Alton, O’Fallon IHOP Owner Subject Of Wage Theft Investigation By U.S. Labor Department

ALTON - The owner of two IHOP locations - one in Alton and another in O’Fallon - is the subject of a U.S. Department of Labor complaint which claims he owes over $367,890 in unpaid wages and damages to 179 employees.

A Labor Department investigation uncovered a series of wage and tip violations from March 1, 2020 to Feb. 28, 2022 allegedly committed by owner Khalid Ramadan using the following methods:

• Directing managers to delete entire shifts from time records when workers approached 40 hours in a workweek to avoid paying overtime.
• Frequently failing to pay workers the required minimum wage.
• 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 — if they paid an overtime premium at all.

The investigation also revealed other violations, including management 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.

The Department’s Wage and Hour Division estimates the ownership groups behind both franchise locations owe approximately $367,890 to a total of 179 employees. $183,945 (or about half) of that total is owed in back wages, while the other half is owed in the form of liquidated damages. The division also assessed a civil money penalty of $199,577 for the employers’ willful violations.

“Tips are the property of the employee who earned them and no employer has the right to them,” Wage and Hour Division District Director Noah Lee said. “Khalid Ramadan allegedly retained IHOP workers’ tips for his businesses - literally taking money from employees’ pockets - in clear violation of federal wage laws.

“This action and several others that deprived many low-wage workers of their hard-earned earnings led us to assess nearly $200,000 in penalties given the extensive nature of wage theft our investigators found.”

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 alleging numerous violations of the Fair Labor Standards Act’s minimum wage, overtime, and recordkeeping provisions.

“The Department of Labor will take all necessary action to hold employers accountable for abiding by the law and ensuring workers receive the wages they have rightfully earned,” Lee added.

For more information, see the full press release from the U.S. Department of Labor.

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