responses.

SPEAKER_00 12:40

Aaron Ross Powell Two of them really stood out to me because they sound like ancient medieval curses.

SPEAKER_01 12:45

Oh, let me guess.

SPEAKER_00 12:46

Equitable estoppel and unclean hands.

SPEAKER_01 12:48

Yep. Those are the ones.

SPEAKER_00 12:49

What do these concepts actually mean in plain English and how do they apply to someone dancing at a club?

SPEAKER_01 12:54

They are fascinating, deeply rooted legal concepts that essentially deal with fairness. Okay. Equitable estoppel is a principle that says you cannot say one thing, induce someone else to rely on what you said, and then later claim the exact opposite in order to sue them.

SPEAKER_00 13:11

Aaron Powell Oh, I see. So it's about going back on your word when the other person trusted you.

SPEAKER_01 13:15

Exactly. In this context, Sassi's argued that Hollis willingly signed the independent contractor agreement. Right. By doing so, Hollis represented themselves to the club as an independent business entity.

SPEAKER_00 13:26

Aaron Powell And the club relied on that.

SPEAKER_01 13:28

Yes. Sassies relied on that representation to allow Hollis to perform without withholding taxes or paying minimum wage.

SPEAKER_00 13:34

Aaron Powell So they're saying, hey, we trusted your signature.

SPEAKER_01 13:37

Right. Now, years later, Hollis is crying foul. The club's position is that it is fundamentally unfair to allow Hollis to reverse their position after the club relied on the initial agreement.

SPEAKER_00 13:47

Aaron Powell And what about unclean hands?

SPEAKER_01 13:49

The unclean hands defense builds on that idea of fairness, essentially arguing bad faith.

SPEAKER_00 13:55

Bad faith by Hollis.

SPEAKER_01 13:56

Yes. Sassies is saying to the court, look at this plaintiff. They entered this contract knowing exactly what the terms were.

SPEAKER_00 14:03

They knew what they were signing up for.

SPEAKER_01 14:05

Exactly. They reaped all the benefits of being an independent contractor-like, keeping the vast majority of their tips, maintaining flexibility, not having taxes withheld. And now they are weaponizing that very contract to extract damages from us. Wow. The doctrine of unclean hands basically states that if you are asking the court for fairness, you must have acted fairly yourself.

SPEAKER_00 14:29

Here's where it gets really interesting, and I think this is a point of confusion for a lot of people who operate in the gig economy. If someone signs a contract in writing, fully aware of what it says, stating, I am an independent contractor, I understand I get no benefits, I pay my own taxes. Doesn't that settle it?

SPEAKER_01 14:46

You'd think so, wouldn't you?

SPEAKER_00 14:47

I mean, a contract is a contract. We live in a society governed by contracts. Why does the law look past a mutually signed piece of paper?

SPEAKER_01 14:54

Aaron Powell That is the million-dollar question. And it is the absolute heart of almost all FLSA litigation regarding misclassification.

SPEAKER_00 15:01

Aaron Powell So why doesn't the paper matter?

SPEAKER_01 15:03

Under the Fair Labor Standards Act, contractual labels, frankly, do not matter. The law views minimum wage and overtime protections as fundamental public rights.

SPEAKER_00 15:13

Aaron Powell Fundamental rights. Okay.

SPEAKER_01 15:15

You cannot contract away your rights under the FLSA, even if you want to.

SPEAKER_00 15:19

Aaron Powell Wait, really? So even if I willingly agree to it?

SPEAKER_01 15:22

Even if you beg an employer to hire you below minimum wage just to get a job, the law prohibits it.

SPEAKER_00 15:28

That's fascinating.

The Economic Realities Test Explained

SPEAKER_01 15:29

So when a dispute arises, the courts completely ignore what the piece of paper says. Instead, they use what is called the economic realities test.

SPEAKER_00 15:37

Aaron Powell The Economic Realities Test. Okay. Explain how that works mechanically. Because it sounds like a court playing detective.

SPEAKER_01 15:43

Aaron Powell It is very much a judicial investigation. The test ignores the legal labels and looks at the actual day-to-day economic reality of the relationship.

SPEAKER_00 15:51

Aaron Powell The reality on the ground.

SPEAKER_01 15:53

Right. The ultimate question the court is trying to answer is this Are you, as a worker, economically dependent on the business you are serving? Okay. Or are you truly in business for yourself, operating as a standalone economic entity?

SPEAKER_00 16:07

Got it. And how do they figure that out?

SPEAKER_01 16:09

To figure this out, courts look at a series of factors, usually six.

SPEAKER_00 16:13

We'll run through them.

SPEAKER_01 16:14

First, they look at the degree of control the business has over your work. Who sets the schedule? Who dictates the methods?

SPEAKER_00 16:22

Okay. We talk about that with Sassy's the three-song rule, the shifts.

SPEAKER_01 16:25

Right. Second, they look at your opportunity for profit or loss depending on your own managerial skill.

