PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

No. 18-2462

________________

PRIYA VERMA, On behalf of herself and

All others similarly situated

v.

3001 CASTOR, INC., d/b/a The Penthouse Club and/or

The Penthouse Club@Philly; ABCDE PENNSYLVANIA 

MANAGEMENT, LLC;

DOE DEFENDANTS 1-10

3001 Castor, Inc.,

 Appellant

________________

Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil Action No. 2-13-cv-03034)

District Judge: Honorable Anita B. Brody

________________

Argued April 17, 2019

Before: AMBRO, GREENAWAY, JR.,

and SCIRICA, Circuit Judges
2

(Opinion filed: August 30, 2019)

John F. Innelli (Argued)

Two Penn Center, Suite 1300

Philadelphia, PA 19102

Counsel for Appellant

Jamisen A. Etzel (Argued)

Gary F. Lynch

Carlson Lynch Kilpela & Carpenter

1133 Penn Avenue, 5th Floor

Pittsburgh, PA 15222

Gerald D. Wells, III

Connolly Wells & Gray

2200 Renaissance Boulevard, Suite 275

King of Prussia, PA 19406

Counsel for Appellee

________________

OPINION OF THE COURT

________________

AMBRO, Circuit Judge

A jury in the District Court awarded more than $4.5 

million to a class of dancers at the Penthouse Club, an “adult 

gentleman’s club” in Philadelphia owned and operated by 

3001 Castor, Inc., for unpaid minimum wages and unjust 
3

enrichment under Pennsylvania law. The Court denied the 

motion of Castor to set aside the verdict, and it appeals to us. 

We join our District Court colleague, Judge Brody, in 

concluding that, as a matter of “economic reality,” the dancers 

were employees of Castor, not its independent contractors, and 

we reject Castor’s novel argument that the federal Fair Labor 

Standards Act (“FLSA”) precludes the class’s claims for unjust 

enrichment. We also conclude that Castor is not entitled to any 

credit or offset against the jury award for payments already 

received by the dancers. We thus affirm across the board and 

sustain the jury’s verdict. 

I. Background

Priya Verma was a dancer at the Penthouse Club, a 

nightclub in Philadelphia operated by Castor. As Judge Brody 

explained, the Club provides “topless female dancers” who 

“entertain [Castor’s] customers by performing seductive 

dances.” Verma v. 3001 Castor, Inc., 2014 WL 2957453, at *1 

(E.D. Pa. June 30, 2014). As the Club’s owner and operator, 

Castor controlled its atmosphere, policies, operations, and 

marketing. 

Dancers at the Club were classified into two categories: 

“Entertainers” and “Freelancers.” It required Entertainers to 

commit to working at least four days per week and submit a 

weekly schedule. Freelancers had no such commitments. 

Castor required each dancer in both categories to sign an 

agreement stating that she is an independent contractor. 

Dancers at the Club worked in shifts. They could 

choose among five: a “day shift” lasting from noon to 6:00 

p.m.; a “mid shift” from 3:00 p.m. to 9:00 p.m.; a “preferred 

shift” from 6:00 p.m. to midnight; a “premium shift” from 8:00 

p.m. to 2:00 a.m.; and a “power shift” from 10:00 p.m. to 2:00 
4

a.m. A dancer had to “rent” stage time for each shift she 

worked. The rates for these “stage-rental fees” varied 

depending on the shift and were lower for Entertainers than for 

Freelancers. Dancers performed in two locations: on the 

Club’s main stage and in private dance rooms.

The Club did not pay dancers a wage; their 

compensation consisted entirely of (1) “tips” they received

when dancing on stage or (2) fixed “dance fees” at rates 

established by the Club, which they received from giving 

“private dances” in the private dance rooms. The Club also 

took a fee, called a “room-rental fee,” for each private dance. 

Castor also required the dancers to “tip out” certain individuals 

who worked at the Club. These “mandatory tip-outs” had to 

be paid for each shift regardless how much money the dancer 

made in the shift. They included $15 to the Club’s disc jockey, 

$10 to the “house mom” (who kept track of the dancers’ 

schedules and assisted them in other ways), and $5 to the 

podium host, for a total of $30 per shift.

