A group of Chinatown workers who had been engaged in long-term demonstrations and legal battles against bosses at the now bankrupt New Silver Palace restaurant has won a settlement from their former employers amounting to nearly $500,000 for lost wages, misappropriated tips and other labor violations, according to lawyers on both sides of the dispute. The money will be divided among 17 waiters and busboys.

''It's a tremendous victory —one because it shows that workers who are willing to fight can succeed in obtaining monies that they've lost and secondly it's a warning to restaurateurs that the law applies to them individually and they can be held responsible,'' said Kenneth Kimmerling, lawyer for the workers and legal director of the Asian American Legal Defense and Education Fund on Hudson St. His group sued the giant eatery on the Bowery near Canal St., its principals and shareholders in 2000 in federal court claiming violations of state and federal labor laws and liability under the Racketeer Influenced and Corrupt Organizations, or RICO Act. They were assisted by pro-bono lawyers from the white-shoe law firm of Davis Polk & Wardwell. The case went before federal Judge Alvin K. Hellerstein at the U.S. District Courthouse on Pearl St., who granted the plaintiffs' motion for a summary judgment last year.

Kimmerling said that six of the defendants, who included Silver Palace co-owner Richard Chan and his brother Ted, settled for $450,000, while three others offered a combined $39,000 on June 23. Kimmerling noted that the defendants would ''have to pay out of their own pockets'' now that the New Silver Palace, like its predecessor restaurant, has declared bankruptcy and is now closed. He claimed that three other defendants are in default ''and we will seek to obtain judgments against them.''

The workers will get an average of $29,400, but the individual awards will vary depending on how long they worked. Chan's attorney did not return a call for comment.

Robert Lewis, a Midtown lawyer who represented defendant Foon Szeto, an investor in the New Silver Palace, estimated that the labor dispute with the waiters and bus boys in Local 318 of the Restaurants Workers Union dates back to 10 years before the ''old'' Silver Palace went bankrupt. ''Our clients were faced with the prospect of defending themselves against plaintiffs who had free legal services from AALDEF and Davis Polk & Wardwell, which is one of the wealthiest law firms in the world,'' he said. He said that the genesis of the legal fisticuffs stemmed from personal animosity between Richard Chan and Wing Lam, executive director of the Chinese Staff and Worker's Association. Lam, Lewis contended, ''controlled'' the union.

Lam was present when three union workers from the New Silver Palace described their reaction to the settlement through an interpreter at a Vietnamese restaurant in Chinatown. All of them said they wished the dollar amount was larger.

''I feel we've been fighting so long and the amount of money doesn't really make up for our losses for so many years — the emotional damages and the financial damages,'' said Guo Cheong Liang, 59, who is now unemployed. He had been a waiter and union activist at both the New Silver Palace and old Silver Palace for 15 years. Liang said he was fired in 1999 for complaining about ''management taking tips'' and then rehired after the National Labor Relations Board stepped in and required the restaurant to rehire union workers who had been locked out.

But despite the ''little money'' being offered, Liang said he believed the settlement would ''send a message'' to Chinatown restaurant bosses that they should ''respect the labor laws.''

Jiang Feng, 38, who also worked as a waiter at the restaurant for over 15 years, six days a week, said he believes he lost ''approximately $800,000 to $1 million'' in tips, or about $60,000 a year. The restaurants bosses pooled the tips among workers at the end of the day, he said, giving ''portions'' to themselves and to dark-suited managers who ran the floor and were known as ''black jackets.''

Feng said he hadn't thought about how he would spend his settlement money.

Tong Leung, 56, said he worked at the restaurant for at least six years as a busboy and claimed managers took ''30 percent of the tips. Sometimes I'd get a few dollars in tips so I save my money and penny pinched,'' he added. ''We picketed and demonstrated. We should have gotten $1 million dollars.''

According to court papers, the dispute over tips began in 1995 with the old Silver Palace before it went bankrupt. At that time, local 318 of the Restaurant Workers Union challenged the legality of the restaurant's tip pooling arrangement. Although the New York State Supreme Court held that the system was illegal, the practice continued after Jonathan Chiu and Richard Chan purchased the assets of the old Silver Place in 1997 and restarted the Chinese restaurant and catering service, the documents state.

''This was a bitterly fought case,'' said William J. Harrington, one of the waiters' attorneys at Davis. ''The defendants made repeated and extensive motions to dismiss the case. They said this wasn't racketeering. They said these tips belonged to the black jackets. They said the claims were preempted by federal law because they had similar claims brought by the union. They made a number of motions and they lost repeatedly. It was a very expensive and time consuming process,'' he added. Harrington said that his firm gave more than $1 million in free legal services to the plaintiffs.