Employee Survival Guide® - When Risk Management Becomes Retaliation: Hollis v. R & R Restaurants

Episode Date: April 25, 2026

Comment on the Show by Sending Mark a Text Message.A single email can expose an entire retaliation strategy. We start with a scenario that feels painfully familiar in the gig economy: you’re called an “independent contractor,” you believe you’re being controlled like an employee, and you finally file an FLSA lawsuit for unpaid minimum wages. Then your income dries up somewhere else, not because your work changed, but because the owner you sued has ties to another venue across town.We dig into the case documents behind a Portland dispute involving exotic dance clubs, house fees, tip practices, and unusually granular workplace rules. Along the way, we explain the Fair Labor Standards Act in plain language, including why a signed independent contractor agreement is not decisive and how the economic realities test weighs control, profit opportunity, investment, skill, permanence, and whether the work is integral to the business. We also cover the procedural side that can make or break wage and hour claims: discovery, depositions, and the FLSA statute of limitations.The turning point is retaliation. A booked performance gets canceled after a lawsuit is filed, with the reason put in writing as “risk management.” The trial court initially treats that as outside the FLSA because the worker looks like a contractor at the second venue. The Ninth Circuit flips that logic, reading “employer” broadly enough to reach people acting indirectly in an employer’s interest and rejecting the idea that liability avoidance excuses blacklisting. If you care about worker protections, corporate webs, and how retaliation works across related businesses, this one matters.Subscribe for more clear breakdowns of real employment law battles, share this episode with someone navigating contractor status, and leave a review with your biggest question about misclassification or retaliation. If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, X and LinkedIn.  We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts and Spotify. Leaving a review will help other employees find the Employee Survival Guide.  For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.Disclaimer:  For educational use only, not intended to be legal advice. 

Hey, it's Mark here and welcome to the next edition of the Employee Survival Guide, where I tell you, as always, what your employer does definitely not want you to know about, and a lot more. 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. Yeah, pretty stressful one, actually. Oh, absolutely. I want you to picture yourself working as an independent contractor. You know, you're hustling, you're putting in the hours.

Or managing your own schedule. or, well, trying to at least. Right, trying to. And eventually you get into a dispute with a person who signs the checks. And not just a minor disagreement. Exactly. A serious one. We are talking about a fundamental legal dispute over unpaid minimum wages.

Right. You start to realize that maybe you aren't actually an independent contractor at all. You feel like you've been misclassified. You feel that the control they have over you crosses a legal line. So you take this massive risk. and you file a lawsuit. Now, imagine that just a few weeks later, you suddenly find yourself blacklisted. Your shifts get canceled. Yeah, cancel at a completely different gig across town, a gig that has nothing to do with the first one, except for one, like, tiny detail. The boss you just sued

happens to be a business partner at this other entirely separate company. 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. 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. Claiming that my standard contractor agreements are illegal, right. But from your perspective, as the worker, you're looking at your empty bank account. And you're thinking, wait a minute, you are cutting off my livelihood across the board to punish me. Yes. This is illegal retaliation. So the question is, which is it? Is it a savvy, legitimate business decision to limit corporate liability?

Or is it bald, illegal retaliation designed to just starve a worker into submission? Exactly. And that tension right there is the central battleground of modern labor law. It really is. And to answer that question, we have a stack of fascinating case documents today. We've got initial complaints, amended complaints, trial court orders, and ultimately appellate rulings from the Ninth Circuit. Yeah, these documents chronicle a fierce multi-year legal battle over this exact scenario. 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.

But more importantly, we are going to examine how far the anti-retaliation protections in that law actually stretch. Right, especially when dealing with interconnected corporate entities and shared ownership structures. It gets incredibly messy. 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. Just because they happen to share an owner.