The Club provided training to the dancers and closely 

reviewed their attendance, appearance, demeanor, and 

customer service. It also had a strict set of rules the dancers 

must follow. When they violated those rules, they were fined 

amounts ranging from $10 to $100. 

In 2013 Verma filed this action against Castor on behalf 

of herself and similarly situated current and former dancers at 

the Club. She alleged claims for minimum wages and overtime 

under the FLSA, 29 U.S.C. §§ 206(a), 207(a), 216(b), 

analogous claims for minimum wages and overtime under the 

Pennsylvania Minimum Wage Act (“PMWA”), 43 Pa. Stat. 

§§ 333.104 & .113, a claim for non-payment of wages under 

the Pennsylvania Wage Payment and Collection Law, 43 Pa. 

Stat. § 260.9a, and a claim for unjust enrichment under 

Pennsylvania common law.
5

On the FLSA claims, Verma alleged an “opt-in” 

collective action under 29 U.S.C. § 216(b). See Knepper v. 

Rite Aid Corp., 675 F.3d 249, 258–59 (3d Cir. 2012).1 On the 

state-law claims, she pursued a damages class action under 

Federal Rule of Civil Procedure 23(b)(3).2 The case proceeded 

 

1 29 U.S.C. § 216(b) provides that private claims under the 

FLSA may be pursued collectively “by any one or more 

employees for and in behalf of himself or themselves and other 

employees similarly situated.” Unlike class actions under the 

Federal Rules of Civil Procedure, FLSA collective actions 

under § 216(b) are “opt in” actions—that is, “[n]o employee 

shall be a party plaintiff to any such action unless he gives his 

consent in writing to become such a party and such consent is 

filed in the court in which such action is brought.” 29 U.S.C. 

§ 216(b). The procedures for these collective actions, which 

are not disputed here, have been described in prior cases. See, 

e.g., Zavala v. Wal Mart Stores Inc., 691 F.3d 527, 534 (3d Cir. 

2012). 

2 Rule 23(b)(3) provides that a class action may be maintained 

if the requirements of Rule 23(a) are met and “the court finds 

that the questions of law or fact common to class members 

predominate over any questions affecting only individual 

members, and that a class action is superior to other available 

methods for fairly and efficiently adjudicating the 

controversy.” The requirements of Rule 23(a) are having 

(1) so many class members that joinder is impractical, 

(2) questions of law or fact that are common to the class, (3) 

one or more representatives whose claims or defenses are 

typical of those in the class, and (4) representatives who will 

fairly and adequately protect the interests of the class. See Fed. 

R. Civ. P. 23(a)(1)–(4).
6

along two tracks: one under the collective-action provisions of 

the FLSA, and another under the class-action procedures of 

Rule 23. We and other circuits have endorsed this dual-track 

procedure, which is used widely to pursue wage-and-hour 

cases in federal court simultaneously under federal and state 

law. See Knepper, 675 F.3d at 262 (collecting cases).

After some discovery, the District Court entered an 

order conditionally certifying a collective action under the 

FLSA comprising current and former dancers of the Club 

during the covered time period. 3001 Castor, 2014 WL 

2957453, at *13. A notice was sent to potential members of 

the collective action, and 22 dancers filed consent forms to join 

the action as “opt-in” plaintiffs. (For convenience, Verma and 

the opt-in plaintiffs are described as “plaintiffs.”) The District 

Court also ruled, as a matter of law, that plaintiffs and the other 

dancers were “employees” of Castor under the FLSA and the 

PMWA. Id. at *4–10.

After further discovery, the Court entered an order 

granting final certification of the FLSA collective action

(covering both the minimum-wage and overtime claims) and 

granting in part Verma’s motion for class certification under 

Rule 23. See Verma v. 3001 Castor, 2016 WL 6962522, at *6, 

*14 (E.D. Pa. Nov. 29, 2016). The Court certified a Rule 

23(b)(3) class with respect to the following claims under 

Pennsylvania law: (i) a claim for minimum wages under the 

PMWA, (ii) a claim for overtime under the PMWA, and (iii) a 

claim for unjust enrichment based on deductions for mandatory 

tip-outs. (It denied class certification to the extent plaintiffs

sought to recover deductions for stage-rental fees, fines, and 

room-rental fees. Id. at *10–11.)

