In an unprecedented show of force, Denver licensing officials this week moved to revoke the operating permit for the Diamond Cabaret strip club over allegations of rampant wage theft, retaliation and noncompliance with city orders.
The city’s Department of Excise and Licenses sent the adult venue an “order to show cause” on Wednesday, giving the business’ owners a chance to tell regulators next month why they shouldn’t have their license suspended or revoked.
This is the first time Denver has taken disciplinary action to revoke a business license as a result of a wage theft investigation, city officials said.
Wednesday’s actions mark the latest salvo in an increasingly bitter dispute between Denver and the Diamond Cabaret over its long-running business practices.
Since May 2023, Denver’s labor division has completed six investigations related to the downtown strip club, alleging “widespread wage theft, repeated acts of retaliation and other illegal acts” committed by the club and its managers, the order states.
Denver Labor’s probes found the club misclassified DJs and other laborers as food and beverage workers; allowed managers to routinely take tips for work performed by dancers; violated minimum wage laws for bartenders, servers and hosts by paying them below minimum wage and requiring them to share tips; and imposed fees that dancers must pay every night in order to work.
The division also found that the Diamond Cabaret retaliated against at least three workers by demoting and firing them, as well as codifying new rules against taking photos and videos.
Additionally, Denver Labor officials said the club refused to produce accounting records when asked by the city.
The city in February ordered the Diamond Cabaret and Rick’s Cabaret to pay nearly $14 million in restitution and penalties in a case the auditor called “extraordinary” and unlike any other his office has ever conducted.
Leah P. VanLandschoot, an attorney for the Diamond Cabaret, said Wednesday’s order amounts to “more retaliation and harassment” from a business following the law.
“The city Department of Excise and Licenses wants to take action based on totally false allegations fabricated by Denver Labor… allegations that we have already filed suit in federal court to dismiss,” she said in a statement. “Other businesses in Denver should beware.”
Diamond Cabaret and Rick’s Cabaret, which share the same owner, sued the city in March, alleging labor officials exhibited a “reckless abuse of power” that violated their constitutional rights.
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Colorado strip clubs persistently steal wages from their workers, dancers say: “We have to pay to work” Two Denver strip clubs must pay nearly $14 million in back pay and penalties to workers, auditor rules Denver’s investigation of wage theft at strip clubs was a “reckless abuse of power,” lawsuit allegesThey said the city illegally accessed employee records, falsely accused the clubs of stealing tips from entertainers and employees and fraudulently misrepresented how much the businesses paid their employees in calculating fines.
Dancers told The Denver Post in March that wage theft is baked into local strip clubs’ business models, to the point where entertainers sometimes go home with less money than they had at the beginning of the night. They feel pressure, they said, to illegally share tips with managers for fear of retaliation or termination.
The show cause hearing is set for June 26.
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