Right. But legally does that hold up? Yeah. Today we are taking a journey through the neon lit world of Portland's exotic dance clubs straight into the federal courts. Our focus is the legal battle between an exotic dancer named Zoe Hollis and the management of two well-known Portland venues. Sassies and Dantes. Right. And the documents we have lay out two vastly different.

reality is depending entirely on which side of the courtroom you're sitting on. We have Hollis's amended complaint detailing allegations of extreme workplace control, unpaid wages, and retaliatory blacklisting. And on the flip side, we have the legal answers and affirmative defenses from the club's management. Arguing that they operated a standard live entertainment venue, engage performers strictly as independent contractors based on mutually signed agreements, and merely made a prudent business decision to avoid further litigation.

Yeah, they claim it was just risk management. And our goal today isn't to play judge and jury on the underlying facts themselves. Right. We're not here to take sides on the specific claims. We're just reporting what's in the document. Exactly. We want to explore the incredible legal mechanics of how the federal courts navigated this dispute. Especially when it comes to defining the boundaries of retaliation in a world where business owners often have their hands in multiple different companies.

It's a really complex web. 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. Right, because if we don't understand what happened at the first club, nothing that happens at the second club makes sense. We need to set the stage. What were the working conditions at Sassies that sparked this entire legal firestorm in the first place? Let's go back to the period from 2018 to February 2019 when Hollis was performing at Sassies. Okay, let's start with the plaintiff's reality. So according to Hollis' claims in the lawsuit, the reality of working at Sassies was defined by profound micromanagement.

A dynamic that Hollis argues is completely at odds with the label of independent contractor. Absolutely. The foundational issue here is compensation. Right, money. 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. Not a single cent in base pay from the club itself. Nothing. In fact, the financial relationship operated in the exact opposite direction. Wait, what do you mean?

Hollis claimed that they had to pay what are known as house fees to sassies just for the privilege of working a shift. Let me stop you right there, because for anyone who works a traditional W-2 job, that concept is mind-boggling. It really is. 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. That is the core allegation, yes. And it is relatively common in this specific industry, actually. Wow. So where does their money come from? The only money Hollis took home was generated through tips directly from the customers. Okay, I see.

But even those tips weren't fully theirs to keep. Of course not. Hollis's complaint alleges a strict system of mandatory tip sharing. Like tipping out the bartender at a restaurant? 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. The managers. Yes.

And the complaint notes that if a dancer failed to pay these kickbacks, the staff would, quote, make working there miserable. 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. It is a massive red flag under the Fair Labor Standards Act. Really? How so?

Well, the FLSA has incredibly detailed strict rules about tip pools. In a standard restaurant, for example, waitstaff can pool tips and share them with busers or bartenders. Right, because they're all part of the service chain. Exactly, because those are all service employees who customarily receive tips. Makes sense. But you generally cannot force a customarily tipped employee to share their tips with non-service employees who don't customarily receive tips. Okay. And you absolutely cannot force them to.

to share tips with management or ownership. So giving a cut to the managers is a huge no-no. 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. Meaning what, practically? Meaning they would owe the worker

the full statutory minimum wage for every hour worked, retroactively. 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 these court filings was the sheer level of control the club allegedly exercised over the actual

performance itself. Yes, the behavioral controls. 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. Sure. But I don't stand behind them and dictate how they hold the brush or demand they paint the trim before the ceiling. No, you let them do their job.

They are the expert. I leave the method to them. But at Sassies, the control described in the complaint seemed incredibly rigid. It did. The complaint outlines a remarkably robust set of rules governing the dancer's behavior and performance. Like what? Well, Sassies allegedly set the schedules, meaning performers couldn't just drop in whenever they felt like working. Okay, so that looks like employment. The club also mandated minimum prices for dances, removing the contractor's ability to negotiate their own rates based on market demand.

Interesting. So you can't even set your own price. Right. But the most striking allegation is that the club controlled the sequence of clothing removal on stage. I read that and couldn't believe it. It's very specific. They had a literal three-song rule. Yes.

