Can a Restaurant Make a Server Pay for Mistakes?

waiter holding trayThe best answer for this question is it depends. Most businesses throughout the United States customarily charge back monetary losses to their employees. These are most often losses that come from taking payments, operating a cash register, or dealing with other monetary exchanges for which an employee would be directly responsible.

Employees can also be held accountable for breaking or destroying merchandise, tools, or other company equipment while performing their duties if the losses occur through misuse or misappropriation. Employees are generally not liable for losses or damages occurring by accident or by the actions of customers.

However, in the restaurant business, servers are often held accountable for patrons who leave without paying their bills, as well as mathematical errors in calculating checks, errors in making change, and, in some cases, errors in ordering food and beverages. The question remains, can a restaurant dock a server’s wages for these mistakes? The answer is yes, but only to the extent that the deductions are from tipped earnings above and beyond the $7.25 Federal Minimum Wage.

How are servers paid in the U.S.?

By long custom, servers are paid a nominal minimum wage plus at least a portion of the tips that restaurant patrons leave with their bills. The nominal minimum wage for tipped employees varies from state to state. Some states pay servers the same minimum wage that federal law guarantees all employees, currently $7.25 per hour.

The federal standard for tipped employees however, is much, much lower, at only $2.13 per hour! While most states follow federal guidelines, some do not. Seven U.S. states have no tipped minimum wage at all, while a number of other states have increased their tipped minimum to at least $4 or $5 per hour.

Lobbying efforts by the National Restaurant Association have helped to keep the tipped minimum at its present level, unchanged since 1991. One reason for the Association’s strong opposition to raising the tipped minimum is that restaurant owners are currently allowed to write off the $5.12 difference between the tipped minimum and the $7.25 standard minimum, provided that the server earns at least that much including tips.

This is found money for restaurant owners, legitimate tax deductions of monies they don’t have to pay out, that are covered by customers’ tips. For larger establishments, this results in significant tax savings each year, savings that NRA members are reluctant to give up.

What laws cover servers?

Laws administered by the United States Department of Labor cover all workers in the U.S., including servers and other restaurant workers. These laws are found under the Fair Labor Standards Act; a summary of these laws, dealing specifically with tipped workers in the U.S., can be found at this web link.

What are severs responsible for?

Employers may legally deduct monies from a tipped server’s pay for a number of reasons. Federal, state, and local taxes and FICA (Social Security and Medicare taxes) are the most common deduction. Employers may also require servers to contribute to a tip pool: funds that will be shared by other employees who generally earn tips, such as bus persons and bartenders.

According to the Wiser Waitress website, employers may also reduce a server’s wages and tips for the Federal tip credit (as discussed above). Other deductions, as a rule, are only allowed with the server’s permission and approval.

According to the Department of Labor, deductions for losses stemming from shortages, walk outs, breakage, or other server errors are permitted, but only if these monies come from earnings above the federal minimum wage of $7.25. Deductions that reduce a server’s wages below that amount are illegal.

Who is responsible for walkouts, short changers, and other restaurant scofflaws?

Clearly, management personnel are ultimately responsible for patrons who try to abscond without paying the bill. However, servers are always on the front lines and can often sense when a guest is about to dine and dash. Since many restaurants hold their servers financially accountable for all guest checks, servers will go out of their way to prevent these losses; some actually try to chase down cheaters. This can be a bad idea.

Several years ago, a server in Columbus, Ohio was hit by a car driven by a fleeing customer. She suffered permanent paralysis as a result of the mishap. The year before that, a server in Texas was killed after running outside to record the license plate number of a would-be thief, who then ran her down with his car. He was later apprehended and is now serving a 30-year jail sentence.

How do I know what the laws are in my area?

Like many other areas of law, the rules regarding tipped employees can vary from state to state. In any event, state laws may never contradict or replace the federal statutes. Federal labor laws guarantee basic rights to all wage earners in the U.S.

Many informational websites document relevant cases and provide information to professional servers, such as the Wiser Waitress site mentioned above. Other web blogs such as help keep the public informed on what is and what is not acceptable and lawful behavior for restaurant owners.

  1. cw

    PLEASE remove or edit this article!
    The correct answer to, “Can a restaurant make a server pay for mistakes”, is, “check with a local labor attorney”, or, “call your state’s department of workforce development”.
    I don’t know about other states but in Wisconsin an employer is NOT permitted to deduct any money from an employee’s paycheck (obviously other than state and federal taxes) without their written approval. An employer also can NOT force an employee to pay for a dine and dash, they may however write an employee up for not paying attention.

  2. Elijah

    This article is very misleading in the way it is interpreting federal law. They really should have competent lawyers look at this stuff prior to making inaccurate legal claims. It is illegal for a restaurant to take any money from a waiter/waitress tips. They can only deduct it from their hourly pay if the employee is making at least the federal minimum wage without any tip credit. Let me give an example.

    An employee is paid $7/hr and makes $10/hr in tips. In this case the restaurant is paying the $7/hr and assumes the waiter/waitress is making at least $1.25 in tips and claims a $1.25 credit. Federal law would prevent the restaurant from holding the waiter/waitress responsible in this case because the restaurant is claiming a tip credit leaving the employee below minimum wage without tips. It doesn’t matter if the waitress is actually making $17/hr, the fact that the restaurant claims a tip credit means they cannot hold the employee responsible.

    In another example, if an employee is being paid $7.25 and makes no tips they can still be held responsible even if it would technically put them below minimum wage. This is how the law is written, but unfortunately it also leads to another grey area in that it leaves the employee below minimum wage although it’s rare for a waiter/waitress to actually make nothing in tips.

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