SPEAKER_00 16:32

So like if you work harder, can you negotiate better rates? Or is your income capped by the employer's pricing structure?

SPEAKER_01 16:41

Exactly. Third, they evaluate your investment in equipment or materials. Meaning, did you buy a$50,000 truck to do the job, or did you just show up with a pair of shoes? Right.

SPEAKER_00 16:50

Got it. What's next?

SPEAKER_01 16:51

Fourth, they ask whether the service requires a special skill. Routine, manual labor usually points to employment. Highly specialized, rare skills point to independent contracting.

SPEAKER_00 17:02

Okay.

SPEAKER_01 17:02

Fifth, they consider the permanence of the working relationship. Do you work there every single Tuesday for three years, or did you drop in for one week to complete a specific project?

SPEAKER_00 17:12

The drop-in sounds more like a contractor.

SPEAKER_01 17:14

Right. And sixth, whether your service is an integral part of the employer's business.

SPEAKER_00 17:18

Let's play with that last factor, because I think it's the easiest to understand. Sure. If I'm a plumber and sassy's calls me to fix a broken sink in the bathroom, I bring my own tools, which is my investment. I set my own hourly rate, so my profit depends on my skill. And most importantly, plumbing is not integral to an exotic dance club's business model.

SPEAKER_01 17:40

It definitely isn't.

SPEAKER_00 17:41

People don't go to Sassy's to look at the pipes. So I am clearly an independent contractor.

SPEAKER_01 17:47

Aaron Powell That is a perfect textbook example. Now apply those same factors to an exotic dancer. Trevor Burrus, Jr.

SPEAKER_00 17:52

Right. Sassi's would argue that dancers have special skills, they control their own artistic expression, they bring their own costumes, and their profit depends on how well they hustle for tips on the floor.

SPEAKER_01 18:02

Therefore they're contractors.

SPEAKER_00 18:03

But Hollis would look at the exact same factors and argue the opposite.

SPEAKER_01 18:07

Entirely the opposite. The club sets the minimum dance prices, limiting profit opportunity.

SPEAKER_00 18:19

And regarding that integral factor, without dancers, an exotic dance club fundamentally has no business.

SPEAKER_01 18:25

Right. They aren't selling the lighting system, they're selling the performance. And that debate over the economic realities test is going to become the absolute crux of everything that happens later in this case.

SPEAKER_00 18:36

The battle lines were drawn over those six factors.

SPEAKER_01 18:39

Exactly.

SPEAKER_00 18:39

So moving the timeline forward, Hollis leaves Sassy's in March of 2019. For over two years, nothing happens.

SPEAKER_01 18:48

The dispute seems to be over.

SPEAKER_00 18:50

But the story doesn't end there. In the summer of 2021, Hollis decides to formally sue.

SPEAKER_01 18:56

And this decision sets off a chain reaction that hits a completely different venue across town.

SPEAKER_00 19:00

So fast forward to June of 2021, Hollis books a new gig at a different Portland club called Dante's.

SPEAKER_01 19:07

Specifically, they are booked to perform at an event called the Sinferno Cabaret.

SPEAKER_00 19:11

What kind of event is that?

Dante’s Gig Canceled By Email

SPEAKER_01 19:12

This is not just a regular club night. Sinferno Cabaret is an institution in Portland. It's a 20-year-old weekly variety showcase. It's a massive, chaotic theatrical event featuring fire performers, jugglers, contortionists, and pole dancing.

SPEAKER_00 19:28

It sounds like an alternative punk rock cirque du soleil.

SPEAKER_01 19:31

It really is highly theatrical and features a constantly rotating cast of performers.

SPEAKER_00 19:35

And Hollis performs there.

SPEAKER_01 19:37

Hollis performs at this cabaret twice. And it is incredibly important to note the contrast here with the environment at Sassy's.

SPEAKER_00 19:43

How so?

SPEAKER_01 19:44

At Dante's, Hollis is performing a specific, self-chorephed pole dance routine for exactly five minutes during a two-hour show that features nine other distinct acts. Hollis has full artistic control over this five-minute set. There is no three-song rule, there are no bundles of twenty.

SPEAKER_00 20:02

Totally different vibe.

SPEAKER_01 20:03

Completely. And on June 22, 2021, Hollis receives an email from Dante's management confirming a third scheduled performance for July 25th.

SPEAKER_00 20:12

So they loved the act.

SPEAKER_01 20:13

They did. And they were asking for Hollis's availability for future dates. Everything is going great. The relationship is thriving.

SPEAKER_00 20:19

And then the trigger is pulled. Six days after that confirmation email, on June 28, 2021, Hollis officially files the FLSA class action lawsuit against Sassi's. Right. The lawsuit names the corporate entity, R restaurants, but it also personally names the individual managers. Stacy Mayhood, Ian Hannigan, and Frank Follis.

SPEAKER_01 20:42

And Frank Follis is the linchpin of this entire story.