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 a second song, the top had to come off. And during the third song, the bottoms came off. That is highly specific choreographic. It really is. It's not just saying perform a dance. It's saying perform a dance exactly the way we have structured it. And the rules extended well beyond the stage performance, too. What else did they control? Hollis alleged they were required to keep their customer tips, specifically the $1 bills, neatly organized in bundles of 20. Bundles of 20. Why would the club care how you fold the money in your own bag? It speaks to the aesthetic and operational control the club maintained over the environment. They wanted things a certain way. That's incredibly granular.

Furthermore, there were strict appearance standards. Which I assume aren't cheap to maintain. 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. So you're tripping for an hour off the clock? 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. A penalty for their natural hair. That's the allegation. 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. A currency organization. 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? It's a strong list. But, of course, the lawsuit has two sides. Sassies didn't just roll over and accept this narrative. They mounted a robust defense. They certainly did. What was the defendant's reality? Let's hear their side of it.

So the defendants are in our restaurants, which is the corporate entity operating sassies, along with its individual managers. They paint a completely different picture in their legal answer to the complaint. What's their main argument? Their primary defense is straightforward and relies on documentation. The contract. Exactly. Hollis signed an express arm's length independent contractor agreement. Right.

Sassies argues that they did not control the manner or means of how the performers completed their work. They dispute the level of control. Completely. From their perspective, they were simply operating like any standard live entertainment venue. Like a comedy club or a concert hall. Precisely the analogy they would use. They argue that they provided the infrastructure. Meaning the building. They owned the building. They paid for the advertising.

They provided the security personnel, the sound systems, the lighting, and the stage. So they set the stage, literally? Yes. They facilitated a safe, regulated environment for both the customers and the performers to interact. But the artistic performance itself. 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. Ah, okay. The theater provides the mic and the audience, but the comedian writes their own jokes.

That's their argument, exactly. In their legal filings, the defendants listed what are called affirmative defenses. Yes, standard practice in these responses. Two of them really stood out to me because they sound like ancient medieval curses. Oh, let me guess. Equitable, estoppel, and unclean hands. Yep, those are the ones. What do these concepts actually mean in plain English and

how do they apply to someone dancing at a club? 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. Oh, I see. So it's about going back on your word when the other person trusted you. Exactly. In this context, Sassies argued that Hollis willingly signed the independent contractor agreement.

Right. By doing so, Hollis represented themselves to the club as an independent business entity. And the club relied on that. Yes, Sassies relied on that representation to allow Hollis to perform without withholding taxes or paying minimum wage. So they're saying, hey, we trusted your signature. 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.

And what about unclean hands? The unclean hands defense builds on that idea of fairness, essentially arguing bad faith. Bad faith by Hollis. Yes. Sassies is saying to the court, look at this plaintiff. They entered this contract knowing exactly what the terms were. They knew what they were signing up for. 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. 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.

Talk or sure. 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? You'd think so, wouldn't you? 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?

That is the million dollar question. And it is the absolute heart of almost all FLSA litigation regarding misclassification. So why doesn't the paper matter? Under the Fair Labor Standards Act, contractual labels, frankly, do not matter. The law views minimum wage and overtime protections as fundamental public rights. Fundamental rights. Okay. You cannot contract away your rights under the FLSA, even.

even if you want to. Wait, really. So even if I willingly agree to it? Even if you beg an employer to hire you below minimum wage just to get a job, the law prohibits it. That's fascinating. So when a dispute arises, the courts completely ignore what the piece of paper says. Instead, they use what is called the Economic Reality's Test. The Economic Reality's test.

Okay, explain how that works mechanically because it sounds like a court playing detective. 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. The reality on the ground. 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? Or are you truly in business for yourself operating as a standalone economic entity? Got it. And how do they figure that out?

To figure this out, courts look at a series of factors, usually six. We'll run through them. First, they look at the degree of control the business has over your work. Who sets the schedule? Who dictates the methods? Okay, we talk about that with Sassies, the three-song rule, the shifts. Right. Second, they look at your opportunity for profit or loss depending on your own managerial skill.

So, like, if you work harder, can you negotiate better rates? Or is your income capped by the employer's pricing structure? Exactly. Third, they evaluate your investment in a quick, 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.

