Bill Text: HI SB759 | 2012 | Regular Session | Introduced

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Bill Title: Minimum Wage; Tip Credit

Spectrum: Moderate Partisan Bill (Democrat 7-1)

Status: (Introduced - Dead) 2011-12-01 - Carried over to 2012 Regular Session. [SB759 Detail]

Download: Hawaii-2012-SB759-Introduced.html

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THE SENATE	S.B. NO.	759
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to tip credit.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that divergent interests generally exist between employees and employers with regard to the treatment of tips received by tipped employees.  Employees desire to retain all tips received, regarding tips as an integral part of their payment for services.  Employers – who provide employment, a work place, equipment, marketing, products, and training – believe these benefits contribute directly to the employee's ability to earn tips.  As a result, employers seek to establish that the amount of tips an employee receives be recognized as income and be credited as a greater part of the minimum wage, which is the case in federal law and minimum wage legislation in the majority of other states.

     In 1969, the legislature established a minimum wage of $1.60 and tip credit amount of 20 cents (Act 36, Session Laws of Hawaii 1969, codified as section 387-2, Hawaii Revised Statutes).  In subsequent years, the legislature increased the minimum wage several times to the current amount of $7.25, while the tip credit has been increased only one time by 5 cents to the current amount of 25 cents – an amount that has been seriously eroded by inflation.

     The legislature further finds that the failure of Hawaii's tip credit to keep pace with the increased minimum wage amount hampers an employer's ability to increase the wages of non‑tipped employees, who also contribute valuable services to the business.  The balance between the competing interests of employers and employees must be adjusted to ensure that employers' interests and ability to do business are protected, employees are provided appropriate living wage, and fundamental fairness exists among employees.

     In addition, in 2010, the senate committee on economic development and technology and the house committee on economic revitalization, business, and military affairs convened an informal small business discussion group to address the most critical issues facing the small business sectors within Hawaii's economy.  Representatives from the Chamber of Commerce of Hawaii, construction and trades industries, community nonprofits, the agricultural sector, food and restaurant industries, retailing, the science and technology sector, the commercial transportation industry, and interested stakeholders developed a package of bills that address the most pressing problems facing Hawaii's small business community.

     The purpose of this Act is to support the findings of the small business working group and to provide greater equality in Hawaii's tip credit law by:

     (1)  Allowing employers to increase the tip credit by changing it from a fixed amount to a percentage of hourly tips claimed by the employee as income;

     (2)  Ensuring that employees subject to a tip credit earn three times the amount of tip income over the minimum wage as the tip credit (25 per cent:75 per cent = 1:3);

     (3)  Ensuring that the tip credit keeps pace with future minimum wage increases; and

     (4)  Increasing the amount of tips reported as taxable income.

     This Act provides assistance to Hawaii employers by changing the tip credit from 25 cents per hour to twenty-five per cent of the tips claimed by an employee on an hourly basis, but not less than an employer paid wage of $5 an hour.

     SECTION 2.  Section 387-2, Hawaii Revised Statutes, is amended to read as follows:

     "§387-2  Minimum wages.  Except as provided in section 387‑9 and this section, every employer shall pay to each employee employed by the employer, wages at the rate of not less than:

     (1)  $6.25 per hour beginning January 1, 2003;

     (2)  $6.75 per hour beginning January 1, 2006; and

     (3)  $7.25 per hour beginning January 1, 2007.

     The hourly wage of a tipped employee may be deemed to be increased on account of tips if the employee is paid not less than [25 cents] twenty-five per cent of tips claimed as income by the employee calculated at an hourly basis below the applicable minimum wage by the employee's employer [and the combined amount the employee receives from the employee's employer and in tips is at least 50 cents more than the applicable minimum wage.], but not less than $5 per hour."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Minimum Wage; Tip Credit

 

Description:

Allows employers to increase the tip credit by changing it from a fixed amount to a percentage of hourly tips claimed by the employee as income; ensures that employees subject to a tip credit earn three times the amount of tip income over the minimum wage as the tip credit; ensures that the tip credit keeps pace with future minimum wage increases; increases the amount of tips reported as taxable income.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.