A guest disputed their card charge. Can my manager make me pay the tip back?

Example

You work 30 hours in a week at $2.13 an hour, and your employer takes the full $5.12 tip credit. On Friday a guest adds a $16 tip on a card. Two weeks later the guest disputes the charge (illustrative).

1. 1Tip credit for the week: 30 hours × $5.12 = $153.60. That’s the floor your tips can’t drop below after a recovery, when your employer claims the full credit.
2. 2Tip pools: if the $16 went into a pool, DOL says each person who got a share pays back only their share. If you got back 70% of what you put in, you’d owe at most $11.20.
3. 3Your own mistake doesn’t change it. The recovery rule is about a charge that was never collected, not about who took the card.

Not tax or legal advice. The numbers are made up. The floor uses the full $5.12 credit; if your employer claims less, the floor is lower.

Plain English

What the federal rules actually say

No federal statute, regulation, or DOL fact sheet uses the word “chargeback” or talks about a guest disputing a tip. What exists is narrower. Federal regulations say a tip belongs to the customer’s choice alone: “whether a tip is to be given, and its amount, are matters determined solely by the customer.” Your employer may not keep any part of your tips, for any purpose, whether or not it pays $2.13. Card tips count as tips, and DOL lets your employer take out only the card company’s actual fee on them.

Uncollected card charges

DOL’s Field Operations Handbook, the manual its investigators use, covers one case directly. When a card transaction is never collected from the card company, the employer doesn’t have to pay the tip on that slip. If it already paid you, it may recover that tip. Two limits apply. The recovery can’t reduce the tips you keep below the tip credit your employer claimed that week. And the handbook assumes the charge went uncollected for a real reason, not because the restaurant never submitted the slip. DOL said the same in a 2006 opinion letter.

Card tips over 20%

Some restaurants won’t run a card tip above a set percentage. We found no federal rule that allows or bans that policy. The federal rules say the tip amount is the customer’s call, and that any tip your employer does collect is yours. If a guest’s larger tip was run, your employer can’t keep the part above 20%.

What to do this week

1. 1Ask for the details in writing: the date, the check number, and whether the card company actually reversed the charge.
2. 2Check the math against your week: your hours, your tips, and the tip credit your employer claimed. Federal rules make your employer record that tip credit amount.
3. 3Keep your own record of the check, the tip, and any amount taken back.
4. 4Ask DOL if it doesn’t add up. The Wage and Hour Division takes calls at 1-866-487-9243, and DOL says complaints are confidential. See How do I report my restaurant for taking tips? Your state may have stricter rules; DOL keeps a list of state labor offices.