Serving alcohol comes with serious responsibilities and legal risks. Many people don’t realize that bars can be sued for overserving patrons who later cause harm. Whether you're a bartender or bar owner, understanding your liability under dram shop laws can protect your customers, your staff, and your business. In this guide, we’ll walk through the basics of liability, share cautionary tales from bars that learned the hard way, and give you straightforward strategies to protect your staff, your patrons, and your business.

What Is Considered Overserving?

Overserving is when a bartender or server keeps serving a customer who is already drunk. If a bartender keeps serving drinks to a patron who is obviously intoxicated to the point that they may be a danger to themselves or others, the establishment may be held accountable for overserving.

It is part of a bartender's training to know when to stop supplying beverages to a customer if they are, for instance, slurring their words, acting disoriented, or having difficulty getting up and moving around. The bartender intentionally raises the risk of an accident if they keep serving an intoxicated person, particularly if they intend to drive home after the bar.

A bartender can be held liable for overservice. Overserving by bartenders can result in serious consequences such as civil lawsuits, fines, license suspension, and, in some cases, criminal charges.

Dram Shop Laws & Legal Consequences of Overserving Alcohol

Overserving laws and liabilities will vary based on where you do business. They vary by state, county, and even municipality.

Liquor license holders and their businesses are responsible for making sure that all applicable liquor laws are followed. The most common legal consequences of overserving alcohol (among other violations) are fines and loss of a liquor license, but under some jurisdictions and circumstances, business owners can face jail time.

Before dram shop laws were enacted, the court system often discouraged or banned lawsuits against alcoholic beverage sellers and servers, arguing that the damage was caused by an intoxicated individual and not the alcohol itself. Dram shop cases are divided into first-party and third-party cases.

First-Party Cases

In first-party dram shop cases, people who drank too much sue the bartender or establishment for damages caused by their intoxication. Most states prohibit prosecution in first-party dram shop cases and DUI cases. This is because most local lawmakers and juries have a hard time letting an adult blame a business for their own decisions

When first-party liability is allowed, it’s more likely to be limited to the case of serving alcohol to minors. In some states, minors or their guardians can prosecute first-party dram shop cases. This is because those under 21 are not allowed to legally drink alcohol. These cases are just rarely successful.

Third-Party Cases

A third-party dram case happens when an intoxicated person injures or damages another person or party. That means if a visibly intoxicated person drinks in a bar and gets into an accident while driving, the injured third party can sue for damages.

States allowing third-party dram shop cases typically have specific court requirements for the third party to successfully sue the bartender or establishment. While different states have different requirements for proof, generally speaking, the third party must:

• Show that the bartender or establishment sold or provided alcohol to the individual
• Establish a link between the individual's level of intoxication and their alcohol consumption
• Provide evidence of irresponsibility by purposefully serving alcohol to someone who is visibly inebriated
• Prove that the bartender knowingly served alcohol to an individual with alcohol/drug addiction
• Demonstrate that the establishment served alcohol to a minor
• Show that the act of serving alcohol was intentional

Most states also have some form of dram shop law that allows a third party to sue a business for overserving if they go on to cause damages against that person or their family. In fact, there are only eight states without dram shop liability: Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota, and Virginia.

Fallout for Bartenders Who Overserve

There are already laws in 42 states and the District of Columbia that hold bartenders accountable for overserving patrons. The bar or establishment can also face civil lawsuits in addition to penalties for the bartender. States, counties, and municipalities may impose different penalties on bartenders who serve excessive amounts of alcohol. Among the penalties are:

• Penalties and charges amounting to thousands of dollars
• Revocation or suspension of license
• Imprisonment
• Criminal offenses, including manslaughter or assault
• Legal responsibility for damages, such as injuries, deaths, and medical expenses

Bartenders and their employers can face these penalties and more if they're proven guilty of overserving alcohol to an intoxicated individual.

Each state will have its own laws regarding overserving. In Texas, for example, you can be charged with criminal negligence for selling or delivering alcohol to "a habitual drunkard, or an intoxicated or insane person." Selling or distributing alcohol to "certain persons" is a Class A misdemeanor in Texas, which carries a potential of a one-year prison sentence and a fine of $4,000.

