Restaurant Wage Theft Lawsuits: Illegal Deductions, Stolen Tips

Attorneys working with ClassAction.org are looking into whether class action lawsuits can be filed against restaurants that may be taking illegal deductions from workers’ wages and tips.

Specifically, the attorneys suspect that restaurants could be violating labor laws by deducting the cost of uniforms, customer walkouts, order errors, and other expenses from employees’ pay. Under the federal Fair Labor Standards Act, it is illegal for an employer to make deductions from a worker’s pay that causes them to be paid less than minimum wage—or to keep any portion of their tips, regardless of the reason.

Restaurant Wage Theft: Illegal Deductions

The Fair Labor Standards Act (FLSA) requires employers to pay workers at least the minimum wage for all hours worked. For tipped employees, employers are permitted to pay a lower wage rate as long as the worker’s tips combined with their direct wage are at least the minimum wage.

While in some cases it is legal for an employer to make deductions from a worker’s wages, those deductions cannot reduce the worker’s pay to below the minimum wage. If an employer claims a tip credit—i.e., uses a worker’s tips to make up the difference between their hourly wage and minimum wage—any deductions from their pay are illegal because their hourly rate is already below the minimum wage.

Lawsuits Against Restaurants for Wage Theft

In a September 2024 press release, the Department of Labor announced that an investigation into five New Orleans restaurants resulted in over $109,000 in back wages and damages being paid to tipped servers and bartenders who had deductions taken from their pay. The department determined that the restaurants had illegally deducted the cost of uniforms, order errors, liquor shortages, customer walkouts and customer credit card disputes from employees’ wages.

Other Illegal Deductions: Stolen Tips

Under the FLSA, restaurants and other employers are not permitted to retain any portion of employees’ tips. Tips are always the property of the employee—unless they are distributed through a valid tip pool arrangement. Even then, restaurant owners, managers and supervisors are never permitted to participate in and receive tips from the tip pool.

According to the Department of Labor, it is illegal for a restaurant or other employer to require employees to give their tips to an owner or manager for any reason—even when the employee already makes the full minimum wage without counting tips.

Employee Complaints About Restaurant Wage Theft

Restaurant workers have turned to online forums such as Reddit to post complaints and ask questions about wage deductions. Some workers levied wage theft claims against their employers, saying they had to pay for dine and dash incidents, cover cash register shortages or pay for and clean their uniforms when they made minimum wage. Others complained that they were charged for mistakes, such as breaking dishes.

The following is a sample of some of the wage theft complaints posted on Reddit [sic throughout]:

I work at a fast food restaurant in Kansas and the store was just recently sold. This new owner is making many changes that are disliked by myself and fellow employees. The major one is wanting all employees on the clock to pay him through cash or check if the cash drawer comes up short. He is not threatening to take it from our payroll/paychecks, but expects us to pay out of pocket instead. Is this legal?”
— Reddit.com

I'm being hired for a Job at [restaurant] and one of the forms I'm required to sign asked me to consent to the deduction of my wages for processing fees with W-2's But out if the 3 terms I'm required to agree to, the last one states this: ‘A deduction from my wages if any drawer shortages in excess of $5.00 per shift’ I'm pretty sure this is illegal?”
— Reddit.com

I work at a pizza place in Ohio. The place is requiring us to buy our new uniforms, shirt $16, hat $11, coat $35. I make the state minimum $8.10/hr. I feel like if I pay for these, I am making less than minimum and so shouldn't be forced to pay.”
— Reddit.com

Hi! I just started a job as a waitress and they are saying that I am required to cover any customers walkouts (dine and dash) that may happen or be fired. I was under the impression that is wage theft, but In my state I guess it is only ‘illegal if the deduction reduces the employee's wages below the minimum wage or cuts into overtime pay.’ Can someone explain to me what that means? And what should I do/ tips in the event it does happen to me and I refuse to pay for the customers walkout tab? As a server a walkout (any amount) will for sure cut into my minimum hourly rate, but not sure if it will still count if they remove it from my net pay.”
—  Reddit.com

For context I live in Texas and I believe it is illegal to charge employees for a mistake without written consent at the beginning of a job. I have been working at this restaurant for 1 week and already feel like I need to quit which I have never worked at a job and wanted to quit within one week. The restaurant is not a chain and is family owned and very short staffed but the owners sit outside and eat food and drink while 1 sever and 1 bartender run the whole front of restaurant. I am currently a food runner till I get trained on serving, and I broke a salsa bowl and the owner came up to me and said it would be coming out of my check.”
— Reddit.com

How Could a Lawsuit Help?

If a restaurant is sued and the class action is successful, workers who had illegal deductions taken from their pay or stolen tips could recover money for back wages and damages. A lawsuit could also force a restaurant to change its pay practices.

What You Can Do

After you get in touch, an attorney or legal representative may reach out to you directly to ask you some questions and explain how you may be able to help start a lawsuit. It costs nothing to fill out the form or speak with someone, and you’re not obligated to take legal action if you decide you don’t want to.

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