Class Action Alleges Tenn., Texas Restaurant Owner Falsely Reported Paid COVID-19 Sick Pay to IRS [DISMISSED]

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A proposed class action lawsuit alleges the operator of two Tennessee and Texas restaurants fraudulently represented to the government that they had paid workers COVID-19-related sick pay under the Families First Coronavirus Response Act (FFCRA). 

The 16-page lawsuit alleges celebrity chef Timothy Love, whose companies run Knoxville, Tennessee’s Lonesome Dove Western Bistro and the Woodshed Smokehouse in Fort Worth, Texas, misrepresented to the Internal Revenue Service that the five plaintiffs and other workers were paid COVID-19 sick wages. The plaintiffs claim in the suit that they “never received any payment for Covid-19 sick leave, [were] not eligible for Covid-19 leave, and did not take Covid-19 leave.” 

The FFCRA was implemented to help reimburse U.S. employers with fewer than 500 employees when workers needed sick leave amid the pandemic, the case begins. More specifically, funds distributed through the FFCRA were a dollar-for-dollar tax credit for the cost of providing employees with mandatory paid leave taken for reasons related to COVID-19, the suit says. This allowed workers to stay on payroll, the suit explains, while at the same time ensured they were “not forced to choose between their paychecks and the public health measures needed to combat the virus.” 

According to the lawsuit, the defendants recognized in early December 2020 that the time to claim COVID-19 relief from the government was ending and proceeded to claim that “all of their employees, at every restaurant and every entity, were paid their Covid-19 pay for qualifying ‘leave’” by the companies. 

“Upon information and belief, Tim Love and Love Style knew that not every employee of every restaurant contracted Covid-19,” the lawsuit says, alleging the defendants “designed a scheme” whereby the restaurants would wrongfully report that employees took COVID-19 sick leave and claim the FFCRA tax credit while failing to make any payments to workers, much less grant leave. 

“Tim Love and [Love Style HR and payroll manager Melinda Morgan] designed a scheme to defraud the IRS and Love Style employees to gain unearned tax reimbursements by claiming employees received Covid-19 pay as a wage they were never given,” the complaint alleges. 

Each plaintiff claims that their respective W2 Forms reflected that they had “earned” COVID-19 pay, and the individuals therefore had to pay taxes on the funds. One plaintiff claims to have received what amounts to a few hundred dollars of “hush” money after consistently complaining that she never received the sick pay she was actually owed from when she contracted COVID-19 in January 2021.

The case looks to represent individuals who worked for defendants Timothy Love, Love Style Inc., LDWB Knox LLC (Lonesome Dove Western Bistro), River Shack LLC (Woodshed Smokehouse) and Love Management Inc. in the United States between April 1, 2020 through December 31, 2020 and who the parties allegedly reported to the IRS had received paid sick leave payments under the FFCRA but did not actually receive those payments. 

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