A diner used servers' tip money to pay its bussers' wages, probe finds. Now it has to pay $1.35 million.

A diner in a Philadelphia suburb must return $1.35 million in back wages and damages to more than 100 employees after it used its waiters’ tips to pay its bussers’ wages, the Department of Labor announced Wednesday. 

Federal Judge Eduardo Robreno ruled last month that Empire Diner in Lansdowne, Pennsylvania, “willfully” violated labor laws and ordered it and two defendants – the owner and a manager – to pay $675,626.67 and an equal amount in damages to the affected employees, totaling $1.35 million. Empire Diner said it plans to appeal the decision. 

A Labor Department investigation found Empire Diner violated minimum wage, overtime and recordkeeping laws. The chief offense was skirting tip credit requirements by using the service staff’s tips to pay for bussers’ wages, according to the Department of Labor.  

The department first filed a lawsuit against the restaurant in 2018. The restaurant's website indicates it operates a single location.

Empire Diner required its servers to give 10-15% of their tips to the restaurant at the end of their shifts for a tip pool. The servers were paid a cash wage of $2.83 per hour while the restaurant claimed a tip credit for the difference between the cash wage and the federal minimum wage of $7.25 an hour. But Empire Diner retained some of the tips to pay the bussers' wages and not for a valid tip pool, according to court documents. 

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The violations occurred at the restaurant from 2014 through at least 2018, court documents show.

The department said the restaurant interfered with its investigation by asking employees to lie about its pay practices.

In an email to USA TODAY, Empire Diner owner Ihsan Gunaydin said the diner disagrees with the court and plans to "appeal the decisions on several grounds." 

The diner denied “knowingly” violating tip pool requirements and said it stopped operating the tip pool to pay bussers after the Labor Department’s investigation in 2018. It also said its servers did not report cash tips as instructed, which prevented the diner from lawfully claiming a tip credit. 

“We did not take any employees money… We do not agree with the court’s decision because we did not know the compliance rules and we acted in good faith,” the diner said in a follow-up statement to USA TODAY. 

“This legal action recovers the workers’ hard-earned wages and sends a strong message to other restaurant employers that violations come at a high cost,​” Solicitor of Labor Seema Nanda, was quoted in the department’s release. “The U.S. Department of Labor is prepared to use every tool available, including litigation, to prevent employers from depriving workers of their wages.”