The Department of Labor has lodged a formal complaint over claims of wage violations against an IHOP franchise operator at the O’Fallon and Alton, Illinois locations.

The U.S. Department of Labor has filed a complaint in federal court against two Illinois restaurants, both operating as IHOP franchises in O’Fallon and Alton, and their owner, Khalid Ramadan. The complaint comes after an investigation by the department’s Wage and Hour Division revealed numerous violations, including the owner keeping tips meant for servers and sharing them with non-eligible employees.

In addition to violating tip pool regulations, the investigation also uncovered other violations, such as managers deleting shifts from time records to avoid paying overtime, failure to pay the required minimum wage, and paying some employees “straight time” for overtime hours. The division determined that R & R Restaurant Group Inc. and 2103 Restaurant Group LLC, owned by Ramadan, owe approximately $367,890 in back wages and liquidated damages to 179 employees for the period of March 1, 2020 to Feb. 28, 2022.

The division also assessed a civil money penalty of $199,577 for the employers’ willful violations. According to Wage and Hour Division District Director Noah Lee, “Tips are the property of the employee who earned them and no employer has the right to them. Khalid Ramadan allegedly retained IHOP workers’ tips for his businesses — literally taking money from employees’ pockets — in clear violation of federal wage laws.”

To recover the back wages and damages, hold the employers accountable, and prevent future violations, the department filed a complaint on June 11, 2024, in the U.S. District Court for the Southern District of Illinois in East St. Louis. The complaint alleges numerous violations of the Fair Labor Standards Act’s minimum wage, overtime, and recordkeeping provisions.

Lee emphasized that the department will take all necessary action to hold employers accountable for abiding by the law and ensuring workers receive the wages they have rightfully earned. Founded in 1958, IHOP currently has over 1,800 locations in 50 states, two U.S. territories, and 13 other countries.  

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