Public record · Not a Marty customer result · Customer case studies
$9 Million Settlement.
6 States. One Tip Credit Gap.
Bluegrass Hospitality Group, owner of Malone's, Drake's, Harry's, and OBC Kitchen, settled a class-action lawsuit after servers and bartenders were paid below minimum wage without proper tip credit notice.
Book a Free Working Session →How It Happened
Tip Credit Applied Without Proper Notice
Servers and bartenders across Kentucky, Missouri, Tennessee, North Carolina, Alabama, and Illinois were paid below federal minimum wage. Federal law requires employers to provide clear written notice before using a tip credit. BHG allegedly did not.
Non-Tipped Work Exceeded 20% Threshold
Employees were required to sweep, mop, roll silverware, and set up restaurant sections for more than 20% of their work week, while still being paid the tipped minimum wage. This violates the "80/20 rule" under FLSA.
Forced Tip Contributions
Workers were allegedly compelled to contribute their tips to other employees involuntarily, a practice that can violate federal tip pooling regulations when not properly structured.
Class-Action Lawsuit Filed
Kentucky-based employees filed suit, alleging gaps under the Fair Labor Standards Act (FLSA) and Kentucky Wages and Hours Act. The class expanded to include workers across 6 states.
$9 Million Settlement Finalized
BHG agreed to pay $9 million to settle the claims. The company also covered attorney fees and other costs for the plaintiffs. Eight months from lawsuit to settlement, one of the largest restaurant wage gap settlements in recent years.
Settlement Announced Publicly
News of the settlement spread across Kentucky media. The company issued a statement about "moving forward" while continuing to provide a positive environment. The $9M hit was already on the books.
The Core Gaps
1. Missing Tip Credit Notice
Employers using a tip credit must provide written notice to employees explaining the tip credit, the amount claimed, and that tips are the employee's property. BHG allegedly failed to provide this legally required notice.
2. Excessive Non-Tipped Work (80/20 Rule)
Under FLSA, if tipped employees spend more than 20% of their time on non-tipped duties (side work), they must be paid full minimum wage for that time. Sweeping, mopping, rolling silverware exceeded this threshold.
3. Involuntary Tip Pool Contributions
While tip pooling is legal under certain conditions, workers cannot be compelled to share tips with employees who don't customarily receive tips, or when the employer is taking a tip credit improperly.
Without Marty
- No visibility into tip credit compliance across locations
- Side work time not tracked or flagged when exceeding 20%
- Gaps accumulate across 6 states undetected
- First notice comes from attorneys, not internal audit
- $9M settlement hits the books
With Marty
- Automatic tip credit notice compliance tracking
- Real-time notifications when side work exceeds 20% threshold
- Multi-state compliance monitoring from one dashboard
- Documentation trail proves good-faith corrections
- Find gaps before they become class actions
See What's Collectible in Your Tip Credit Data
Our analysis finds the collectible cash sitting in your payroll and tip data across every location.
Book a Free Working Session →If we don't find $250K+ in collectible cash, you don't pay.
Sources: Lexington Herald-Leader, court filings (Boyer v. BHG), public records.