Report Title:

Minimum Wage; Tip Credit; Increase

Description:

Incrementally increases minimum-wage tip credit for tipped employees over the next two fiscal years. (HB3209 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

3209

TWENTY-THIRD LEGISLATURE, 2006

H.D. 1

STATE OF HAWAII

  

 

A BILL FOR AN ACT

 

relating to the minimum wage.

 

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

SECTION 1. The legislature finds that the state law relating to the 25-cent tip credit is undesirable for the following reasons:

(1) It has remained generally unchanged since enacted in 1969, when the minimum wage was $1.60, and has been eroded by inflation to 3.8 per cent of the present minimum wage;

(2) It is significantly less than the federal tip credit and the tip credit of a majority of other states;

(3) It impedes the increase in wages for the lowest-paid workers in businesses when tipped employees earn two to six times the minimum wage in tips per hour, as employers are mandated to increase the wages of the highest wage earners when tip income is taken into account;

(4) It does not take into consideration the investment the employer makes to create conditions that enable tipped employees to earn tips; and

(5) It creates a significant disparity in earning ability between tipped and non-tipped employees within a business.

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

"§387-2 Minimum wages. (a) 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)] (1) $6.75 per hour beginning January 1, 2006; and

[(3)] (2) $7.25 per hour beginning January 1, 2007.

(b) The hourly wage of a tipped employee may be deemed to be increased on account of tips if the employee is paid:

(1) Prior to July 1, 2006, not less than 25 cents 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;

(2) After June 30, 2006, not less than 75 cents 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 $1 more than the applicable minimum wage; or

(3) After December 31, 2006, not less than $1.25 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 $1.50 more than the applicable minimum wage;

provided that the wages of non-salaried, non-tipped employees of employers allowed a credit under this subsection are increased by fifty per cent of the amount an employer is allowed to reduce the hourly wage below the applicable minimum wage of tipped employees."

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 Statutory material to be repealed is bracketed and stricken.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

SECTION 4. This Act shall take effect on July 1, 2006.