A couple weeks before trial, plaintiffs and Castor 

purportedly reached an agreement in principle to settle an aspect 

of plaintiffs’ FLSA claims. The terms of that alleged settlement 
7

are not in the record, and there appears to be disagreement 

between counsel concerning what those terms are and whether an 

agreement was actually reached. What we know is this: plaintiffs 

were to receive $109,000 in exchange for not presenting at trial

some portion of their FLSA claims. 

Shortly after the alleged settlement, Castor filed a 

motion to dismiss the action for lack of subject matter 

jurisdiction. It argued that a settlement concerning the FLSA 

claims—the only federal claims involved—deprived the 

District Court of jurisdiction over the case. The Court denied 

that motion because, in its view, it retained supplemental 

jurisdiction over the state claims under 28 U.S.C. § 1367(a). 

The remaining claims—class claims for minimum wages

under the PMWA, overtime under the PMWA, and unjust 

enrichment—went to trial. The jury returned a verdict awarding 

the class more than $4.5 million: $2,610,322.61 for its 

minimum wage claims and $1,948,400.12 for its unjust 

enrichment claims. Castor filed post-trial motions asking the 

Court to dismiss the suit for lack of jurisdiction, to reconsider 

its summary-judgment rulings, and to enter judgment for 

Castor as a matter of law. The Court denied those motions and 

entered final judgment on the verdict. Castor appeals to us. 

II. Discussion

We have jurisdiction to review the final judgment of the 

District Court under 28 U.S.C. § 1291. Stecyk v. Bell 

Helicopter Textron, Inc., 295 F.3d 408, 412 (3d Cir. 2002). 

Castor challenges on several grounds the District Court’s 

judgment entering the $4.5 million jury verdict. We address 

each in turn. 
8

A. The District Court’s Jurisdiction

Castor contends the District Court did not have 

jurisdiction to try this case. It claims the Court should have 

granted its motion to dismiss for lack of jurisdiction after the 

parties reached an agreement in principle to settle an aspect of 

plaintiffs’ FLSA claims. According to Castor, once those 

claims were excised from the case, the Court should not have 

exercised supplemental jurisdiction under § 1367(a). Instead, 

it should have dismissed plaintiffs’ state-law claims because 

(i) they presented “novel or complex issue[s] of State law,” 

28 U.S.C. § 1367(c)(1), (ii) they “substantially 

predominate[d]” over the federal claims, id. § 1367(c)(2), and 

(iii) it was improper to try the state-law claims on their own. 

We need not review the decision to exercise 

supplemental jurisdiction in these circumstances. Irrespective 

whether the District Court had that jurisdiction, it no doubt had 

jurisdiction over plaintiffs’ state-law claims under the Class 

Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109–2, 

119 Stat. 4 (codified in scattered sections of Title 28 of the U.S. 

Code). That statute gives district courts original jurisdiction 

over class actions that (i) involve more than 100 class 

members, (ii) have an aggregate amount in controversy greater 

than $5 million, and (iii) have diversity of citizenship between 

any class member and any defendant. 28 U.S.C. § 1332(d). 

Those criteria clearly were met here: the complaint alleged a 

class of more than 300 dancers, an aggregate amount in 

controversy more than $5 million, and the requisite diversity 

of citizenship. 

