Denver Labor, a division of the Denver Auditor’s Office made a determination that two strip clubs stole wages from entertainers, bartenders, servers and other workers. The strip clubs have subsequently filed a suit against the Denver Auditor’s office alleging that the Auditor’s office illegally obtained pay stubs. The Denver Auditor’s press release follows:
DENVER — Diamond Cabaret and Rick’s Cabaret strip clubs are ordered to pay $13,958,000 in restitution and penalties after more than 230 entertainers, bartenders, servers, and other workers had their wages stolen. The strip clubs also engaged in questionable workplace practices involving their staff. Denver Labor, a division of the Denver Auditor’s Office, made these determinations in its investigation of the strip clubs.
“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,” said Denver Auditor Timothy M. O’Brien, CPA.
RCI Hospitality Holdings, Inc., a publicly-traded corporation with dozens of clubs and restaurants nationwide owns Diamond Cabaret and Rick’s Cabaret. RCI is legally responsible for this wage theft and must ensure all workers receive the restitution they are owed.
How wages were stolen
Our investigation determined Diamond Cabaret and Rick’s Cabaret misclassified entertainers (also called strippers or dancers) as exempt from wage and hour laws. The strip clubs exercised a significant amount of control over their working conditions. This misclassification led to wage theft, including rampant minimum wage violations, as the strip clubs were not paying them for their work.
The clubs required strippers to pay a “house fee” of up to $85 per shift and an additional $8 “promo fee” before working, which are other examples of wage theft.
Other tipped workers such as bartenders, servers, and barbacks had wages stolen. Managers routinely took tips for work performed by tipped workers and entertainers, illegally resulting in workers making less than they should.
For example, at Rick’s Cabaret, each night, tipped workers were required to place a portion of their earnings into what’s called “The Rusty Envelope.”
“These investigations are further evidence that wage theft is rampant in the adult entertainment and hospitality industries,” said Denver Labor Executive Director Matthew Fritz-Mauer. “Bars and restaurants, as well as strip clubs, are some of the biggest violators of minimum wage laws. Violations are extremely common at these businesses, especially when dealing with historically marginalized and vulnerable employees.”
Questionable practices and control
Beyond wage theft, we found staggering levels of control over entertainers and workers.
Tipped workers were required to review and sign forms each shift acknowledging what was earned and how it was split between other staff. During our investigations, Diamond Cabaret destroyed these forms, even though workers provided proof the documents existed.
Strippers were expected to perform on stage for three songs. They must be topless by the end of the second song and may be disciplined if they were not. However, they could not leave the stage until the next dancer was present. Also, if a stripper did not show up for their scheduled set, they were fined $25.
Disturbingly, entertainers told us how customers have choked or slapped them and repeatedly photographed or filmed them without consent, in violation of the club’s policies. Managers often refused to eject these customers.
The strip clubs rigorously monitor the entertainers working each day. Entertainers were required to sign in for their shifts using the trackable “Pole Position” app before they could work. Additionally, entertainers must clock in by scanning their fingerprints through ClubTrax, the internal system both clubs use. Before they can work, they are required to sign the clubs’ contracts, meet the clubs’ standards of appearance, and pay their house and promo fees.
Devynn Dewey, one of the entertainers who worked at both Diamond Cabaret and Rick’s Cabaret, said that strip clubs rely on the stigmatization, harm, and vulnerability that entertainers face to justify and further their corporate overreach.
“By using fear tactics, retaliation, and the normalization of exploitative practices, they hope we stay silent, which reinforces their excessive control. Every entertainer comes from a different background of adversity, simply trying to navigate our human right to survival through our jobs. Where there is stigma, there is pain generating stolen profit,” said Dewey, who the clubs owe more than $70,000 in stolen wages and another $140,000 in damages.
Denver Labor sides with these workers who have been taken advantage of.
“Despite what these clubs tell them, entertainers have the same rights as every other worker in the city,” said Fritz-Mauer. “They’re entitled to the minimum wage, and it’s illegal to force them to pay to work, especially since the clubs exercise so much control over them.”
Orders and penalties
Together, these clubs must pay $11,358,000 in restitution to more than 230 affected workers, which includes unpaid wages and stolen tips. That amount was reached due to the $2.6 million in actual wages stolen, plus 300% in damages and 12% in annual interest. These clubs must additionally pay wage theft fines to the City and County of Denver equal to 100% of unpaid wages, which is also $2.6 million. If restitution is not paid by March 13, 2025, wage theft penalties will increase to 150% of unpaid wages. The clubs may appeal these determinations.
“In Denver, all workers have rights regardless of their age, gender, immigration status, or the work performed,” said Auditor O’Brien. “Adult entertainment workers, including strippers, are entitled to these rights, and our office is here to enforce those rights.”
Denver Labor has previously investigated Diamond Cabaret, for unlawfully withholding a worker’s wages and retaliating against her in a separate case. The wage determination is available on the Auditor’s website(PDF, 235KB). Additionally, Denver Labor has fined Diamond Cabaret for refusing to provide records. A hearing officer upheld that determination.
Our office has issued three other determinations related to wage theft and retaliation against Diamond Cabaret, which the club is appealing. Denver Labor has also issued subpoenas against both these strip clubs to collect documents as part of wage theft investigations.
These determinations highlight the hardships that tipped workers often face. Many tipped workers are low-income and earn a sub-minimum wage. Despite these facts, Colorado lawmakers are considering a bill that would immediately slash tipped workers’ wages by an estimated $140 million per year. Auditor O’Brien recently wrote an opinion article in the Denver Post opposing this policy, since the bill would only worsen the problems of low wages and wage theft in the hospitality industry.
The Auditor’s Office strongly urges all workers in the adult entertainment and hospitality industries who may be harmed by wage theft to contact us. We understand the risks of employer retaliation, which is why we encourage employees to submit an anonymous complaint. Visit DenverGov.org/StripClub for valuable resources and guidance.
Source: Strip clubs owe nearly $14 million following wage theft investigation – City and County of Denver