Got it. What's next? 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. 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?

The drop in sounds more like a contractor. And six, whether your service is an integral part of the employer's business. Let's play with that last factor because I think it's the easiest to understand. Sure. If I'm a plumber and sassies 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. It definitely isn't.

People don't go to Sassies to look at the pipes. So I am clearly an independent contractor. That is a perfect textbook example. Now, apply those same factors to an exotic dancer. Right. Sassies 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. Therefore, they're contractors. But Hollis would look at the exact same factors and argue the opposite. Entirely the opposite. Hollis would say, the club controls everything from the schedule to the specific song sequence of clothes. clothing removal. The club sets the minimum dance prices, limiting profit opportunity. And regarding that integral factor, without dancers, an exotic dance club fundamentally has no business. 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. The battle lines were drawn over those six factors. Exactly. So moving the timeline forward, Hollis leaves sassies in March of 2019. For over two years, nothing happens. The dispute seems to be over. But the story doesn't end there. In the summer of 2021, Hollis decides to formally sue. And this decision sets off a chain reaction that hits a completely different venue across town.

So fast forward to June of 2021. Hollis books a new gig at a different Portland club called Dantes. Specifically, they are booked to perform at an event called the Sanferno Cabaret. What kind of event is that? This is not just a regular club night. Sanferno 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.

It sounds like an alternative punk rock Cirque du Soleil. It really is highly theatrical and features a constantly rotating cast of performers. And Hollis performs there. Hollis performs at this cabaret twice. And it is incredibly important to note the contrast here. with the environment at Sassies. How so? At Dantes,

Hollis is performing a specific, self-choreographed 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 20. Totally different vibe. Completely. And on June 22, 2021, Hollis receives an email from Dante's management confirming a third scheduled performance for July 25. So they loved the act.

They did. And they were asking for Hollis's availability for future dates. Everything is going great. The relationship is thriving. 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 Sassies. Right. The lawsuit names the corporate entity, are in our restaurants, but it also personally names the individual managers.

Stacey Mayhood, Ian Hannigan. and Frank Follas. And Frank Follis is the linchpin of this entire story. Because he isn't just a partner and manager at Sassies. No, he's also a partner and manager at Dantes. This brings us to the retaliation email. This is such a crucial piece of evidence. It is rare in employment law to get a smoking gun document like this.

Usually employers are very careful to use vague language when terminating a relationship, right? Oh, absolutely. They say things like going in a different direction. But three weeks after the lawsuit is filed, on July 19, 2021, Frank Fales sends an email directly to Hollis. And it is a remarkable document because it lays out his exact reasoning in black and white. There is no subtext. It is entirely text. 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. Phelais 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 Sassies. A few days ago, we were served papers there for a class action lawsuit, of which you are the primary plaintiff. He acknowledges the lawsuit directly establishing the motive. Then he delivers the turning point of the email. 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 Sassies. Since you would be performing at Dantes as an independent contractor, that puts another business that I'm a partner in at risk for a lawsuit. And here's the punchline. Therefore, we have been strongly advised to not have you perform at Dantes.

That's all right there. He goes on to clarify his personal stance, seemingly trying to separate his business decision from personal malice, I guess. Yeah, he mentions that he actually supports much of Hollis's broader activism regarding cultural bias and diversity in the industry. But he draws a hard line on the legal classification issue. Right. He says, when it comes to performers being independent, contractors versus employees, we disagree. 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 sassies or any of their other clubs out of business. And he ends the email by apologizing that things ended up this way. 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. Let's hear it. 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. Yeah.

Wouldn't you have to stop hiring them as a contractor at your other businesses to stop the bleeding? That's the argument. If Faye-Lace lets Hollis perform at Dantes under the exact same independent contractor label that Hollis is currently attacking in court over at Sassies, isn't Falaise just inviting a second lawsuit against Dantes? It looks that way on paper. Isn't that just common sense liability management? You don't invite a known arsonist into your second house. You have articulated the exact legal tension that makes this case so important, and it is the argument the defense leans on heavily. Is it a legitimate business decision?