Castor contends that CAFA’s amount-in-controversy 

requirement was not satisfied because the maximum damages 

the dancers could recover was only around $700,000. We 

disagree for two reasons. First, because Castor did not raise a 

factual challenge to the complaint’s CAFA allegations until the 
9

eve of trial, the jurisdictional allegations in the complaint are 

controlling. See Neale v. Volvo Cars of N.A., LLC, 794 F.3d 

353, 357 n.1 (2015) (where no factual challenge is raised to 

CAFA allegations, they are controlling unless “it is clear to a 

legal certainty that the plaintiff cannot recover the amount 

claimed”); see also Dart Cherokee Basin Operating Co., LLC 

v. Owens, 135 S. Ct. 547, 553 (2014) (“When a plaintiff 

invokes federal-court jurisdiction, the plaintiff’s amount-incontroversy allegation is accepted if made in good faith.”); 

Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d 388, 

395–96 (3d Cir. 2016) (“[U]nder a long-standing rule, federal 

diversity jurisdiction is generally determined based on the 

circumstances prevailing at the time the suit was filed.” 

(quotation and brackets omitted)). 

Second, even if we were to consider Castor’s belated 

factual challenge to the District Court’s jurisdiction under 

CAFA, we would easily conclude from the record—including 

the approximately $4.5 million jury verdict—that the amount 

in controversy exceeded $5 million all along. The verdict does 

not include attorneys’ fees, which do count for CAFA’s 

amount-in-controversy threshold, see Neale, 794 F.3d at 357 

n.1, and was entered based on a narrower scope of issues (and 

thus a smaller amount in controversy) than were initially pled 

in the complaint, see Verma Br. at 17–18 (summarizing the 

additional categories of alleged damages the District Court 

excluded from class certification). As we recently explained, 

a putative class action’s qualification for CAFA jurisdiction is 

determined based on the class action that is “filed” under Rule 

23—in other words, the class action that is alleged. Coba v. 

Ford Motor Co., --- F.3d ---, 2019 WL 3367573, at *3 (3d Cir. 

July 26, 2019). We thus conclude that CAFA’s amount-incontroversy requirement was met here in any event. In short, 

the District Court had jurisdiction under CAFA to determine 

the class’s state-law claims.
10

We also believe the Court acted within its discretion to 

exercise jurisdiction over those claims under § 1367(a). 

Before the FLSA claims were dropped, the overlap between 

the federal and state-law claims was substantial. Allowing 

Verma to pursue them through the customary “dual-track” 

procedure we endorsed in Knepper was reasonable. 675 F.3d 

at 262. And although the federal claims were not presented at 

trial, the Court may have reasonably concluded that 

“considerations of judicial economy, convenience, and fairness 

to the parties provide[d] an affirmative justification for” 

exercising jurisdiction. Hedges v. Musco, 204 F.3d 109, 123 

(3d Cir. 2000) (quotation omitted).

B. The District Court’s Pre-trial “Employee” 

Ruling 

As noted, before trial the District Court ruled as a matter 

of law that plaintiffs and the other dancers were “employees” 

of Castor under the FLSA and the PMWA. Castor claims that 

ruling erred and asks us to reverse it. But before reaching this 

issue, we address a threshold argument made by the class. 

1. Appellate Jurisdiction

Verma contends we lack jurisdiction to review the 

District Court’s classification of the dancers as employees. 

She claims that ruling is unreviewable either because (a) it was 

part of an unappealable order denying a motion for summary 

judgment, or (b) Castor forfeited any challenge to that ruling 

by not objecting at trial when the Court instructed the jury that 

“[the Court] ha[s] already determined that Verma and the other 

Dancers were employees, not independent contractors.” 

Verma Br. at 24–25. 

Both contentions miss the mark. Regardless how it was 

labeled, the Court’s ruling that Verma and the other dancers by 
11

law are employees was in substance a partial grant of summary 

judgment in favor of plaintiffs on each of their claims that was 

premised on the existence of that employer–employee 

relationship. As such, we can review it under the “merger 

rule,” which provides that interlocutory orders, such as partial 

grants of summary judgment, “merge with the final judgment 

in a case, and the interlocutory orders (to the extent that they 

affect the final judgment) may be reviewed on appeal from the 

final order.” Pineda v. Ford Motor Co., 520 F.3d 237, 243 (3d 

Cir. 2008) (quoting In re Westinghouse Sec. Litig., 90 F.3d 

696, 706 (3d Cir. 1996)); see also Roberts v. Ferman, 826 F.3d 

117, 121 n.3 (3d Cir. 2016) (“[B]ecause interlocutory orders 

such as partial grants of summary judgment merge with the 

final judgment, they can be challenged on appeal.”). 

