State Labor Cabinet officials confirm investigation into Applebee’s wage,tip practices

 State regulators confirmed this week they have an ongoing investigation into allegations that many workers at the Corbin Applebee’s restaurant were illegally denied gratuities and pay over a five year period since it opened in 2008.

Daniel Lowery, Director of Communications with the Kentucky Labor Cabinet, said Applebee’s is currently being scrutinized by investigators for practices that violate the state’s labor laws.

“I can confirm that there is an ongoing investigation into the Corbin Applebee’s and the allegations of violation of Kentucky law involving tip pooling,” Lowery said.

He added that a “notice of violation” had been issued to the restaurant, but that its owners had not been formally cited yet as the investigation is not yet complete.

The News Journal requested documents related to the investigation under the Kentucky Open Records act, but was denied since the investigation into practices at the restaurant is “ongoing and active.”

The news comes on the heels of a potentially massive lawsuit that was filed Oct. 15 against Quality Restaurant Concepts LLC (QRC) an Alabama company that owns Applebee’s in Corbin, and store manager Nathan Bunger. It was filed on behalf of the employees by Louisville attorney John R. Shelton, of the Shelton Law Group.

At issue in the lawsuit is a mandatory “tip sharing” program, apparently in place at Applebee’s from the time it opened in Corbin in 2008 until shortly before the lawsuit was filed.

According to the complaint, the employees were all servers or “tipped employees” who are normally exempt under federal and state law from normal minimum wage requirements. Any “tipped” employee that makes $30 or more a month in gratuities can be paid just $2.13 an hour instead of the usual mandated minimum wage of $7.25. The law allows an employer to take a “Tip Credit” toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage.

But Shelton said in an interview Tuesday the exemption only applies as long as employees get to keep all the tips they receive. Kentucky regulations mandate an employer pay regular minimum wage if they take any of the tips from employees.

In the case of Applebee’s, the company was allegedly forcing tipped employees to surrender “20 percent” of the tips they received for redistribution to non-tipped employees at the restaurant.

The lawsuit seeks the return of all tips taken by the restaurant for redistribution, plus an extra $5.12 per hour for each worker who was subjected to the policy. It also is asking for punitive damages, attorney fees and post and pre-judgment interest.

Management at the Corbin Applebee’s restaurant has declined to comment on the case. Calls to QRC officials seeking comment have not been returned.