Updated 4:44 p.m.
The city of Denver is facing a lawsuit from the two strip clubs that government officials had ordered to pay $14 million in back pay and penalties.
Last week, the Denver Auditor’s Office ordered Diamond Cabaret and Rick’s Cabaret to pay millions over labor violations. A months-long investigation from the office’s labor division found instances of questionable workplace practices and wage theft affecting more than 230 “entertainers, bartenders, servers and other workers”.
Through reviewing documents and interviewing workers, investigators found that some workers were required to pay a “house fee” before their shifts, and were illegally docked pay for breaking certain house rules.
The two strip clubs and their lawyers denied the findings of the report and denounced it as government overreach.
On Friday, the strip clubs filed a lawsuit in U.S. District Court, challenging the $14 million order and requesting a gag order that would prevent “further dissemination of falsehoods against the clubs.”
The lawsuit alleges that the auditor’s office abused its power
The strip clubs argue that workers impacted by the alleged wage theft were actually self-employed independent contractors and not subject to laws concerning full-time employees. In contrast, the city auditor had accused the clubs of misclassifying workers to exempt them from employment laws.
The lawsuit also takes issue with how investigators were able to access employee records, arguing it was an abuse of power. The investigation was launched shortly after the auditor’s office received expanded subpoena powers given by Denver City Council.
“If left unchecked, Denver Labor’s reckless abuse of power and disregard for the limits of statutory authority will set catastrophic precedents that jeopardize every business, worker, and entrepreneur in Denver,” the lawsuit said.
The lawsuit also denied allegations that the clubs had stolen tips and shorted its workers and the city on pay and taxes.
The Denver Auditor’s Office defended their actions in a statement.
"We aware are of this lawsuit and we will let the legal process play out," said office spokesperson Michael Brannen. "We stand by the findings of our determinations."
Editor's note: This story was updated after the Denver Auditor's Office provided a comment.