As an aside, we note that Castor did not explicitly 

identify the District Court’s partial grant of summary judgment 

in its notice of appeal; instead it identified the Court’s order 

denying the motion to reconsider its grant of partial summary 

judgment. But that does not bar our review. We exercise 

appellate jurisdiction over orders “that are not specified in the 

notice of appeal where: (1) there is a connection between the 

specified and unspecified orders; (2) the intention to appeal the 

unspecified order is apparent; and (3) the opposing party is not 

prejudiced and has a full opportunity to brief the issues.” 

Trzaska v. L’Oreal USA, Inc., 865 F.3d 155, 163 (3d Cir. 2017)

(quotation omitted). These requirements are all met here: the 

specified and unspecified orders were both related to Castor’s

opposition to summary judgment on the

employee/independent-contractor issue, Castor’s intention to 

appeal that issue is evident from the 15 pages it devoted to the 

issue in its opening brief, and plaintiffs took their full 

opportunity to brief it on appeal.
12

2. Merits

That brings us to the merits of the District Court’s 

“employee” ruling. Whether a worker is an employee or an 

independent contractor under the FLSA or PMWA is a mixed 

question of fact and law. See Martin v. Selker Bros., 949 F.2d 

1286, 1292 (3d Cir. 1991). The fact component is the 

combination of disputed and undisputed facts that comprise the 

economic relations between the worker and the alleged 

employer. The law component is the conclusion of whether 

those facts make a worker an “employee” or “independent 

contractor.” In some cases, one or more genuine issues of fact 

concerning the relevant economic relations may preclude a trial 

court from drawing a conclusion as a matter of law on the 

“employee” or “independent contractor” issue. In those cases 

the issue would go to trial, with the jury resolving it through 

either special interrogatories or by deciding the classification 

issue. See Fed. R. Civ. P. 49. But in other cases, as here, the 

district court may resolve the issue before trial based on 

undisputed facts in the record. In those cases we do a fresh 

review on appeal of the court’s determination. Selker Bros., 949 

F.2d at 1292.

We use a six-factor test to determine whether a worker is 

an “employee” or an “independent contractor” under the FLSA. 

See id. at 1293. Pennsylvania courts use the same test under the 

PMWA. Pa. Dep’t of Labor & Indus. v. Stuber, 822 A.2d 870, 

873 (Pa. Commw. Ct. 2003), aff’d sub nom. Pennsylvania v. 

Stuber, 859 A.2d 1253 (Pa. 2004). Those factors are:

(1) the degree of the alleged employer’s right to 

control the manner in which the work is to be 

performed; 

(2) the alleged employee’s opportunity for profit 

or loss depending upon [her] managerial skill; 
13

(3) the alleged employee’s investment in 

equipment or materials required for [her] task, or 

[her] employment of helpers; 

(4) whether the service rendered requires a special 

skill; 

(5) the degree of permanence of the working 

relationship; [and]

(6) whether the service rendered is an integral part 

of the alleged employer’s business.

Selker Bros., 949 F.2d at 1293; accord Donovan v. 

DialAmerica Mktg., Inc., 757 F.2d 1376, 1379 (3d Cir. 1985). 

Notably, none of these factors asks whether the worker 

signed an agreement stating that she is an “independent 

contractor,” as Castor required of the dancers here. That is not 

surprising. The whole point of the FLSA and the PMWA is to 

protect workers by overriding contractual relations through 

statute. See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 

(1945) (“The [FLSA] statute was a recognition of the fact that 

due to the unequal bargaining power as between employer and 

employee, certain segments of the population required federal 

compulsory legislation to prevent private contracts . . . .”); 43 

Pa. Stat. § 333.101 (declaring that employees covered by the 

protections of the PMWA “are not as a class on a level of 

equality in bargaining with their employers in regard to 

minimum fair wage standards, and ‘freedom of contract’ as 

applied to their relations with their employers is illusory”).

