Employee Not Responsible for “Dine and Dash” Customer

By Pushor Mitchell LLP
Categories: Blog, Employment Law

A recent letter to the editor in a Kelowna newspaper dealt with the situation of a restaurant employee who was held responsible for a customer’s “dine and dash”. The employer apparently compensated itself for the lost revenue by deducting the amount from the employee’s wages.

This letter reminded me that, now and then, employers need to be schooled on the fundamental employment standards rules. At least in B.C., the rule is that the employee’s “pay packet” is not open to unilateral deductions by the employer.

The B.C. Employment Standards Act governs permissible payroll deductions. Aside from the normal statutory deductions, the range of permissible deductions is extremely narrow. All deductions must be permitted by the Act and the types of permissible deductions are listed in the Act.

Employers may make deductions which are required by any statute of B.C. or Canada. This includes, for instance, the usual deductions for income tax and for employment insurance and Canada pension plan premiums.

The employer also must make deductions, in limited circumstances, when the employee has made a written “assignment” of wages. An assignment is merely the employee’s written direction authorizing a deduction or payment.

These include an assignment to a trade union pursuant to the Labour Relations Code, to a charitable organization or pension plan if the amounts are deductible for income tax purposes under the Income Tax Act, to satisfy a maintenance obligation under the Family Maintenance Enforcement Act, and to an insurance company for medical coverage. An employee may also request that an employer honour an assignment of wages to satisfy a credit obligation.

A valid assignment of wages must be in writing. It must be specific and must be given voluntarily (not under pressure from the employer). A blanket authorization, imposed by the employer, allowing it to make future deductions for non-specific future events (such as customer theft) would be contrary to the purposes of the Act and, thus, invalid.

Employers should understand that the sections of the Act permitting written assignments of wages contemplate payments to third parties, not to the employer. In some circumstances, however, the employer will be allowed to recover a legitimate debt from the employee by way of an assignment of wages.

The golden rule is that employers must never make any sort of a deduction which is for the purpose of paying any of its own costs of doing business. An employee must not be asked to pay any costs related (for instance) to damage, breakage, theft, or other business losses.

The Employment Standards Branch routinely disallows such deductions. Some disallowed instances have involved costs of car accidents involving the employer’s vehicle, withholding of wages pending the return of company property, cellular telephone accounts, speeding tickets, air travel, and training courses for business purposes.

The Branch has also rejected deductions for work-related credit card bills, recovery of customers’ bad debts, correcting alleged work deficiencies of the employee, damage to customers’ property, fines incurred by employees while working, and money lost or stolen while the employee was working.

The message employers need to receive is that downloading business costs, such as those related to theft, onto the employee is illegal. Such a practice can result not only in an award compensating the employee for the improper deduction but also a monetary penalty.

So, when a customer does a “dine and dash” in a restaurant, the lost revenues are not the employee’s responsibility. Those lost revenues are an unfortunate cost of doing business which must be absorbed (or, better, rectified through improved business practices) by the employer.