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A federal judge ordered the owners of a Delco diner to pay their servers $1.3M for seizing their tips

The owners of the Empire Diner routinely took 10 to 15% of servers tips to help cover other employees' salaries, according to federal prosecutors.

A federal judge ordered the owners of the Empire Diner to pay $1.3 million in back wages and penalties after four years of litigation.
A federal judge ordered the owners of the Empire Diner to pay $1.3 million in back wages and penalties after four years of litigation.Read moreTYGER WILLIAMS / Staff Photographer

The father-son duo operating a Delaware County diner were ordered by a federal judge to pay their employees $1.3 million in damages and back wages for illegally seizing their tips, officials announced Wednesday.

Ihsan Gunaydin, the owner of the Empire Diner in Lansdowne, and his son Engin, the diner’s manager, were handed that decision by U.S. District Judge Eduardo C. Robreno after nearly four years of litigation and a five-day bench trial last month.

Federal prosecutors alleged that the family paid its servers $2.83 an hour, well below the minimum wage, but said tips made up the difference. However, management at Empire routinely took 10 to 15% of servers’ tips each week to cover the salaries of kitchen staff and bussers, according to court filings.

» READ MORE: U.S. sues diner, alleges owner trimmed tips, shorted overtime for 83 workers

The management also failed to pay overtime to employees who worked more than 40 hours a week, prosecutors said. And when investigators from the U.S. Department of Labor came to the diner to inquire about that, prosecutors said, management instructed some employees to lie about the hours they worked.

Engin Gunaydin did not return a request for comment. Nor did his attorney, James Bell.

“Tipped workers in the food services industry rely on their hard-earned tips to make ends meet,” said Jessica Looman, the principal deputy wage and hour administrator for the Department of Labor. “By diverting a portion of these tips, restaurant employers violate federal labor laws and harm workers and their families.”

The settlement benefits 107 current and former servers and kitchen workers at Empire, a fixture near Southwest Philadelphia that is frequented by local politicians.

In court filings, Bell wrote that, with tips, the waitstaff made well above minimum wage, and denied any wrongdoing. Employees often failed to properly record how much they made in tips, forcing the owners to “guesstimate” their income for payroll records, he said.

Bell described most of the employees represented in the suit as “problem employees with reasons to be disgruntled.” And he noted that the diner’s accountant as well as two payroll companies it hired never told the Gunaydin family that the payment practices were illegal.

Bell argued against awarding the damages to the employees, saying the management’s actions were made in good faith, and without realizing that they had violated federal law.

Prosecutors balked at that assertion, saying “no reasonably prudent person would have come to the conclusion that stealing tips and creating false payroll records was permissible.”