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. So what did Hollis do after getting this email? Shortly after receiving it, Hollis and their legal team amends the lawsuit. They add a brand new claim, an FLSA retaliation claim against Frank Felles specifically. Arguing that canceling the Dante's gig was an illegal retaliatory act directly responding to the filing of the Sassie's wage lawsuit.

Right. So now we have two massive issues rolling into the courtroom simultaneously. A dual track case? We have the original wage theft and misclassification claims regarding the years spent at Sassies, and we have this fresh new retaliation claim regarding the canceled cabaret gig at Dantes. And the legal battle goes to the U.S. District Court for the District of Oregon. But things quickly go sideways for always. Very sideways.

And honestly, it wasn't just the complexity of the law that was the problem. It was a catastrophic failure of basic legal procedure. The procedural blunders in this case are a nightmare scenario for any litigator. The case ends up before magistrate judge Yuli Yim Yu. Let's clarify the court structure for a second. What's a magistrate judge compared to a district judge? 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. Okay. The big boss and the magistrate. 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. the lawsuit forward. So they do the heavy lifting? Exactly. They manage the timeline. They handle discovery disputes. They hear pretrial motions and they issue what are called findings and recommendations. And then the district judge reviews those. Right. The district judge reviews those recommendations and makes the final ruling. Got it. So in this case, magistrate judge you was managing the timeline. And she became increasingly frustrated with Hollis's legal team. Because they completely dropped the ball during discovery.

Completely. For our listeners who haven't been involved in a lawsuit, discovery is the phase where both sides have to exchange evidence, handover emails, and interview witnesses under oath. Right. That is the discovery phase, and it is usually the most expensive and time-consuming part of a lawsuit. And a key component is the deposition. 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. And you just grill them. You asked them questions under oath for hours. It is critical for locking down their story and gathering evidence. So Hollis's lawyers argued to the judge that they desperately needed to depose the defendants to prove their case. 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. Must take place. Yes. But the deadline came and went and the depositions never. It never happened. 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. And they missed that deadline, too. The judge, clearly annoyed, even called a special status conference on April 13 to figure out what on Earth was going on. And Hollis's local counsel failed to appear. They didn't show up to the hearing about why they were missing deadlines. No.

And what was their excuse? A, quote, palindering error? A calendaring error. Yeah. Like they just forgot to put it in their outlook calendar. That's essentially what that means. These aren't just minor clerical errors that a judge brushes off, are they? No, in federal court, missing these deadlines has fatal consequences for your claims.

The judge is not going to do the lawyers work for them. Which brings us to the statute of limitations hurdle. Right. This is where the lack of depositions completely destroyed Hollis's wage claim. 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. The timeline is ruthless.

But let's explain why the missed depositions specifically destroyed the wage claim against Sassies. It has to do with how long you have to file a lawsuit under the FLSA? 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. Okay, two years. Hollis last performed at Sassies in March of 2019. But they didn't file the lawsuit until June 28, 2021. That is two years and roughly three months. Right.

So on its face, the claim is expired. It's what lawyers call time barred. But there's an exception to that two-year rule, right? 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. Willful. What does that mean legally?

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

And how do you get that evidence? By putting the owners in a room under oath and opposing them. Exactly. 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 three-song role? Did you read the FLSA guidelines? Right.

You used the deposition to prove they knew better, but did it anyway. But because Hollis's lawyers missed the deadline and never did the depositions, they had zero proof of willfulness to present to the judge. 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. Because Hollis sued after two years and three months. The wage claims against sassies were dismissed entirely. The core of the original lawsuit was dead on arrival due to a missed calendar invite. It's devastated.

That is a brutal way to lose a case. But what about the retaliation claim? The email from Files canceling the Dante's 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? The trial court first magistrate Judge U, whose findings were then adopted by District Judge Simon, ruled against Hollis on the retaliation claim as well.

