Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.B. No. 356 entitled:

begs leave to report as follows:

The purpose of this bill is to change the tip credit eligibility for employers of employees receiving tips, from not less than 20 cents below the minimum wage to a blank percentage below the minimum wage beginning on January 1 of an unspecified year.

Currently, the hourly wage of an employee who receives tips may be deemed to be increased by tips if the employee is paid not less than 20 cents below the minimum wage, and the combined amount of wages and tips received is at least 50 cents more than the minimum wage. This bill changes the 20 cents to an unspecified percentage below the minimum wage.

Your Committee received testimony in favor of this measure from the Hawaii Restaurant Association. Testimony in opposition to this measure was received from the ILWU Local 142, the American Friends Service Committee, and the Department of Labor and Industrial Relations.

Your Committee realizes that Hawaii businesses struggling to recover from the long ten-year recession in the State need to keep overhead costs down. At the same time, your Committee believes that servers who receive tips work hard and should not be penalized by lowering their wages.

Your Committee wishes to keep discussion on this bill open but also wishes to address servers' needs by tying in the combined amount of tips and minimum wage, less the tip credit, to assure that this amount does not fall below $9.43 per hour, the level of a living wage that would keep a family of four above the federal poverty level for Hawaii.

Accordingly, your Committee has amended this bill by changing the amount of the combined tips and wages from at least 50 cents above the minimum wage to "at least a living wage, currently $9.43 per hour." This amount of $9.43 represents the hypothetical hourly "living wage" for Hawaii. The bill has also been amended to require the Department of Labor and Industrial Relations to annually adjust, by rule, the hypothetical living wage for Hawaii on January 1, 2003 and every year thereafter, based on forty hours of work per week for fifty-two weeks a year that would keep a family of four above the federal poverty level for Hawaii.

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. 356, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 356, H.D. 1, and be referred to the Committee on Finance.