Strip Club Win Shows The Power Of The Epic SCOTUS Ruling For Gig Companies

When the Supreme Court decided this May that businesses were permitted to enter into class waiver agreements with employees and contractors, forcing them into individual arbitration proceedings over workplace disputes rather than having to be subjected to bloated and costly class action litigation, we called it a "monumental" decision that "saved employment arbitration as we know it." For businesses in the gig world, we now have a definitive example of just how valuable the SCOTUS's new standard can be when it comes to misclassification cases.

Late last week, the 6th Circuit Court of Appeals (hearing federal cases arising out of Ohio, Tennessee, Kentucky, and Michigan) struck down a proposed class action lawsuit filed by a group of exotic dancers hoping to prevail on an argument that they were misclassified as contractors, relying on the Supreme Court's Epic decision for the proposition that the workers' arbitration agreements precluded class litigation. This is welcome news for gig companies, as the ruling demonstrates that this standard can apply to federal misclassification proceedings, and is a good reminder that there are significant benefits associated with arbitration agreements with class waiver provisions.

The August 23 decision in McGrew v. VCG Holding Corp. is brief (just two pages long) and to the point. It briefly recaps the underlying casea group of exotic dancers who worked for PT's Showclub in Louisville, Kentucky, brought a misclassification case against the hiring entity alleging they should have been classified as employees. The club defended the case by pointing to the arbitration agreements signed by each dancer containing class waiver provisions, and the lower court dismissed the class action case and ordered the dancers to proceed with individual arbitration claims. The workers appealed the decision to the 6th Circuit, which held off on a final ruling on the matter until after the SCOTUS could weigh in...