In 2005, a dancer at Club Orleans in Topeka filed an unemployment claim. The dancers earn money through tips, while the club maintains that it is offering "rental space" for them to perform.
By ruling that the workers are employees because they had to follow a number of house rules, the state Supreme Court decided that the club's owners must contribute to the state unemployment-insurance fund, as first reported by the Wall Street Journal.
The Kansas Department of Labor argued that the minimum rates for particular dances and rules binding interactions with customers could be interpreted as rules for employees.
The Department of Labor would not release the name of the worker who filed for unemployment.
Michael Merriam, an attorney for Milano's, a company that owned Club Orleans since 2002, told ABC News that the ruling "was incorrectly decided."
"The court relied almost entirely on the fact that we had some house rules which were requested by the dancers. They were designed to keep everything legal," Merriam said. "And the court relied on that fact alone to say we had control over them and that made them employees."
He said his client does not plan to appeal the decision.
"This is the Kansas Supreme Court. This is where it ends," he said.
A spokeswoman for the Kansas Department of Labor said this ruling applies to the workers at issue in this case.
"All decisions concerning unemployment are based on the applicable law and the specific facts of each case," she said.