SB 1287: DLIR; Food, Beverage, and Service Establishments; Transparency; Tips; Allocation; Disclosure; Payment of Wages; Compensation

A BILL FOR AN ACT

RELATING TO TRANSPARENCY.

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

     SECTION 1.  The legislature finds that food, beverage, and service establishments increasingly rely on customers tipping employees to earn a reasonable wage.

     However, the legislature further finds that a 2022 United States Department of Labor investigation discovered that employers in the State were illegally stealing tips that their employees had earned, resulting in the employers being required to pay $117,710 in back wages and liquidated damages for seventy workers.  Another illegal tip theft investigation at a local cafe resulted in fourteen workers recovering a combined $79,000 in back wages and $79,000 in damages.

     The Hawaii Worker Rights Center estimates that for each illegal case of tip theft discovered, countless others likely continue, depriving local workers of their earnings.  However, tip theft is often difficult to identify because tips are frequently split by employers between front and back of house employees without disclosing to both customers and employees how the tips are actually allocated.

     The legislature also finds that a simple and effective solution to prevent tip theft by employers is to inform tipping customers and workers receiving tips that it is illegal for employers to retain tips and clarify who to contact regarding suspected violations.

     Accordingly, the purpose of this Act is to require a clear and accessible notice of tip allocation in food, beverage, and service establishments.

     SECTION 2.  Chapter 388, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§388-    Tip allocation transparency; disclosure.  (a)  In addition to the notification requirements provided in section 388‑7, each food, beverage, and service establishment that accepts tips and employs an employee subject to title 29 Code of Federal Regulations section 531.50 et seq. or a tipped employee as defined in section 387-1, shall post:

     (1)  A reasonably noticeable and easily readable sign with a simple and understandable explanation of how tips are allocated, which employee positions receive tips, and the percentages or proportions of tips allocated to each position in physical locations, including brick and mortar premises, mobile vehicle, or other temporary sites of business; at each point of customer check-in, check-out, final transaction; or an otherwise publicly visible location where customers are reasonably expected to pay for their purchase or service.  The sign posted pursuant to this paragraph shall include one of the following statements or a substantially similar statement:

          (A)  "Tips are kept entirely by each employee to whom they are left or given";

          (B)  "Tips are aggregated and divided equally among all employees legally allowed to receive tips from tip pools"; or

          (C)  "Tips are aggregated and allocated as follows:  one third is divided among all drivers; one third is divided among all servers; and one third is divided among all the kitchen staff"; and

     (2)  A reasonably noticeable and easily readable sign with:

          (A)  The same text in the sign posted pursuant to paragraph (1); and

          (B)  The following statement or a substantially similar statement:

                   "Federal and State laws require ALL tips received by this establishment to be directly distributed to employees.  For questions or to report violations, contact the Wage and Hour Division of the U.S. Department of Labor at 1‑866-487-9243, or the Wage Standards Division of the Hawaii Department of Labor and Industrial Relations at:

              (i)  808-586-8777 for the city and county of Honolulu;

             (ii)  808-274-3351 for the county of Kauai;

            (iii)  808-984-2076 or 808-984-2075 for the county of Maui; and

             (iv)  808-974-6464 for the county of Hawaii.",

              in each physical location where other legally required notices for employees are posted.

     (b)  In addition to the remedies available under section 388-11, any employer who fails or refuses to post a clear and accessible notice of the tip allocation required under this section shall be liable to the employee for back wages and penalties for back wages in the amount that the employee should have earned if all tips had been paid directly to the employee.

     (c)  Action by an employee to recover unpaid wages, including back wages and unpaid tips, may be maintained in any court of competent jurisdiction by any one or more employees for and on behalf of oneself or themselves, or the employee or employees may designate an agent or representative to maintain the action.  The court in any action brought under this section shall, in addition to any judgment awarded to the plaintiff or plaintiffs, award back wages in the amount that an employee should have earned if all tips had been paid directly to the employee by the employer."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.

Report Title:

DLIR; Food, Beverage, and Service Establishments; Transparency; Tips; Allocation; Disclosure; Payment of Wages; Compensation

Description:

Requires under the State's wage compensation laws that food, beverage, and service establishments that accept tips and employ tipped employees post signs that include language explaining their tip allocation practices and the contact information for the Wage Standards Division of the Department of Labor and Industrial Relations and the Wage and Hours Division of the United States Department of Labor.  Establishes back wages and penalties as available remedies for employees in the event of a violation.  Effective 7/1/2050.  (SD2)

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

A BILL FOR AN ACT

RELATING TO TRANSPARENCY.

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

     SECTION 1.  The legislature finds that food, beverage, and service establishments increasingly rely on customers tipping employees to earn a reasonable wage.

     However, the legislature further finds that a 2022 United States Department of Labor investigation discovered that employers in the State were illegally stealing tips that their employees had earned, resulting in the employers being required to pay $117,710 in back wages and liquid damages for seventy workers.  Another illegal tip theft investigation at a local cafe resulted in fourteen workers recovering a combined $79,000 in back wages and $79,000 in damages.