SPEAKER_00 20:45

Because he isn't just a partner and manager at Sassy's.

SPEAKER_01 20:48

No, he is also a partner and manager at Dante's.

SPEAKER_00 20:50

This brings us to the retaliation email.

SPEAKER_01 20:52

This is such a crucial piece of evidence. It is rare in employment law to get a smoking gun document like this.

SPEAKER_00 20:58

Usually employers are very careful to use vague language when terminating a relationship, right?

SPEAKER_01 21:03

Oh, absolutely. They say things like going in a different direction. But three weeks after the lawsuit is filed, on July 19th, 2021, Frank Falles sends an email directly to Hollis.

SPEAKER_00 21:12

And it is a remarkable document because it lays out his exact reasoning in black and white.

SPEAKER_01 21:17

There is no subtext. It is entirely text.

SPEAKER_00 21:20

I want to read the crucial details of this email because it is wild to see this thought process put in writing. Go for it. Philas writes, quote, I have been dreading writing this to you, and our attorney has cautioned against it. But you and I have had a good working relationship. As you may or may not remember, I am one of the partners in Sassy's. A few days ago we were served papers there for a class action lawsuit, of which you are the primary plaintiff.

SPEAKER_01 21:45

He acknowledges the lawsuit directly, establishing the motive, then he delivers the turning point of the email.

SPEAKER_00 21:51

He continues, quote, that makes things complicated, especially since it is regarding the claim of being an employee versus an independent contractor, as stated in the contract with Sassy's. Since you would be performing at Dante's as an independent contractor, that puts another business that I'm a partner in at risk for a lawsuit.

SPEAKER_01 22:09

And here's the punchline.

SPEAKER_00 22:10

Therefore, we have been strongly advised to not have you perform at Dante's. Seemingly trying to separate his business decision from personal malice, I guess.

SPEAKER_01 22:23

Yeah, he mentions that he actually supports much of Hollis's broader activism regarding cultural bias and diversity in the industry.

SPEAKER_00 22:31

But he draws a hard line on the legal classification issue.

SPEAKER_01 22:35

Right. He says when it comes to performers being independent contractors versus employees, we disagree.

SPEAKER_00 22:41

And he explicitly points out the financial stakes of the class action. He writes that this is a serious lawsuit where the legal bills alone could easily put sassys or any other other clubs out of business.

SPEAKER_01 22:54

And he ends the email by apologizing that things ended up this way.

SPEAKER_00 22:57

Okay, I need to play devil's advocate here and push back on behalf of anyone who has ever run a business, managed a budget, or worried about getting sued into bankruptcy.

SPEAKER_01 23:06

Let's hear it.

SPEAKER_00 23:07

From a pure cold risk management perspective, if you are being actively sued by a worker who claims your standard independent contractor agreement is illegal and a sham, wouldn't you have to stop hiring them as a contractor at your other businesses to stop the bleeding?

SPEAKER_01 23:24

That's the argument.

SPEAKER_00 23:25

If Fayace lets Hollis perform at Dante's under the exact same independent contractor label that Hollis is currently attacking in court over at Sassy's, isn't Felace just inviting a second lawsuit against Dante's?

SPEAKER_01 23:37

It looks that way on paper.

SPEAKER_00 23:38

Isn't that just common sense liability management? You don't invite a known arsonist into your second house.

SPEAKER_01 23:44

You have articulated the exact legal tension that makes this case so important. And it is the argument the defense leans on heavily.

SPEAKER_00 23:52

Is it a legitimate business decision?

SPEAKER_01 23:54

Exactly. Is this email evidence of a legitimate business decision made to protect a company from an existential financial threat? Or is it bald retaliation designed to punish a worker for exercising their federally protected rights using the excuse of liability to mask the punishment?

SPEAKER_00 24:10

So what did Hollis do after getting this email?

SPEAKER_01 24:12

Shortly after receiving it, Hollis and their legal team amends the lawsuit. They add a brand new claim, an FLSA retaliation claim against Frank Felley specifically.

SPEAKER_00 24:22

Aaron Powell Arguing that canceling the Dantes gig was an illegal retaliatory act directly responding to the filing of the Sassy's wage lawsuit. Right. So now we have two massive issues rolling into the courtroom simultaneously.

SPEAKER_01 24:35

A dual track case?

SPEAKER_00 24:36

We have the original wage theft and misclassification claims regarding the years spent at Sassy's, and we have this fresh new retaliation claim regarding the canceled cabaret gig at Dantes.

SPEAKER_01 24:47

And the legal battle goes to the U.S. District Court for the District of Oregon.

SPEAKER_00 24:51

But things quickly go sideways for Ollie's.

SPEAKER_01 24:53

Very sideways.

Discovery Failures And Time Limits

SPEAKER_00 24:54

And honestly, it wasn't just the complexity of the law that was the problem. It was a catastrophic failure of basic legal procedure.