Also gone. 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. Employee, that's the magic word. Exactly. The trial court reasons that for Hollis to claim illegal retaliation regarding the cancellation

of the Dante's gig, Hollis had to be an employee of Dantes. They viewed the retaliatory act as inextricably linked to the venue where the act occurred. Yes. So the court took that six-factor economic realities test we debated earlier. The one with the plumber analogy. Right. But they applied it exclusively to the work Hollis did at Dantes. Okay, let's run the test on the Dante's gig, because the facts.

are wildly different than sassies. They really are. Control. Yeah. Hollis had full artistic control over his self-corriagraphed five-minute set. Permanence. It was a one-off gig performed exactly twice with a third scheduled. 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. So when you apply the economic realities test to the Dundee's test to the Dantes' time, Dante's performances, it is abundantly clear that Hollis was acting as a true independent contractor at Dantes, not an employee. And the court looked at that and concluded. Because Hollis was an independent contractor at Dantes, there was no employee relationship to be retaliated against in that specific context. The FLSA only protects employees. Therefore, legally speaking, Fialese's email canceling the gig could not be considered FLSA retaliation.

And the entire case was dismissed. 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. That was the rule. 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. It creates a roadmap for consequence-free corporate revenge. It really does. It's wild. 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. I love an appellate court plot twist. When the higher court looks at the mess the trial court made, how do they untangle it?

They start by fundamentally re-evaluating the definition of the employer. Okay. 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 Dantes. 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.

Acting indirectly in the interest of an employer. That is incredibly broad language. It is intentional. Congress wrote the law broadly to prevent employers from using middlemen or corporate shells to evade the law. Oh, that makes sense. The Ninth Circuit explained that Frank Phelais didn't need to be Hollis's direct employer at Dantes to be held liable for retaliation. So what was he? Instead, the court looked at his role at Sassies. Phelis was a partner at Sassies. By canceling the Dante's gig because of the sassies lawsuit, Phelis was acting indirectly in the interest of sassies. 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? Because it is an attempt to punish the worker for suing Club A. It sends a message. Like, if you sue my first club, I will make sure you can't earn a living at my second club. 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. That's a really sharp way of looking at it.

To illustrate this concept of indirect action, the Ninth Circuit cited a truly fascinating parallel case, Arias v. Ramondo. Let's talk about Arias v. Ramondo, because this case really highlights how far the law will go to protect workers from creative forms of retaliation. It's a shocking case, honestly. In Arias, a worker sued his former employer for severe wage theft. We're talking unpaid overtime, missed meal breaks, the works. And the worker happened to be undocumented. Yes. As the case was progressing and approaching trial, the employer's private defense attorney, a man named Remando, took matters into his own hands. What did he do?

He repeatedly contacted U.S. immigration and customs enforcement ICE to try and get the worker deported. That is intense. The defense lawyer tried to get the opposing party physically removed from the country to stop the lawsuit from moving forward. He did. The worker facing deportation then sued the attorney, Ramondo, for FLSA retaliation. Now, Ramando went to court and argued. Hey, I'm just an outside lawyer. 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. But the Ninth Circuit ruled against the attorney. 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. So if we connect this to the bigger picture of the Sassie'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. Not at all. 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 star view of income is also acting as an indirect employer. 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. That doesn't even require direct financial benefit. 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. Which leads to the appellate court's biggest, most impactful reframing of the case. This is the real turning point. Right, because we still have that magic word hanging over our heads. Employee. Yes.