     The Hawaii Worker Rights Center estimates that for each illegal case of tip theft discovered, countless others likely continue, depriving local workers of their earnings.  However, tip theft is often difficult to identify because tips are frequently split by employers between front and back of house employees without disclosing to both customers and employees how the tips are actually allocated.

     The legislature also finds that a simple and effective solution to prevent tip theft by employers is to inform tipping customers and workers receiving tips that it is illegal for employers to retain tips and clarify who to contact regarding suspected violations.

     Accordingly, the purpose of this Act is to require a clear and accessible notice of tip allocation in food, beverage, and service establishments.

     SECTION 2.  Chapter 481B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§481B-    Tip allocation transparency; disclosure.  Each food, beverage, and service establishment that accepts tips and employs an employee subject to title 29 Code of Federal Regulations section 531.50 et seq. or a tipped employee as defined in section 387-1, shall post:

     (1)  A reasonably noticeable and easily readable sign with a simple and understandable explanation of how tips are allocated, which employee positions receive tips, and the percentages or proportions of tips allocated to each position in physical locations, including brick and mortar premises; mobile vehicle or other temporary sites of business; at each point of customer check-in, check-out, final transaction; or an otherwise publicly visible location where customers are reasonably expected to pay for their purchase or service.  The sign posted pursuant to this paragraph shall include one of the following statements or a substantially similar statement:

          (A)  "Tips are kept entirely by each employee to whom they are left or given";

          (B)  "Tips are aggregated and divided equally among all employees legally allowed to receive tips from tip pools"; or

          (C)  "Tips are aggregated and allocated as follows:  one third is divided among all drivers; one third is divided among all servers; and one third is divided among all the kitchen staff"; and

     (2)  A reasonably noticeable and easily readable sign with:

          (A)  The same text in the sign posted pursuant to paragraph (1); and

          (B)  The following statement or a substantially similar statement:

                   "Federal and State laws require ALL tips received by this establishment to be directly distributed to employees.  For questions or to report violations, contact the Wage and Hour Division of the U.S. Department of Labor at 1‑866-487-9243, or the Wage Standards Division of the Hawaii Department of Labor and Industrial Relations at:

              (i)  808-586-8777 for the city and county of Honolulu;

             (ii)  808-274-3351 for the county of Kauai;

            (iii)  808-984-2076 or 808-984-2075 for the county of Maui; and

             (iv)  808-974-6464 for the county of Hawaii.",

              in each physical location where other legally required notices for employees are posted."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.

Report Title:

Food, Beverage, and Service Establishments; Transparency; Tips; Allocation; Disclosure; Unfair and Deceptive Practices

Description:

Requires under the State's Unfair and Deceptive Practices Law, that food, beverage, and service establishments that accept tips and employ tipped employees post signs that include certain language explaining their tip allocation practices and the contact information for the Wage Standards Division of the Department of Labor and Industrial Relations and the Wage and Hours Division of the United States Department of Labor.  Effective 7/1/2050.  (SD1)

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

A BILL FOR AN ACT

Relating to TRANSPARENCY.

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

     SECTION 1.  The legislature finds that food, beverage, and service establishments are increasingly relying on customers tipping employees to earn a reasonable wage. 

     However, the legislature further finds that a 2022 United States Department of Labor investigation discovered that employers in the State were illegally stealing tips that their employees had earned, resulting in the employers being required to pay $117,710 in back wages and liquid damages for seventy workers.  Another illegal tip theft investigation at a local cafe resulted in fourteen workers recovering a combined $79,000 in back wages and $79,000 in damages.

     The Hawaii Worker Rights Center estimates that for each illegal case of tip theft discovered, countless others likely continue, depriving local workers of their earnings.  However, tip theft is often difficult to identify because tips are frequently split by employers between front and back of house employees without disclosing to both customers and employees how the tips are actually allocated.

     The legislature also finds that a simple and effective solution to prevent tip theft by employers is to inform tipping customers and workers receiving tips that it is illegal for employers to retain tips and clarify who to contact regarding suspected violations.

     Accordingly, the purpose of this Act is to require a clear and accessible notice of tip allocation in food, beverage, and service establishments.

     SECTION 2.  Chapter 481B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§481B-    Tip allocation transparency; disclosure.  Each food, beverage, and service establishment that accepts tips and employs an employee subject to title 29 Code of Federal Regulations section 531.50 et seq. or a tipped employee as defined in section 387-1, shall post:

     (1)  A reasonably noticeable and easily readable sign with a simple and understandable explanation of how tips are allocated, which employee positions receive tips, and the percentages or proportions of tips allocated to each position in physical locations, including brick and mortar premises; mobile vehicle or other temporary sites of business; at each point of customer check-in, check-out, final transaction; or an otherwise publicly visible location where customers are reasonably expected to pay for their purchase or service.  The sign posted pursuant to this paragraph shall include one of the following statements or a substantially similar statement:

          (A)  "Tips are kept entirely by each employee to whom they are left or given";

          (B)  "Tips are aggregated and divided equally among all employees legally allowed to receive tips from tip pools"; or

          (C)  "Tips are aggregated and allocated as follows:  one third is divided among all drivers; one third is divided among all servers; and one third is divided among all the kitchen staff"; and

     (2)  A reasonably noticeable and easily readable sign with:

          (A)  The same text in the sign posted pursuant to paragraph (1); and

          (B)  The following statement or a substantially similar statement:

                   "Federal and State laws require ALL tips received by this establishment to be directly distributed to employees.  For questions or to report violations, contact the Wage and Hour Division of the U.S. Department of Labor at 1‑866-487-9243, or the Wage Standards Division of the Hawaii Department of Labor and Industrial Relations at:

              (i)  808-586-8777 for the city and county of Honolulu;

             (ii)  808-274-3351 for the county of Kauai;

            (iii)  808-984-2076 or 808-984-2075 for the county of Maui; and

             (iv)  808-974-6464 for the county of Hawaii.",

              in each physical location where other legally required notices for employees are posted."

     SECTION 3.  New statutory material is underscored.

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

Report Title:

Food, Beverage, and Service Establishments; Transparency Tips; Allocation; Disclosure Unfair and Deceptive Practices

Description:

Requires under the State's Unfair and Deceptive Practices Law, food, beverage, and service establishments that accept tips and employ tipped employees to post signs that include certain language explaining their tip allocation practices and the contact information for the Wage Standards Division of the Department of Labor and Industrial Relations and the Wage and Hours Division of the United States Department of Labor.

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

STAND. COM. REP. NO. 847

Honolulu, Hawaii

RE:    S.B. No. 1287

       S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1287, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TRANSPARENCY,"

begs leave to report as follows:

     The purpose and intent of this measure is to require a clear and accessible notice of tip allocation in food, beverage, and service establishments.

     Your Committee received testimony in support of this measure from one individual.

     Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs and Department of Labor and Industrial Relations.

     Your Committee finds that tip theft has been an ongoing problem in the State.  Because tips are generally distributed between front and back-of-house employees by their employers without disclosing how the tips are actually allocated, it is often difficult to identify when tip theft occurs.  This measure provides a simple and effective solution to prevent employers from engaging in tip theft by requiring employers to inform consumers and employees who receive tips that it is unlawful for employers to retain or withhold tips from their employees, as well as information on where to report suspected violations.  Your Committee further finds that this measure will increase public awareness of tip theft by providing resources to identify when tip theft occurs.

     Your Committee also notes that, given that this measure is primarily intended to address the labor practices of employers toward their tipped employees, your Committee believes that this measure may be more appropriately designated as a new section under chapter 388, Hawaii Revised Statutes, which governs employee wages, rather than as a consumer protection statute under the Unfair and Deceptive Practices Act.

     Accordingly, your Committee has amended this measure by:

     (1)  Codifying its provisions as a new section under chapter 388, Hawaii Revised Statutes, relating to wages of employees, rather than as a consumer protection statute under the Unfair and Deceptive Practices Act, chapter 481B, Hawaii Revised Statutes;

     (2)  Clarifying that back wages and penalties for back wages are available remedies for a violation of the notification requirements imposed on employers;

     (3)  Specifying that the appropriate remedy for a violation of the notification requirement is an award of back wages in the amount that an employee should have earned if all tips had been paid directly to the employee; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     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 S.B. No. 1287, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1287, S.D. 2.

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

STAND. COM. REP. NO. 352

Honolulu, Hawaii

RE:    S.B. No. 1287

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Labor and Technology, to which was referred S.B. No. 1287 entitled:

"A BILL FOR AN ACT RELATING TO TRANSPARENCY,"

begs leave to report as follows:

     The purpose and intent of this measure is to require food, beverage, and service establishments that accept tips and employ tipped employees to post signs that include certain language explaining their tip allocation practices and the contract information for the Wage Standards Division of the Department of Labor and Industrial Relations and the Wage and Hours Division of the United States Department of Labor.

     Your Committee received comments on this measure from the Department of Labor and Industrial Relations and Department of the Attorney General.

     Your Committee finds that tip theft is a credible threat to the livelihood of many workers in the State.  Tipped employees typically rely on tips for a significant portion of their income, but tips are one of the simplest forms of wage to steal due to the opaque nature of their distribution.  This measure protects tipped employees and their earnings by requiring the posting of signage explaining the tip allocation process to customers and employees and listing the contact information to report violations.

     Your Committee notes the concern raised by the Department of the Attorney General that this measure establishes new prohibitions without prohibiting retroactive application.

     Accordingly, your Committee has amended this measure by:

     (1)  Inserting a savings clause to prohibit retroactive application;

     (2)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

     (3)  Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Labor and Technology that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1287, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1287, S.D. 1, and be referred to your Committee on Commerce and Consumer Protection.

Respectfully submitted on behalf of the members of the Committee on Labor and Technology,