SPEAKER_01 25:01

The procedural blunders in this case are a nightmare scenario for any litigator. The case ends up before magistrate judge Yuli Yim Yu.

SPEAKER_00 25:10

Let's clarify the court structure for a second. What's a magistrate judge compared to a district judge?

SPEAKER_01 25:15

Good question. In the federal system, a district judge is appointed by the president and confirmed by the Senate. They have lifetime tenure and they make the final binding decisions in the trial court.

SPEAKER_00 25:25

Okay. The big boss and the magistrate.

SPEAKER_01 25:28

A magistrate judge, on the other hand, is appointed by the district judges of that specific court to handle the grueling day-to-day tasks of moving a lawsuit forward.

SPEAKER_00 25:37

So they do the heavy lifting?

SPEAKER_01 25:39

Exactly. They manage the timeline, they handle discovery disputes, they hear pretrial motions, and they issue what are called findings and recommendations.

SPEAKER_00 25:48

And then the district judge reviews those.

SPEAKER_01 25:50

Right. The district judge reviews those recommendations and makes the final ruling.

SPEAKER_00 25:54

Got it. So in this case, Magistrate Judge Yu was managing the timeline.

SPEAKER_01 25:58

And she became increasingly frustrated with Hollis's legal team.

SPEAKER_00 26:02

Aaron Powell Because they completely drop the ball during discovery.

SPEAKER_01 26:05

Completely.

SPEAKER_00 26:06

For our listeners who haven't been involved in a lawsuit, discovery is the phase where both sides have to exchange evidence, hand over emails, and interview witnesses under oath. Right.

SPEAKER_01 26:16

Aaron Ross Powell That is the discovery phase, and it is usually the most expensive and time-consuming part of a lawsuit.

SPEAKER_00 26:22

And a key component is the deposition.

SPEAKER_01 26:24

A deposition is an out-of-court sworn testimony. You put the opposing party, in this case, the club owners and managers, in a conference room with a court reporter.

SPEAKER_00 26:33

And you just gorill them.

SPEAKER_01 26:34

You ask them questions under oath for hours. It is critical for locking down their story and gathering evidence.

SPEAKER_00 26:41

So Hollis's lawyers argued to the judge that they desperately needed to depose the defendants to prove their case.

SPEAKER_01 26:47

And the court, accommodating this request, granted them multiple extensions to get it done. The court explicitly ordered that these depositions must take place by March 6, 2023.

SPEAKER_00 27:00

Must take place.

SPEAKER_01 27:01

Yes. But the deadline came and went, and the depositions never happened.

SPEAKER_00 27:04

It never happened. Nope. And it gets worse. The court also ordered Hollis's team to file supplemental briefs by March 20, defending against the club's motion to throw the case out.

SPEAKER_01 27:16

And they missed that deadline, too.

SPEAKER_00 27:17

The judge, clearly annoyed, even called a special status conference on April 13 to figure out what on earth was going on.

SPEAKER_01 27:24

And Hollis's local counsel failed to appear.

SPEAKER_00 27:30

No. And what was their excuse?

SPEAKER_01 27:32

A quote calendaring error.

SPEAKER_00 27:34

A calendaring error. Yeah. Like they just forgot to put it in their outlook calendar.

SPEAKER_01 27:38

That's essentially what that means.

SPEAKER_00 27:40

These aren't just minor clerical errors that a judge brushes off, are they?

SPEAKER_01 27:43

No, in federal court, missing these deadlines has fatal consequences for your claims. The judge is not going to do the lawyer's work for them.

SPEAKER_00 27:51

Which brings us to the Statute of Limitations hurdle.

SPEAKER_01 27:54

Right. This is where the lack of depositions completely destroyed Hollis's wage claim.

SPEAKER_00 27:59

So what does this all mean for you as a potential plaintiff? If you miss your deadlines in court, you lose. It doesn't matter how righteous your cause is.

SPEAKER_01 28:08

The timeline is ruthless.

SPEAKER_00 28:09

But let's explain why the missed depositions specifically destroyed the wage claim against SASEs. It has to do with how long you have to file a lawsuit under the FLSA.

SPEAKER_01 28:19

Normally, under the Fair Labor Standards Act, you have a strict two-year window from the date of the violation to file a lawsuit for unpaid wages.

SPEAKER_00 28:28

Okay, two years.

SPEAKER_01 28:29

Hollis last performed at SASE's in March of 2019, but they didn't file the lawsuit until June 28, 2021.

SPEAKER_00 28:36

That is two years and roughly three months.

SPEAKER_01 28:38

Right. So on its face, the claim is expired. It's what lawyers call time barred.

SPEAKER_00 28:42

But there's an exception to that two-year rule, right?

SPEAKER_01 28:45

There is. The FLSA extends the statute of limitations to three years if and only if you can prove the employer's violation was willful.

SPEAKER_00 28:55

What does that mean legally?

