The Denver Auditor’s Office has ordered Diamond Cabaret and Rick’s Cabaret to pay $14 million in back pay and penalties to its workers.
In a press release Thursday, the office said its investigation found instances of questionable workplace practices and that more than 230 “entertainers, bartenders, servers and other workers” had their wages stolen.
“This is an extraordinary case and unlike any other my office has conducted, due to the exorbitant amount of wages stolen, the strip clubs’ overbearing employee rules, and their refusals to comply with our lawful investigations,” auditor Timothy M. O’Brien said.
The investigation into multiple strip clubs for wage theft started in September 2024, using newly expanded subpoena powers given to the office by Denver City Council.
The auditor’s office also subpoenaed PT’s Showclub and PT’s Centerfold, which were not named in its finished investigation.
At the time, the auditor’s office said it was investigating whether club owners misclassified workers as non-employees to avoid providing overtime, paid sick leave and proper minimum wage and tips.
The investigation found evidence of wage theft at the two clubs
The auditor’s report found that Diamond Cabaret and Rick’s Cabaret misclassified workers as exempt from wage and hour laws, leading to wage theft.
Strippers were also required to pay a “house fee” of up to $85 per shift and an additional “promo fee” before working, according to the report. Strippers would also be docked pay if they broke certain rules, such as failing to remove their tops during their on-stage set.
Other workers were also required to place a portion of their tips into what was called “The Rusty Envelope,” which was named for one of the managers.
The auditor’s office relied on testimony and documentation from workers. One worker quoted in the report is owed more than $70,000 in stolen wages, and another $140,000 in damages.
The $14 million fine for Diamond Cabaret and Rick’s Cabaret includes a $2.6 million wage theft fee paid to the City and County of Denver. The clubs must pay the fine by March 13.
The strip clubs plan to challenge the findings
The Litigation Boutique, the law firm representing the two strip clubs, said in an email sent to Denverite that it plans to challenge the determination in court and denounced the investigation as government overreach fueled by political agendas.
“Under the guise of protection, Denver Labor is wielding subpoenas like weapons, demanding excessive documentation without a lawful basis, and violating the privacy of individuals who have chosen a profession that Denver Labor refuses to respect,” the law firm said.
During the initial subpoena, an independent hearing officer approved the auditor’s office use of its subpoena powers, noting that it wouldn’t be an undue burden to the strip clubs and that the auditor’s office guaranteed the confidentiality of personal information.