Real-World Examples of Dram Shop Lawsuits

As a bartender, your decisions matter. While it might seem tempting to serve one more drink to an intoxicated customer in hopes of a bigger tip, the risk simply isn't worth it. Take these recent lawsuits as a warning. 

In 2021, a Corpus Christi bar shared dram shop liability in a drunk driving accident where the victim was awarded $301 billion in damages. It’s by far the largest dram shop verdict in history, and both the business and its owner will likely have to pay a considerable amount.

This verdict is the most shocking case in recent memory, but smaller dram shop damages happen every year. In many states, it’s easier to prove the liability of the individual server, but a business’s pockets are deeper, and plenty of cases demonstrate that juries are willing to recognize the responsibility of bars in alcohol service.

Even some more recent cases. For example, in January of 2024, a New Jersey dram shop suit involving the estate of a 17-year-old killed in a drunken-driving accident reached a  $1.2 million settlement. The 17-year-old victim was a passenger in a vehicle that was struck from the rear by a drunk driver going 105 mph. Also, in 2019, a bench verdict awarded $37.5 million in damages in a third-party dram shop case against a strip club in St. Louis.

Even when the courts don’t find a business liable, bars that have been sued for overserving face legal fees and higher insurance premiums, that’s why some businesses choose to pay out a settlement instead.

Strategies for Bars to Prevent Overserving

There are many reasons, aside from overserving laws and liabilities, why it’s smart to prevent overserving in bars. Drunk patrons drive away good business, and sometimes, things can escalate into a situation that results in injury and property damage.

According to one insurance company, the cost of a bar fight claim averages over $100,000, and it’s not unheard of for a claim to amount to several million dollars over a single incident. What you save out-of-pocket, you’ll pay in increased insurance premiums.

To prevent overserving, you need staff adept at spotting intoxicated patrons and using conflict resolution. Proper training plays a big part in this, but you also need to empower them to take the steps they deem necessary to prevent overservice.

A few systemic practices can help prevent overserving in your bar, including:

• Turn People Away: Put staff on the door for peak hours and empower them to turn away anyone who is already visibly intoxicated. You won’t be able to responsibly serve them alcohol, and they can cause a lot of trouble.
• Keep a Close Eye: Develop monitoring methods for service staff, like drink counting methods and observing for signs of intoxication.
• Check IDs: Hold staff responsible for enforcing a conservative ID-checking policy and train them to distinguish between valid and fake IDs. Additionally, they should keep an eye out for signs of third-party sales to minors. In some states, even parents can’t legally share alcoholic beverages with minors in a public venue.
• Take Time for Breaks: Adequately staff during peak hours so that there is a large enough staff to pay attention to the state of patrons (and their IDs) before they serve them. Training and vigilance don’t matter if staff don’t have time to make a judgment call.
• Clearly Defined Cutoff Policy: Having a clear cutoff policy will help all employees know the stage of intoxication, which is "too much" for another drink. Don't leave it up to individual judgment, which will vary from person to person and day to day.
• Enforce Pour Discipline: Drinks have to be predictable and have a reasonable amount of alcohol. Having a policy of measuring alcohol for drinks allows you to confidently say that no one was served an especially strong drink.
• Offer Rides Home: Try offering cab service to intoxicated patrons. Sometimes attempts at prevention fail for one reason or another, but offering drunk patrons an alternate way home can be used as a valid defense in a dram shop lawsuit.

Protect Your Business with TIPS Training

Training your bartenders and servers in responsible alcohol service is a key step to preventing overserving in bars and avoiding a dram shop lawsuit.

Not only do you give your staff the skills and knowledge they need to prevent overserving or illegal service, but in some states, your business may even be able to use this training as a defense. For example, Texas bars and restaurants are protected from lawsuits if they’ve given their staff TABC-approved training. It’s called the Safe Harbor Defense.

TIPS courses are proven effective and count as approved responsible alcohol server training in many states. Your employees can even complete the training online – it’s cost-effective, and your employees can complete the courses on their schedule, at their own pace, which aids understanding and retention.

Check out our state-by-state guide to learn about your state’s dram shop laws and training requirements. You can also register your bartenders for online TIPS training or locate trainers for in-person classes. Head to our website to enroll today!