In any event, no one factor is dispositive. Rather, a 

court should consider them together in the “circumstances of 

the whole activity” to determine whether the worker is 

“dependent upon the business to which [she] render[s] service” 
14

or is, “as a matter of economic reality,” operating an 

independent business for herself. Selker Bros., 949 F.2d at 

1293 (quoting DialAmerica, 757 F.2d at 1382 (internal 

quotation omitted)).

i. Employer’s right to control the 

manner in which the work is to be 

performed

Castor contends the dancers had substantial control over 

their work. It emphasizes that they (i) set their own hours, 

(ii) could opt among different shifts with varying stage-rental 

fees, (iii) decided whether to be Entertainers (requiring a 

weekly four-shift commitment for lower stage-rental fees) or 

Freelancers (no weekly commitment but higher stage-rental 

fees), (iv) determined whether to stay beyond the end of their 

shifts to continue working, and (v) chose whether to accept or 

reject requests for private dances.

But beyond these narrow choices made by the dancers, 

which primarily relate to the shifts they selected, the Club 

exerted overwhelming control over the performance of their 

work. It (i) established the available shift times, (ii) checked

the dancers’ shift attendance and fined them $10 for every 30 

minutes they were late, (iii) instructed the dancers on their 

physical appearance and dictated their choice of dress, hair, 

and makeup, (iv) determined the songs and number of songs 

that play when a dancer is dancing, (v) forbade them from 

smoking, chewing gum, or using their cellphones while on the 

dance floor, (vi) banned changing into their street clothes 

before the end of their shifts, and (vii) set the price and duration 

of all private dances.

On balance, the control factor weighs strongly in favor 

of “employee” status. See id. at 1294 (employer’s control over 

gas station operators shown by findings that owner “set the 
15

price[s] of cash sales,” visited the gas stations regularly “to 

oversee its operations,” and “controlled the hours of operation 

and the appearance of the stations”); see also McFeeley v. 

Jackson Street Entm’t, LLC, 825 F.3d 235, 241–42 (4th Cir. 

2016) (nightclub owner’s pervasive control over exotic dancers 

shown by findings that nightclub reviewed attendance, 

imposed guidelines on dancers’ appearance, set the fees for 

private dances, instructed dancers on their demeanor and 

performance, and managed the club’s atmosphere and 

clientele).

ii. Employee’s opportunity for profit 

or loss depending upon her 

managerial skill

Castor places significant weight on this factor. 

Throughout its brief it characterizes the dancers as 

“entrepreneurs” who “invested” their time and money in shifts 

at the Club in exchange for the opportunity to make money. It 

emphasizes that, in a given shift, dancers could make anywhere 

from profits in excess of $1,600 to a loss (due to paying stagerental fees and mandatory tip-outs). It argues that each dancer 

had control over her own profits and losses based on her 

attraction of followers (through social media platforms, for 

example) along with “her dancing skills . . . and her skills at 

creating a fantasy.”

But this factor also weighs in favor of employee status. 

Although each dancer had some degree of control over her 

profits and losses, “managerial skill”—the relevant factor 

here—had minimal influence on them. It was the Club, not the 

dancers, that determined its hours, decided whether to charge 

admission fees, set the price for drinks and food, determined

the length and price of dances on stage and in private rooms, 

and managed its atmosphere, operations, and advertising. 

Further, the dancers’ skills in “dancing” and “creating a 
16

fantasy” are not the kinds of “managerial skills” that can weigh 

in favor of independent-contractor status. See Selker Bros., 

949 F.2d at 1294; Reich v. Circle C. Investments, Inc., 998 F.2d 

324, 328 (5th Cir. 1993) (rejecting argument that exotic 

dancers’ control over their profits through “initiative, hustle, 

and costume” weighed in favor of independent-contractor 

status); McFeeley, 825 F.3d at 243 (observing that courts have 

“almost universally rejected” the argument that dancers control 

their opportunities for losses and profits because they can 

“hustle” to increase their tips and dance fees).

