More employees accusing Applebee’s of cheating them out of tips, wages

Nine more current and former workers at Applebee’s restaurant in Corbin have come forward, bringing to a total of 58 the number who are accusing the company of cheating them out of tips and wages and have joined in on a potentially massive lawsuit seeking back pay for what they say are a violation of Kentucky labor laws.

A second civil complaint was filed Dec. 26, 2013 on behalf of the workers in Whitley Circuit Court against Quality Restaurant Concepts (QRC), the Alabama company that owns Applebee’s in Corbin, and store manager Nathan Bunger. The new plaintiff are: Candice Bustos, Stephanie Prewitt, Deanna Cornett, Curtis Summars, Robert Petro, George Lawson, Amy Sizemore, Barbara Jackson and Jennifer Rucker.

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.

Shelton and his plaintiffs contend 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 they take any of the tips from employees.

In the case of Applebee’s, the lawsuit claims the company was forcing tipped employees to surrender a portion of the tips they received for redistribution to non-tipped employees at the restaurant.

The Kentucky Labor Cabinet has an ongoing investigation into the alleged practice at the Corbin Applebee’s. QRC was issued two notices of violation by the Labor Cabinet. The first came on Jan. 16, 2013 when investigators accused the restaurant of violating laws against forced tip pooling. The second came in early October when the restaurant was warned against paying its employees less than minimum wage. Both violations were to be resolved “immediately” and carry fines of $100 to $1,000 per violation.

QRC CEO Kurt Gutshall has denied that the “tip sharing” program at the Corbin Applebee’s was mandatory or illegal, countering that they all sign an agreement when they are hired saying they are voluntarily choosing to participate in the program.

“It is a very legal practice that most restaurants around the country participate in. Nothing new. Nothing different,” Guttshall said.
“It’s just something they do to take care of the support crew members that contribute to their guests’ experience … They do a lot of things that enhance the guest experience.”

Gutshall said even after accounting for gratuities surrendered as part of the tip-sharing program, servers at the restaurant average nearly $11 per hour.

Attorneys for the employees who have sued QRC claim that attempts to arbitrate the dispute were ignored. All Applebee’s employees sign an agreement saying they would seek binding arbitration to settle any disputes between them and QRC should they arise.

Currently, both sides are arguing the fate of the case in U.S. District Court in London. QRC attorneys moved to have it removed from the local courts so it could be argued, and possibly tried, in federal court. The plaintiffs in the case are fighting the removal and are seeking to have it moved back to be argued in Whitley County.