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Minn. Servers' Dine-and-Dash Lawsuit May Pay Off

By Aditi Mukherji, JD | Last updated on

From the looks of one court's take on a dine-and-dash lawsuit, employers may want to think twice before forcing servers to cover losses from customers who don't pay their bills.

In a recent dine-and-dash class action case, the Minnesota Supreme Court sided with 750 server and bartender plaintiffs who sued over the practice of employers passing on the loss from dine-and-dash restaurant patrons. The case now goes back to a lower court to determine how much money the servers should get in damages.

The court's decision is a warning to employers to steer clear of forcing servers to cover lost revenue for customers who don't pay.

Minnesota Labor Law

The overarching issue was whether deducting dine-and-dash losses from servers' tips violated Minnesota's labor law. That law prohibits employers from making deductions from wages for theft, loss or damage without consent.

Under Minnesota law, tips are considered wages. Lower courts held the pay deductions were lawful, as long as employees' wages still exceeded the minimum wage.

But the Minnesota Supreme Court rejected that line of reasoning. The state's wage deductions law does not "require employees to show that deductions caused their wages to fall below the minimum wage," the court ruled.

Instead, the court held that it simply wasn't OK for employees to be threatened with job loss for failing to cover patrons who walked out or failed to sign credit card receipts, reports the St. Paul Pioneer Press.

Minnesota employers should pay attention to the ruling. Those who violate the deductions law can be sued by employees for twice the amount of the deduction or credit taken.

Better Alternatives

Rather than have your employees shoulder the costs of customers stiffing your restaurant, consider taking dine-and-dash prevention measures that are less legally dubious.

One option is to absorb the costs by factoring dine-and-dash losses into your prices. Retailers often use this method to leverage losses from shoplifting.

The golden rule in the food industry is to refine your customer service. For example, if your establishment has the ambiance of Amy's Baking Co., customers may be leaving you with an empty plate and an unpaid bill on purpose. Alas, an attentive server may just be what the patron ordered -- and paid for.

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