The Emersons Ltd. restaurant chain was ordered in U.S. District Court in Alexandria yesterday to pay $293,003.46 in back wages to more than 700 employees.
The award, determined by a jury, was approved by Judge Albert V. Bryan Jr., who delayed its implementation pending a final decision in a similar case involving the Marriott Corp.
The award followed a finding by Bryan last November that a "tip back plan" used by some Emersons Restaurants in Virginia to pay its night waiters and waitresses violated federal minimum wage laws.
Under that plan, at the end of a day an employee gives the employer money he or she has collected in tips equal to the minimum legal wage for the time worked. At the end of the week, the employer pays the worker "wages" from the tips, less federal and state taxes.
One Labor Department lawyer said the policy, in effect, allowed Emersons to pay nothing out of its won pocket for salaries.
He said the Labor Department interprets the federal minimum wage law to mean that only half the hourly minimum wage can be credited from tips to pay an employee's salary.
In yesterday's order, the judge also said Emersons must keep accurate records of work time and stop using the "tip back plan."
Emersons, based in Rockville, filed a bankruptcy petition in Hyattsville, Feb. 10 but said its 36 restaurants will remain open. Emersons asked that the current management be allowed to continue operating the firm while a plan of financial reorganization id developed with creditors.
Last year, the Securities ad Exchange Commission alleged that former officers of Emersons inflated reports on company operations and took kickbacks in exchange for use of specific beers and wines. Officials involved in the alleged fraud were removed and a California restaurant executive was brought in last fall as president.
Emersons' attorney, Alan Kerxton, could not be reached for comment about the judge's order.