STAND. COM. REP. NO. 3077

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2123
                                        H.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 2123, H.D. 2, entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to enhance consumer
protection with respect to service charges imposed by hotels and
restaurants on the sale of food and beverages.

     Testimony on the measure was received by the Department of
Labor and Industrial Relations, the President and several members
of the Hotel Employees and Restaurant Employees Union, Local 5,
the Hawaii Hotel Association, and an individual.
     
     Your Committee finds that it is generally understood that
service charges applied to the sale of food and beverages by
hotels and restaurants are levied in lieu of a voluntary
gratuity, and are distributed to the employees providing the
service.  Therefore, most consumers do not tip for services over
and above the amounts they pay as a service charge.  

     Your Committee further finds that, contrary to the above
understanding, moneys collected as service charges are not always
distributed to the employees as gratuities and are sometimes used
to pay the employer's administrative costs.  Therefore, the
employee does not receive the money intended as a gratuity by the
customer, and the customer is misled into believing that the
employee has been rewarded for providing good service.

 
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                                   STAND. COM. REP. NO. 3077
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     This measure is intended to prevent consumers from being
misled about the application of moneys they pay as service
charges by requiring under the Unfair and Deceptive Practices Act
that a hotel or restaurant distribute moneys paid by customers as
service charges directly to its employees as tip income, or
disclose to the consumer that the service charge is being used to
pay for the employer's costs or expenses, other than wages and
tips.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 2123, H.D. 2, and recommends that it pass
Second Reading and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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