SPEAKER_01 28:57

It has a very specific, high-bar legal definition. It doesn't just mean they made a mistake calculating your pay. It means the employer either knew their conduct was illegal or they showed reckless disregard for whether it was prohibited.

SPEAKER_00 29:11

So basic negligence isn't enough?

SPEAKER_01 29:13

No. Basic negligence is not enough to get the three-year extension. You need hard evidence of that reckless disregard.

SPEAKER_00 29:19

Aaron Powell And how do you get that evidence? By putting the owners in a room under oath and opposing them.

SPEAKER_01 29:25

Exactly.

SPEAKER_00 29:25

You asked them, hey, did you consult an employment attorney about your contractor agreements before you implemented them? Did you know other clubs in Portland were getting sued for this exact same threesong role? Did you read the FLSA guidelines?

SPEAKER_01 29:37

Right. You used the deposition to prove they knew better, but did it anyway.

SPEAKER_00 29:41

But because Hollis's lawyers missed the deadline and never did the depositions, they had zero proof of willfulness to present to the judge.

SPEAKER_01 29:48

None at all. And the magistrate judge looked at the empty evidentiary record and ruled that without proof of willfulness, the standard two-year clock applied.

SPEAKER_00 29:57

Because Hollis sued after two years and three months.

SPEAKER_01 30:00

The wage claims against Sassi's were dismissed entirely.

SPEAKER_00 30:04

The core of the original lawsuit was dead on arrival due to a missed calendar invite.

SPEAKER_01 30:09

It's devastating.

SPEAKER_00 30:10

That is a brutal way to lose a case. But what about the retaliation claim? The email from Fayels canceling the Dantes gig happened in July 2021. Hollis amended the complaint almost immediately. That was definitely within the time limit. It was. How did the trial court handle the retaliation claim?

SPEAKER_01 30:28

The trial court first magistrate Judge Yu, whose findings were then adopted by District Judge Simon, ruled against Hollis on the retaliation claim as well.

SPEAKER_00 30:37

Also gone.

Trial Court Creates A Retaliation Loophole

SPEAKER_01 30:37

But this wasn't due to a procedural error. This was based on a strict textual interpretation of the law. The trial court looked at the actual text of the FLSA. The anti-retaliation provision states that it is unlawful to discriminate against any quote employee who has filed a complaint or instituted a proceeding under the Act. Trevor Burrus, Jr.

SPEAKER_00 30:58

Employee, that's the magic word.

SPEAKER_01 30:59

Exactly. The trial court reasons that for Hollis to claim illegal retaliation regarding the cancellation of the Dantes gig, Hollis had to be an employee of Dantes.

SPEAKER_00 31:08

They viewed the retaliatory act as inextricably linked to the venue where the act occurred.

SPEAKER_01 31:14

Yes. So the court took that six-factor economic realities test we debated earlier.

SPEAKER_00 31:19

The one with the plumber analogy.

SPEAKER_01 31:20

Right. But they applied it exclusively to the work Hollis did at Dante's.

SPEAKER_00 31:25

Okay, let's run the test on the Dantes gig because the facts are wildly different than Sassy's.

SPEAKER_01 31:30

They really are.

SPEAKER_00 31:30

Control. Yeah. Hollis had full artistic control over his self-choreographed five-minute set.

SPEAKER_01 31:35

Permanence. It was a one-off gig performed exactly twice with a third scheduled.

SPEAKER_00 31:40

Integral to the business. It was a five-minute slot in a two-hour variety show that had been running for 20 years with juggling and fire breathing. Dante's wasn't economically dependent on Hollis's specific five-minute act to keep the lights on.

SPEAKER_01 31:55

So when you apply the economic realities test to the Dante's performances, it is abundantly clear that Hollis was acting as a true independent contractor at Dante's, not an employee.

SPEAKER_00 32:06

And the court looked at that and concluded.

SPEAKER_01 32:09

Because Hollis was an independent contractor at Dante's, there was no employee relationship to be retaliated against in that specific context. The FLSA only protects employees.

SPEAKER_00 32:19

Therefore, legally speaking, Felix's email canceling the gig could not be considered FLSA retaliation.

SPEAKER_01 32:26

And the entire case was dismissed.

SPEAKER_00 32:27

So the trial court essentially looked at the situation and said, you weren't their employee at the exact moment they canceled your gig, so it's not illegal retaliation.

SPEAKER_01 32:34

That was the rule.

SPEAKER_00 32:35

It feels like a massive loophole. It basically says a business owner can retaliate against you all they want, blacklisting you from a dozen different affiliated businesses, as long as they make sure you are firmly classified as a contractor at those other businesses.

SPEAKER_01 32:50

It creates a roadmap for consequence-free corporate revenge.

SPEAKER_00 32:53

It really does. It's wild.

SPEAKER_01 32:55

And it absolutely created a significant loophole and it alarmed worker advocates across the region. I bet. But Hollis refuses to give up. Hollis appeals the dismissal to the United States Court of Appeals for the Ninth Circuit. Okay, here we go. And in November 2025, the appellate court flips the script entirely. They close that very loophole and radically expand our understanding of how retaliation works in a complex economy.

