Strip Search: After Regaining Power, Denver Labor Issues First Subpoena

Denver Labor has issued a subpoena for the first time since the Denver Auditor’s Office regained subpoena power in April — and it's directed at three local strip clubs.

As part of the auditor's office, Denver Labor investigates and remediates wage theft; it's currently looking into how exotic dancers who work at strip clubs are paid. As part of that investigation, Denver Labor issued a subpoena to PT’s Showclub, the Diamond Cabaret and PT’s Centerfold, all of which are owned by RCI Hospitality Holdings.

RCI owns five clubs in Denver and dozens across the country under various brand names. Denver Labor wants to ensure that dancers at the two PT’s locations and the Diamond Cabaret are properly classified as employees and paid appropriately.

“Dancers are human beings,” says Matt Fritz-Mauer, executive director of Denver Labor. “Human beings have certain rights if they perform work in Denver, and if they are denied those rights, then they are denied the basic dignity that our legislators, and that we as a society, have said they must get.”

Those rights include being paid at least minimum wage, earning overtime, accruing paid sick leave and being allowed to take paid breaks while at work, among many others.

In 2022, Denver City Council repealed the auditor’s subpoena power, calling it too broad. But in April, the council voted to return subpoena power to Denver Labor for wage-theft investigations after the auditor’s office — along with allies in labor and union organizations — argued that sometimes subpoenas are the only way to gain information needed to determine if wage theft has occurred at private companies.

In the case of these three clubs, Denver Labor requested specific records related to contracts, contact information and payment for dancers. All three clubs had failed to produce those records before Denver Labor issued the subpoena this month.

Fritz-Mauer notes that Denver Labor began its investigation last summer, prompted in part by the myriad lawsuits filed in the strip-club industry claiming that dancers are regularly misclassified as non-employees. This results in dancers not being paid appropriately or having money taken from them illegally when companies require that they pay fees to work or share tips with management.

“This is an industry we knew to be high-risk for workers'-rights violations,” Fritz-Mauer says. “I personally was at a community event sometime last year, and a woman came up to me and said, ‘I'm a stripper, and my manager takes my tips. Is that allowed?’ That was a red flag for me.”

Although that stripper didn’t end up filing a formal complaint, Denver Labor is allowed to pursue anonymous complaints — so the division opened an investigation. Fritz-Mauer emphasizes that Denver Labor does not yet know if wage rights are being violated at these three clubs; he says it needs information sought through the subpoena before it can reach a conclusion.

The subpoena requested records going back three years before the start of the investigation, showing contracts between clubs and dancers, contact information for dancers and all payments made to and from dancers.

Misclassifying dancers as contractors or non-employees does the same harm as when any employee is misclassified, Fritz-Mauer says.

“They're denied the whole suite of civil rights that we like the most,” Fritz-Mauer says, including being paid unemployment or being allowed to unionize. “We really think of misclassification as a broad social problem that harms all of us. … It's important for there to be enforcement of people's basic rights, and oftentimes the government is, practically speaking, the only one that can do that.”

Fritz-Mauer says this action is exactly what councilmembers Sarah Parady and Amanda Sawyer envisioned when they ran the bill to return subpoena power to Denver Labor.

“It's an efficient way to resolve disputes, to make sure that our office can get the information we need in order to effectively do our jobs and carry out the mission that we've been entrusted with under city ordinance,” he says.

In a statement from legal representative Ruth McLeod of the Litigation Boutique, RCI definitely disagrees:

"PT’s Showclub, Diamond Cabaret and PT’s Centerfold, strongly oppose the subpoenas issued by Denver Labor, and have made it clear that the subpoenas are overreaching, unjustified, and exceed the authority granted to them under the applicable ordinances," McLeod says. "It is essential to emphasize that Denver Labor has not identified any actual wage theft, yet they continue to unlawfully demand excessive documentation, which creates an undue burden on the Clubs."

The clubs have concerns about the privacy of individuals who may be named in the records, McLeod adds. But  according to Denver Labor, the hearing officer who granted the subpoena found the division offers adequate guarantees of privacy and said this action would not be an undue burden to the clubs.

McLeod says that RCO does not agree:  "It appears to the clubs’ legal counsel that Denver Labor is operating with the belief that they have unfettered access to private business records, wasting thousands of taxpayer dollars in an attempt to unilaterally bolster the limited and narrow subpoena powers granted to them by City Council," McLeod says.

PT’s Showclub has run into controversy in the past. Former owner Troy Lowrie, who sold the chain to RCI in 2021, was busted in a 2011 prostitution sting (the charges were later dropped). Dancers also sued PT’s Showclub in 2017, alleging they were being ripped off by an illegal system that charged them to perform and forced them to cover other employees' earnings out of tips they received.

Those instances occurred before RCI took over, but the club hasn’t stayed entirely out of trouble during the company's tenure. PT’s Showclub closed for two weeks this January after reaching a settlement with the city over alleged prostitution and public indecency at the club.

PT’s admitted to three violations of city and state law related to soliciting or engaging in prostitution, according to a settlement order issued in November 2023 by Molly Duplechian, executive director of the Denver Department of Excise & Licenses. The enforcement action was prompted by a Denver Police Department sting operation during which an officer was offered sexual favors at the club.

The company has until September 24 to fully respond to the subpoena. If RCI fails to do so, it will face fines of up to $1,000 per day. McLeod indicated that the clubs do not plan to comply and will instead challenge the subpoena's terms in district court.

If the terms of the subpoena are met, Denver Labor will examine the documents, give RCI a chance to address any questions, and then either close the investigation or issue a determination of wage theft.