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Alton and O'Fallon IHOP owner kept servers' tips and didn't pay full wages, feds say

Outside of the federal court in East St. Louis, Ill.
Joshua Carter
Belleville News-Democrat
The U.S. Department of Labor filed a lawsuit Tuesday in U.S. District Court for the Southern District of Illinois in East St. Louis.

Editor's note: This story was originally published in the Belleville News-Democrat.

The owner of two IHOP franchises in O’Fallon and Alton allegedly violated federal wage regulations, including keeping servers’ tips and failing to pay overtime, a U.S. Department of Labor investigation found.

The labor department is now suing the owner, Khalid Ramadan, for approximately $367,890 in compensation and damages for 179 IHOP workers. It also sanctioned him with a civil money penalty of $199,577.

Acting Secretary of Labor Julie A. Su filed the lawsuit Tuesday in U.S. District Court for the Southern District of Illinois.

Court records include only the workers’ first initials and last names. The lawsuit leaves open the possibility that other employees the secretary hasn’t specifically named are also owed compensation.

A lawyer for Ramadan was not listed in court records as of Wednesday. He has not yet responded to the lawsuit in federal court.

His IHOP restaurants are located at 1028 W. Highway 50 in O’Fallon and 181 Homer Adams Parkway in Alton.

Ramadan could not be reached at either of the restaurants Wednesday morning. Staff members were advised to relay that Ramadan had no comment, according to an employee who answered the phone at the Alton location.

The labor department’s investigation reviewed employment and pay practices from March 1, 2020, to February 28, 2022, according to the complaint.

The lawsuit alleges that the restaurant skirted federal law by:

  • Telling servers to surrender their tips to a shared tip pool when, in fact, the owner was keeping the tips for the restaurant or sharing them with back-of-the-house employees not eligible to participate in a mandatory tip pool.
  • Failing to pay workers the required minimum wage.
  • Directing managers to delete entire shifts from time records when workers approached 40 hours in a workweek to avoid paying overtime.
  • Paying some employees “straight time” for hours over 40 in a workweek, when overtime was required.
  • Using the federal minimum tipped wage of $2.13 per hour instead of the higher Illinois minimum wage when computing servers’ overtime rate.

The U.S. Department of Labor’s Wage and Hour Division reported that it recovered over $29 million in back wages for food service industry workers in fiscal year 2023.

Lexi Cortes is a reporter with the Belleville News-Democrat, a news partner of St. Louis Public Radio.

Lexi Cortes is an investigative reporter with the Belleville News-Democrat, a news partner of St. Louis Public Radio.