SPEAKER_00 33:20

Aaron Powell I love an appellate court plot twist. When the higher court looks at the mess the trial court made, how do they untangle it?

SPEAKER_01 33:27

They start by fundamentally reevaluating the definition of the employer.

SPEAKER_00 33:31

Okay.

Ninth Circuit Expands Retaliation Liability

SPEAKER_01 33:31

The Ninth Circuit pointed out a critical fatal flaw in the lower court's logic. The trial court focused solely on whether Hollis was an employee of Dante's. But the Ninth Circuit zoomed out. They looked at the FLSA's broader statutory definitions. The FLSA defines an employer as including, quote, any person acting directly or indirectly in the interest of an employer in relation to an employee.

SPEAKER_00 33:56

Acting indirectly in the interest of an employer. That is incredibly broad language.

SPEAKER_01 34:01

It is intentional. Congress wrote the law broadly to prevent employers from using middlemen or corporate shells to evade the law.

SPEAKER_00 34:08

Oh, that makes sense.

SPEAKER_01 34:09

The Ninth Circuit explained that Frank Fales didn't need to be Hollis's direct employer at Dante's to be held liable for retaliation.

SPEAKER_00 34:16

So what was he?

SPEAKER_01 34:17

Instead, the court looked at his role at Sassy's. Fallas was a partner at Sassy's. By canceling the Dantes gig because of the Sasses lawsuit, Phalas was acting indirectly in the interest of Sassi's.

SPEAKER_00 34:29

Let me pause on that because I want to make sure I understand the mechanics. How is canceling a gig at Club B acting in the interest of Club A?

SPEAKER_01 34:36

Because it is an attempt to punish the worker for suing club A. It sends a message.

SPEAKER_00 34:41

Like if you sue my first club, I will make sure you can't earn a living at my second club.

SPEAKER_01 34:46

Exactly. It shills any further legal action, it discourages other dancers from joining the class action lawsuit, and it ultimately serves to limit the liability of the original employer, Sassies.

SPEAKER_00 34:57

That's a really sharp way of looking at it.

SPEAKER_01 34:59

To illustrate this concept of indirect action, the Ninth Circuit cited a truly fascinating parallel case, Arius V. Raymond.

SPEAKER_00 35:06

Aaron Powell Let's talk about Arius V Raymondo because this case really highlights how far the law will go to protect workers from creative forms of retaliation.

SPEAKER_01 35:15

It's a shocking case, honestly. In Arius, a worker sued his former employer for severe wage theft. We're talking unpaid overtime, missed meal breaks, the works.

SPEAKER_00 35:26

And the worker happened to be undocumented.

SPEAKER_01 35:28

Yes. As the case was progressing and approaching trial, the employer's private defense attorney, a man named Raimondo, took matters into his own hands.

SPEAKER_00 35:36

What did he do?

SPEAKER_01 35:37

He repeatedly contacted U.S. Immigration and Customs Enforcement ICE to try and get the worker deported.

SPEAKER_00 35:43

That is intense. The defense lawyer tried to get the opposing party physically removed from the country to stop the lawsuit from moving forward.

SPEAKER_01 35:50

He did. The worker, facing deportation, then sued the attorney Raimondo for FLSA retaliation.

SPEAKER_00 35:58

Now, Raimondo went to court and argued. What was, hey, I'm just an outside lawyer.

SPEAKER_01 36:04

Exactly. He said, I was never this guy's employer. I don't sign his paychecks. You can't sue me under the FLSA. The law only applies to employers.

SPEAKER_00 36:13

But the Ninth Circuit ruled against the attorney.

SPEAKER_01 36:15

They did. They looked at that broad definition we just discussed. They said that by calling ICE to thwart the lawsuit, the attorney was acting indirectly in the interest of the actual employer. Wow. Therefore, the attorney could be held personally liable for retaliation under the FLSA, even though he never employed the worker.

SPEAKER_00 36:33

So if we connect this to the bigger picture, the SASE's case, the Ninth Circuit is saying you don't have to be the boss on the clock signing the paychecks at that exact moment to illegally retaliate.

SPEAKER_01 36:42

Not at all.

SPEAKER_00 36:43

If a company's outside lawyer calling ICE is considered retaliation by an indirect employer, then a partner at a sister company canceling your gig to starve you of income is also acting as an indirect employer.

SPEAKER_01 36:54

The court noted that the phrase indirectly in the interest of the employer does not require a formal agency relationship. It doesn't require a written contract between the two entities.

SPEAKER_00 37:05

That doesn't even require a direct financial benefit.

SPEAKER_01 37:07

Right. It doesn't even require the conferral of a direct financial benefit to the original employer. It is enough that the action penalizes the worker for filing the suit against the original employer.

