A Denver District Court ruled last week that strip club entertainers are employees and have protections under the City’s wage and employment laws. 

The ruling upholds a hearing officer’s earlier determinations involving an investigation by the office of City Auditor Timothy O’Brien into multiple Denver strip clubs, according to a statement released by his office on Monday.  

Attorneys for the strip clubs argue that the entertainers are exempt from certain city wage and employment laws and that the Auditor’s Office lacked the authority to investigate possible violations of entertainers’ rights.

“Our office enforces wage theft laws for all industries and protects anyone performing work in Denver,” O’Brien said. “Adult entertainment workers are no different, and we are pleased the courts agree.” 

Denver Labor, a division of the Auditor’s Office, investigated PT’s Showclub Centerfold, PT’s Showclub, and Diamond Cabaret in 2023 and Rick’s Cabaret in 2024 for minimum wage and other labor law-related violations. 

Both businesses also used questionable workplace practices in that they misclassified entertainers — strippers or dancers — as exempt from some worker laws. The misclassification meant the strip clubs were not paying entertainers appropriately for their work, and treating them as contractors.

Labor investigators requested payroll and other records, including contracts and evidence of the fees the entertainers had to pay to work. 

When the clubs refused to provide the documents, the city imposed fines and issued subpoenas. 

Diamond Cabaret and Rick’s Cabaret strip clubs were ordered to pay $13,958,000 in restitution and penalties after more than 230 entertainers, bartenders, servers, and other workers had their wages stolen, according to City officials. 

RCI Hospitality Holdings, Inc., a publicly-traded corporation with dozens of clubs and restaurants nationwide, owns both Diamond Cabaret and Rick’s Cabaret, and is legally responsible for ensuring all workers receive the restitution they are owed.

In 2024, the strip clubs appealed the fines, petitioning a hearing officer to dismiss the subpoenas, asserting that Denver Labor had no authority to investigate because the entertainers are “licensees” — not employees, independent contractors, or workers.

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, a press statement from O’Brein’s office in February stated.

Other tipped workers, such as bartenders, servers, and barbacks, also had wages stolen. 

Managers routinely took tips for work performed by tipped workers and entertainers, resulting in workers making less than they should.

In one example cited by auditors, tipped workers at Rick’s Cabaret were required to place a portion of their nightly earnings into what’s called “The Rusty Envelope.”

The hearing officer upheld the subpoenas, affirmed the fines, and ruled that Denver Labor indeed had the authority to investigate.

Again, the clubs appealed.

However, last week, a Denver District Court judge reaffirmed the hearing officer’s decisions.

“The strip clubs have tried every tactic to avoid paying these workers properly and to dodge their wage responsibility. Even if it means creating new legal arguments that lack evidence or are contradictory,” Denver Labor Executive Director Matthew Fritz-Mauer said. “I’m thrilled the District Court recognized our legal authority to enforce sex workers’ rights. We remain steadfast in doing what’s right for all workers in Denver.”

A statement from O’Brien’s office noted that “although the strip clubs are appealing the decision, Denver Labor will continue to argue that adult entertainers are workers under Denver’s laws, and they have the same right to work without wage theft as all workers.”

Denver Labor will continue its attempt to recover back pay for the workers.

The Denver Gazette reached out to RCI for comment, but had not heard back by the time this story was published.

Former Denver Gazette reporter Carol McKinley contributed to this story.