EXTRA CONTENT: Applebee’s employees claim they were cheated out of tips, wages in lawsuit

Read a complete copy of the lawsuit by clicking here.

Forty-nine current and former employees of Applebee’s restaurant in Corbin are accusing the company of cheating them out of tips and wages, and have filed a potentially massive lawsuit seeking back pay for what they say are a violation of Kentucky labor laws.

The civil complaint was filed in Whitley Circuit Court 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. Shelton specializes in Kentucky labor law.

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, Shelton said the company was forcing tipped employees to surrender “20 percent” of the tips they received for redistribution to non-tipped employees at the restaurant.

“With multi-state employers, a lot of times they just have an across the board policy on this and in most states its not illegal, but Kentucky is different,” Shelton said.

“We are talking about a substantial amount of money for these people … One guy said it’s a car payment for him. They’ve been doing this since they opened, about five years. It’s stopped now, but they did so, in my opinion, because they knew we were coming at them with a lawsuit.”

Applebee’s opened in Corbin in 2008. Shelton claimed the Corbin restaurant had been “under investigation by the [Kentucky] Labor Cabinet for well over a year” and was cited for wage violations prior to the filing of the lawsuit. He said roughly 80 affidavits from current and former employees have been filed with labor officials regarding the wage dispute at Applebee’s.
Those claims could not be independently verified before press time. Calls to the Kentucky Labor Cabinet were not returned.

Mike Cole, a manager at Applebee’s in Corbin, said he could not comment on the case. Messages seeking comment from officials with QRC were also not returned by press time.

Shelton said he’s represented clients in several lawsuits against restaurant chains over similar issues.

“Most of the time, the employee’s don’t really know any better,” he said. “A lot of times, even if restaurants know better they don’t really care because they just didn’t think the servers would do anything about it. They could always retaliate by giving them a bad shift or less shifts.”

“I think in this case, they certainly knew it after they began it, but they basically said ‘we don’t care. If you don’t like it, quit.’”

All Applebee’s employees signed an agreement saying they would seek binding arbitration to settle any disputes between them and QRC. Shelton said letters from the employees seeking an arbitration hearing were ignored.

The lawsuit has the potential to be relatively massive in local economic terms. Shelton said he is asking that all employees be awarded an extra $5.12 per hour they worked to bring them up to minimum wage, and it seeks the return of all tips taken by the restaurant for redistribution.

The lawsuit also seeks punitive damages, attorney fees and post and pre-judgment interest.

Shelton said he suspects more plaintiffs will enter into the lawsuit as the case proceeds.