The U.S. Court of Appeals for the Third Circuit has reinstated a suit claiming that exotic dancers at a men's club have been wrongly classified as independent contractors.

The court said in a published decision Thursday that an arbitration clause in a signed employment contract does not govern statutory wage-and-hour claims. The court reached its conclusion based on a finding that Moon v. Breathless resembles two New Jersey Supreme Court cases in which arbitration clauses were defeated, Garfinkel v. Morristown Obstetrics & Gynecology Associates and Atalese v. U.S. Legal Services.

Plaintiff Alissa Moon, a dancer at Breathless Men's Club in Rahway, said in her suit that the club misclassifies its dancers as independent contractors, allowing it to unlawfully avoid paying hourly wages or overtime, let alone unemployment, disability or Social Security taxes or workers' compensation premiums. She brought a collective action against Breathless for violations of the Fair Labor Standards Act and the state Wage Payment Law and Wage and Hour Law. According to the suit, Breathless requires its dancers to pay a fee to work there, and makes them contribute part of their tips to a tip pool.