Denver labor officials exhibited a “reckless abuse of power” that violated the constitutional rights of two city strip clubs during a wide-reaching wage theft investigation that led to nearly $14 million in restitution and fines, the businesses allege in a new federal lawsuit.
Diamond Cabaret and Rick’s Cabaret, in a complaint filed Friday in U.S. District Court for the District of Colorado, alleged Denver Labor 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 their fines.
The lawsuit comes a week after Denver Labor, a division of the city auditor’s office, announced the results of a multi-year investigation, in which it accused the two clubs of engaging in widespread wage theft of its entertainers and employees.
The city issued nearly $14 million in fines and restitution payments in a probe the city auditor called an “extraordinary case” unlike any other the office has conducted.
The strip clubs, which share the same ownership, took legal action in order to stop Denver Labor from its enforcement actions and to request a gag order preventing the city from “further dissemination of falsehoods” against the clubs.
“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 clubs said in their filing.
This is a developing story and will be updated
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