iii. Employee’s investment in 

equipment or materials required 

for her task, or her employment of 

helpers

Castor argues weakly that dancers “invest” in their trade 

by paying the Club’s stage-rental fees each shift. But this falls 

in favor of “employee” status. Castor owns and maintains the 

Club’s premises, pays its licensing fees, purchases alcohol for 

it, and manages, pays and trains its personnel. As Judge Brody

noted, courts that have considered similar economic 

arrangements have all concluded that “a dancer’s investment is 

minor when compared to the club’s investment.” 3001 Castor, 

2014 WL 2957453, at *8 (quotation omitted) (collecting 

cases). We reach the same conclusion.

iv. Whether the service rendered 

requires a special skill

As noted, Castor maintains that dancers have control 

over the quality of their performance through their “dancing 

skills” and “skills at creating a fantasy.” The District Court 

aptly described the skills that contribute to dancers’ 

performance of their “primary job responsibilities [of] topless 

dances on stage and . . . private dances [for] the club’s 
17

customers”: they should be “fluid” dancers and have good 

“appearance[,] . . . social skills, [and] hygiene.” Id. at *9. We 

refuse to recognize these as “special skills” that weigh in favor 

of independent-contractor status. Although we have not drawn 

a bright line between “special” and other skills for purposes of 

our six-factor test, we do not believe “appearance,” “social 

skills,” and “hygiene” qualify. See Reich, 998 F.2d at 328 

(nude dancers “do not exhibit the skill or initiative indicative 

of persons in business for themselves”); see also Hopkins v. 

Cornerstone Am., 545 F.3d 338, 345 (5th Cir. 2008) (holding 

that managers’ “skills to effectively manage their offices and 

teams . . . are not specialized skills . . . [because] they are 

abilities common to all effective managers” (emphasis in 

original)). 

v. The degree of permanence of the 

working relationship

The permanence factor is Castor’s strongest. It 

submitted attendance data showing that dancers at the Club 

typically are a transient group. The average dancer in the class 

worked for the Club in only 14 of the 109 workweeks in the 

class period, and none of the dancers who rented stage time at 

the Club during the class period rented time slots totaling more 

than 40 hours in a given week. In addition, throughout the class 

period the dancers were free to work at other venues, including 

for Castor’s competitors. The District Court was correct to 

conclude this factor tips to an independent-contractor 

relationship. Notably, however, the two Circuits who have 

considered similar circumstances—the Fourth and the Fifth—

both assigned little weight to this factor. See McFeeley, 825 

F.3d at 244; Reich, 998 F.2d at 328–29. Castor gives no 

persuasive reason for us to diverge from those Circuits. 
18

vi. Whether the service rendered is an 

integral part of the alleged 

employer’s business

The last factor weighs clearly in favor of an employee 

relationship. Castor markets the Club as an “adult gentleman’s 

club.” Its primary offering to customers is topless female 

dancers who dance on stage and give lap dances in private 

rooms. (To its credit, Castor does not argue that anyone comes 

to the Club for the food, drinks, or any reason other than to see 

the dancers.) They are the providers of that offering. There is 

no question they render a service that is integral to the Club’s 

business. 

* * * * *

Having reviewed the six factors, we perform a holistic 

assessment. Although our judgment is binary—that is, either 

employee or independent contractor—“the 

employee/independent contractor distinction is not a bright line 

but a spectrum.” McFeeley, 825 F.3d at 241. As the economy 

evolves, courts continue to grapple with the challenge of 

placing novel economic relations on the correct point in the 

spectrum. In many cases that judgment is difficult, and we 

express sympathy for the district judges making these factintensive judgments under such a flexible standard. 

But the case before us is not a hard one. Here the 

dancers’ relationship to the Club falls well on the “employee” 

side of the line. Five of the six factors weigh in favor of 

concluding the dancers are Castor’s “employees.” The only 

factor in Castor’s favor—the permanence of the relationship—

does not cut so strongly in that direction as to come close to 

outweighing the other five. Thus we easily conclude the 

dancers were “dependent upon the business to which they 

render service.” Selker Bros., 949 F.2d at 1293 (quotation 
19

omitted). They were not, as a matter of economic reality, 

operating independent businesses for themselves. The District 

Court correctly ruled they were employees as a matter of law. 