The trial court definitively said Hollis wasn't an employee of Dantes. How does the Ninth Circuit get around that textual requirement? They reframe where the employment requirement must be found. The Ninth Circuit rules that the underlying Employees. claimant relationship needed to trigger the retaliation claim isn't with Dantes at all. It's with Sassies. Hollis is claiming they were retaliated against for filing a protected complaint concerning their past work at Sassies. Therefore, the only thing Hollis needs to prove to the court is that they were an employee of Sassies at the time of the original wage dispute. But wait, we just spent a

significant amount of time establishing that the wage claim against Sassies was thrown out. Because Hollis's lawyers missed the statute of limitations. Yeah. 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? And here is the kicker, the absolute legal masterstroke 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. A timed out claim doesn't erase history. 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. But that doesn't mean the robbery never happened. The historical events still occurred. 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. That is brilliant. Let me make sure I have this trait. Go ahead. Even though Hollis can no longer sue to get the actual unpaid minimum wage from Sassies because the lawyers missed the deadlines. Right. The money is gone. Hollis can still go to court, present all the evidence about the three-song clothing removal rule, the hair penalties, and the house fees.

Yes. Hollis can use that evidence to prove to a jury that they were technically an employee of Sassies back in 2018. And if the jury agrees? Hollis can then use that established employee status to valid. the retaliation claim against Phelas for canceling the Dante's gig in 2021. You have it exactly right. The retaliation claim is fully alive and well. That's amazing. Hollis just has to prove the economic realities test applies to their past work at Sassies to

unlock the retaliation protections. The Ninth Circuit untangled the procedural mess and gave Hollis a path forward. So the Ninth Circuit has completely resurrected Hollis's case. They have. They've established that Files can be held liable for retaliation as an indirect employer. and that the Dante's gig cancellation can be the retaliatory act. Yes. But we still have to deal with Flaes-Due's main defense.

The business justification. What about Falaise'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. The Ninth Circuit dismantled this business defense with incredible clarity. How so? The defendant's argument. argued in their appellate briefs that canceling the contract was a, quote, reasonable, protective

decision in the absence of legal certainty. They claimed they were just trying to avoid a second-class action lawsuit. But the court rejected this premise entirely. What was their reasoning? Because on a surface level, as I mentioned earlier, I think a lot of people might sympathize with Felace's predicament. It's a common intuition. 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? 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 Sassies. Oh, because it was just a five-minute cabaret act. 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 Dantes being successfully sued for misclassification was incredibly low. The situations were not comparable. 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. So you cannot use protecting the corporate budget as an excuse for punishing a whistleblower. No, you can't. The court pointed out that canceling a scheduled work agreement and borrowing a worker from future contract opportunities directly cuts that worker off from an income source. Right. It starts. them out. 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. 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. Just because the owners all play golf together and share LLCs. Right. I am never going to file that lawsuit. Exactly. 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.

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. It was designed to protect the poorest, most vulnerable workers from exploitation. 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. If companies could legally blacklist workers from all their affiliated businesses, the second

a worker filed a complaint, the law would become entirely toothless. No one would ever report minimum wage violations if it meant industry-wide, communication. So the law essentially prioritizes the workers' right to complain over the employer's desire to preemptively cut ties across separate corporate entities. That's a great way to summarize it. The court is saying, we don't care if you think you're doing clever corporate risk management. If your risk management involves starving a whistleblower of their income to make a point, it is illegal retaliation. 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. You cannot use your fear of the law as a shield to break the law. That is a massive sweeping ruling. It completely changes the landscape for workers and business owners who operate multiple entities. It's not just about exotic dancers in Portland. This applies to any one of the Ninth Circuit operating under the FLSA. It means that corporate webs and shell companies cannot be used to isolate liability, while simultaneously coordinating retaliation.

The definition of employer is broad enough to catch anyone acting indirectly in the interest of the original employer to punish the worker. Exactly. This brings us to a really fascinating place. We've journeyed from the neon-lit stage of sassies through the procedural nightmare of misdiscovery deadlines in calendaring errors into the appellate court's brilliant reframing of the law. It's a way to journey. So what happens to the independent contractor model when the court's, courts start piercing the veil of these interconnected businesses. As the gig economy grows and as mega corporations own dozens of subsidiary companies. Think about Uber, Lyft, Amazon delivery contractors,

or even freelance graphic designers working for massive media conglomerates. 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. It is a profound shift in power. 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. 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. Because the case was reversed on appeal, it heads back to the trial court for further

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