SPEAKER_00 37:19

Which leads to the appellate court's biggest, most impactful reframing of the case.

SPEAKER_01 37:24

This is the real turning point.

SPEAKER_00 37:26

Right, because we still have that magic word hanging over our heads. Employee.

SPEAKER_01 37:31

Yes.

SPEAKER_00 37:31

The trial court definitively said Hollis wasn't an employee of Dante's. How does the Ninth Circuit get around that textual requirement?

SPEAKER_01 37:39

Aaron Ross Powell They reframe where the employment requirement must be found. The Ninth Circuit rules that the underlying employment relationship needed to trigger the retaliation claim isn't with Dantes at all, it's with Sassy's. Hollis is claiming they were retaliated against for filing a protected complaint concerning their past work at Sassi's. Therefore, the only thing Hollis needs to prove to the court is that they were an employee of Sassi's at the time of the original wage dispute.

SPEAKER_00 38:05

But wait, we just spent a significant amount of time establishing that the wage claim against Sassi's was thrown out.

SPEAKER_01 38:11

Because Hollis's lawyers missed the statute of limitations, yes.

SPEAKER_00 38:15

The claim is legally dead. You can't collect damages on it. How can you base a fresh retaliation claim on a dead wage claim?

SPEAKER_01 38:22

And here is the kicker: the absolute legal master stroke by the Ninth Circuit. I'm listening. The court ruled that just because a legal claim for back pay is time barred by the statute of limitations, that does not erase the historical fact of the relationship.

SPEAKER_00 38:37

Timed out claim doesn't erase history.

SPEAKER_01 38:39

Exactly. Think about it like a criminal statute of limitations. If the statute of limitations for a robbery is five years and the police catch you in year six, they can't put you in jail for the robbery.

SPEAKER_00 38:49

But that doesn't mean the robbery never happened. The historical events still occurred.

SPEAKER_01 38:53

The Ninth Circuit stated clearly: quote, the statute of limitations on a legal claim for damages does not bar a plaintiff from asserting the truth of that claim as a factual matter in order to prevail in a separate action.

SPEAKER_00 39:05

That is brilliant. Let me make sure I have this straight.

SPEAKER_01 39:08

Go ahead.

SPEAKER_00 39:09

Even though Hollis can no longer sue to get the actual unpaid minimum wage from Sassy's because the lawyers missed the deadlines.

SPEAKER_01 39:17

Right. The money is gone.

SPEAKER_00 39:18

Hollis can still go to court, present all the evidence about the threesong clothing removal rule, the hair penalties, and the house fees.

SPEAKER_01 39:26

Yes.

SPEAKER_00 39:27

Hollis can use that evidence to prove to a jury that they were technically an employee of Sassy's back in 2018.

SPEAKER_01 39:34

And if the jury agrees. You have it exactly right. The retaliation claim is fully alive and well.

SPEAKER_00 39:47

That's amazing.

SPEAKER_01 39:48

Hollis just has to prove the economic realities test applies to their past work at SASE's to unlock the retaliation protections. The Ninth Circuit untangled the procedural mess and gave Hollis a path forward.

SPEAKER_00 39:59

So the Ninth Circuit has completely resurrected Hollis's case.

SPEAKER_01 40:03

They have.

SPEAKER_00 40:03

They've established that Philace can be held liable for retaliation as an indirect employer, and that the Dantes gig cancellation can be the retaliatory act.

SPEAKER_01 40:13

Yes.

SPEAKER_00 40:14

But we still have to deal with Philae's do's main defense.

SPEAKER_01 40:17

The business justification.

SPEAKER_00 40:19

What about Philace's argument that he wasn't retaliating out of malice, but simply making a sound, objective business decision to protect Dantes from getting sued next. Because if we ignore that defense, we aren't looking at the whole picture.

SPEAKER_01 40:32

The Ninth Circuit dismantled this business defense with incredible clarity.

SPEAKER_00 40:37

How so?

SPEAKER_01 40:38

The defendants argued in their appellate briefs that canceling the contract was a quote reasonable, protective decision in the absence of legal certainty.

SPEAKER_00 40:47

They claimed they were just trying to avoid a second-class action lawsuit.

SPEAKER_01 40:50

But the court rejected this premise entirely.

SPEAKER_00 40:52

What was their reasoning? Because on a surface level, as I mentioned earlier, I think a lot of people might sympathize with Felaise's predicament.

SPEAKER_01 40:59

It's a common intuition.

What The Ruling Means For Gig Work

SPEAKER_00 41:01

Right. If a contractor believes they are actually an employee and is forcing the business to treat them as such in court, why must the business keep hiring them and compounding their alleged liability? Where is the line between self-protection and retaliation?

SPEAKER_01 41:16

The court looked at the practical reality of the situation. First, they noted that Hollis's work at Dantes was fundamentally different than the work at Sassy's.

SPEAKER_00 41:24

Oh, because it was just a five-minute cabaret act.