C. Castor’s Preemption Argument 

Castor asks us to hold, as a matter of first impression, 

that the class claims for unjust enrichment under Pennsylvania 

law are preempted by regulations promulgated by the U.S. 

Department of Labor under the FLSA. Its arguments, 

however, underwhelm. Castor does not cite any authority for 

the proposition that the FLSA preempts common-law claims

like these. Nor does it contend with the “congressional intent 

not to preempt state standards” we have recognized in the 

FLSA. Knepper, 675 F.3d at 259. We have rejected similar 

preemption arguments before, see id. at 263, and Castor does 

not provide any reason to deviate from the general presumption 

that the FLSA is a parallel regime of wage-and-hour 

protections that works in cooperation with, not to the exclusion 

of, other laws protecting workers. See id. at 263.

Congress’s recent amendment of the FLSA does not 

change the analysis. That occurred in 2018. Through the 

amendment, Congress added a cause of action under the FLSA 

for employees whose tips are taken by their employers. See 

29 U.S.C. § 203(m)(2)(B); 29 U.S.C. § 216(b) (“Any 

employer who violates section 203(m)(2)(B) of this title shall 

be liable to the employee or employees affected in the amount 

of the sum of any tip credit taken by the employer and all such 

tips unlawfully kept by the employer, and in an additional 

equal amount as liquidated damages.”). Not only was that 

cause of action unavailable at the time of plaintiffs’ trial, but 

Castor gives us no reason to believe it precludes a similar claim 

for unjust enrichment. As with the other provisions of the 

FLSA, nothing in these new provisions undermines the 

presumption that the FLSA is meant to supplement, not 
20

supplant, state laws protecting workers. We thus reject 

Castor’s contention that the FLSA preempts plaintiffs’ claims

for unjust enrichment.

D. Castor’s Request for a Credit or Offset 

Castor claims the jury award should have been reduced 

by the amount of money plaintiffs received directly from 

customers in the form of dance fees. It concedes that, for the 

class claims under the PMWA, it does not get a credit or offset 

for those fees. But Castor maintains an offset should have been 

applied to plaintiffs’ unjust enrichment claims because “it 

would be unjust and inequitable” to allow them to recover 

monies for the tips they were forced to pay other Castor 

employees without giving Castor a credit for the dance fees 

they retained. In essence, Castor asks us to remake the jury’s 

verdict on damages for unjust enrichment. 

We decline. First, Castor does not support its argument

with any citations to the record nor any explanation of how we 

would calculate the amount of credit or offset; by not doing so, 

it arguably has waived this argument on appeal. See Norman 

v. Elkin, 860 F.3d 111, 129 (3d Cir. 2017) (“For an argument 

to be preserved on appeal it must be presented together with 

supporting arguments and citations.” (quotation marks 

omitted)). Second, the argument is not persuasive from an 

equitable standpoint. The jury and the District Court 

concluded that Castor was unjustly enriched because it 

obtained the benefit of the tip-outs that plaintiffs were forced 

to make to other employees of Castor. It provides no 

persuasive reason to disturb that conclusion. That Castor did 

not divert all the money plaintiffs received from customers—

namely, the dance fees—does not undermine the jury and the 

District Court’s conclusion that plaintiffs were equitably 

entitled to more than they received. Accordingly, we affirm 
21

the District Court’s denial of Castor’s post-trial request for an 

offset or credit. 

* * * * *

The District Court had CAFA jurisdiction to try the 

class’s claims under the PMWA and Pennsylvania common 

law. It also correctly ruled before trial that, as a matter of law, 

plaintiffs were Castor’s employees. We are not persuaded the 

class’s claims for unjust enrichment are preempted by the 

FLSA, nor is Castor entitled to a credit or an offset of damages 

for the dance fees the class members earned and received. 

Hence we affirm in full the challenged rulings of the District 

Court and sustain the jury’s verdict.