STAND. COM. REP. NO. 479-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2123
                                     H.D. 1
                                     



Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Labor and Public Employment, to which was
referred H.B. No. 2123 entitled: 

     "A BILL FOR AN ACT RELATING TO WAGES AND TIPS OF EMPLOYEES,"

begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to strengthen Hawaii's wage and hour law to protect employees who
receive or may receive tips or gratuities from having these
amounts withheld or credited to their employers.

     The Hotel Employees and Restaurant Employees, Local 5, and
several individuals testified in support of this bill.  Hilton
Hawaiian Village, the Council of Hawaii Hotels, the Society of
Human Resource Management-Hawaii Chapter, the Hawaii Hotel
Association, and the Chamber of Commerce of Hawaii testified in
opposition to this bill.

     The Department of Labor and Industrial Relations (DLIR)
expressed concerns that the bill, as drafted, would delete the
tip credit in its entirety thereby disallowing employers from
taking any offset from the employees' wages.  DLIR testified that
since the current rules concerning tips and gratuities are in
line with federal regulations, changing the definitions would
cause a lot of confusion for both employers and employees.

     The ILWU Local 142 supported the elimination of the tip
credit but also commented that changing the definition of tips
would cause much confusion and suggested amendments to the bill.

 
 
                                 STAND. COM. REP. NO. 479-00
                                 Page 2

 
     Based on the concerns raised and after much discussion, your
Committee concluded that the problem lies with consumers who may
not leave tips for the service employees, mistakenly thinking
that the service charges they paid were tips so they did not
leave additional tips for the service employees.  

     Therefore, your Committee has amended the bill by deleting
its contents and inserting a new section regarding unfair and
deceptive business practices.  This new section requires that any
hotel or restaurant applying a service charge to distribute it to
the employees or clearly state that the service charge is being
used to pay for costs or expenses other than wages for employees.

     Your Committee respectfully requests that the Committee on
Finance may want to explore whether this language can be expanded
to apply to other service industries such as golf caddies or
porters.

     As affirmed by the record of votes of the members of your
Committee on Labor and Public Employment that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 2123, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as H.B. No. 2123, H.D.
1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and Public
                                   Employment,



                                   ______________________________
                                   TERRY NUI YOSHINAGA, Chair