SPEAKER_01 41:27

Exactly. It was a self-choreographed, one-off cabaret act, not a nightly, heavily controlled shift with house fees. So the actual legal risk of Dante's being successfully sued for misclassification was incredibly low.

SPEAKER_00 41:39

The situations were not comparable.

SPEAKER_01 41:41

But more importantly, the Ninth Circuit established a massive precedent here regarding intent. They stated that a financial interest in minimizing liability does not justify bald retaliation.

SPEAKER_00 41:52

So you cannot use protecting the corporate budget as an excuse for punishing a whistleblower.

SPEAKER_01 41:57

No, you can't. The court pointed out that canceling a scheduled work agreement and barring a worker from future contract opportunities directly cuts that worker off from an income source.

unknown 42:07

Right.

SPEAKER_00 42:07

It starts them out.

SPEAKER_01 42:08

It deprives them of funds they otherwise would have earned to pay their rent and buy their groceries. And the legal standard for retaliation under the FLSA, as established by the Supreme Court, is whether the employer's action is harmful, to the point that it could well dissuade a reasonable worker from making or supporting a charge of discrimination.

SPEAKER_00 42:26

To put that in perspective, if I am working at a club and I know that suing Club A for stealing my wages means I will instantly be blacklisted from Club B, Club C, and Club D.

SPEAKER_01 42:38

Just because the owners all play golf together and share LLCs.

SPEAKER_00 42:41

Right. I am never going to file that lawsuit.

SPEAKER_01 42:43

Exactly.

SPEAKER_00 42:43

The financial ruin of being blacklisted from the entire industry is far worse than the stolen wages. I'll just keep my head down and take the abuse.

SPEAKER_01 42:51

And that is the exact chilling effect the court is trying to prevent. The FLSA is not just a set of suggestions. It has what the Supreme Court calls a remedial and humanitarian purpose.

SPEAKER_00 43:02

It was designed to protect the poorest, most vulnerable workers from exploitation. Trevor Burrus, Jr.

SPEAKER_01 43:07

Right. And the entire enforcement mechanism of the Fair Labor Standards Act relies on workers being brave enough to stand up, risk their jobs, and report violations.

SPEAKER_00 43:17

Aaron Ross Powell If companies could legally blacklist workers from all their affiliated businesses, the second a worker filed a complaint, the law would become entirely toothless.

SPEAKER_01 43:27

No one would ever report minimum wage violations if it meant industry-wide excommunication.

SPEAKER_00 43:32

Trevor Burrus So the law essentially prioritizes the worker's right to complain over the employer's desire to preemptively cut ties across separate corporate entities.

SPEAKER_01 43:42

Aaron Powell That's a great way to summarize it.

SPEAKER_00 43:43

Trevor Burrus The court is saying we don't care if you think you are doing clever corporate risk management. If your risk management involves starving a whistleblower of their income to make a point, it is illegal retaliation.

SPEAKER_01 43:54

The Ninth Circuit emphatically stated that FLSA covered employers cannot take adverse actions against plaintiffs and then avoid retaliation liability simply by explaining those actions as attempts to limit legal exposure created by their own alleged violations. That is a massive sweeping ruling. It completely changes the landscape for workers and business owners who operate. Multiple entities.

SPEAKER_00 44:20

It's not just about exotic dancers in Portland. This applies to anyone in the Ninth Circuit operating under the FLSA.

SPEAKER_01 44:25

It means that corporate webs and shell companies cannot be used to isolate liability while simultaneously coordinating retaliation.

SPEAKER_00 44:34

The definition of employer is broad enough to catch anyone acting indirectly in the interest of the original employer to punish the worker.

SPEAKER_01 44:41

Exactly.

SPEAKER_00 44:42

This brings us to a really fascinating place. We've journeyed from the neon lit stage of sassys through the procedural nightmare of missed discovery deadlines and calendaring errors into the appellate court's brilliant reframing of the law.

SPEAKER_01 44:56

It's a way to journey.

SPEAKER_00 44:57

So what happens to the independent contractor model when the courts start piercing the veil of these interconnected businesses as the gig economy grows and as mega corporations own dozens of subsidiary companies?

SPEAKER_01 45:09

Think about Uber, Lyft, Amazon delivery contractors, or even freelance graphic designers working for massive media conglomerates.

SPEAKER_00 45:16

Right. This ruling means your actions at one job could follow you to another. But more importantly, the law might actually have your back if the corporate web tries to retaliate and freeze you out across their various platforms.

SPEAKER_01 45:29

It is a profound shift in power.

SPEAKER_00 45:31

Something to mull over the next time you sign a gig work contract, or the next time you think a corporate boundary will protect you from a retaliation claim.

SPEAKER_01 45:39

It is a critical lesson in how the law looks past the paperwork to find the economic reality, and how protections for workers are designed to survive even the most complex corporate structuring.

SPEAKER_00 45:50

Because the case was reversed on appeal, it heads back to the trial court for further adjudication, including trial.