A measure that died at the state Legislature would have required food, beverage and service businesses that accept tips to post signs with a breakdown of where the tips go.
Senate Bill 1287 intended to increase transparency in the growing culture of tipping.
Supporters of the bill, including Hawaiʻi Workers Center Executive Director Sergio Alcubilla, said that with the heavy tip-driven economy, it can be easy to wonder if the money is reaching employees.
“Signage at the register that says how the tips are actually going to be allocated is good for us as consumers, to know that the tip we leave is actually going to go to the employees,” Alcubilla said.
The state Department of Labor and Industrial Relations noted that most of the businesses that have violated tip allocation processes in the past fall under federal jurisdiction. The bill would have only applied to businesses under state control.
DLIR stated that under the Federal Labor Standards Act, businesses that make more than $500,000 a year are considered under federal jurisdiction, meaning tip allocation is set at the federal level.
The businesses left under state control allow employers to set the allotment of tips, which is a concern for the bill's supporters who were pushing for more transparency in how tips are divided among employees.
“For a lot of people in the industry, they don’t really know how tips are divided,” Alcubilla said. “So it’s good for consumers and it’s good for employees to get that upfront breakdown.”
DLIR noted that it can only track wages once tips are added to an employee’s hourly pay. If an employer does not pay an employee the correct amount in tips, DLIR has no way of tracking it.
“It’s up to the employer how they want to split it up,” said Sheryl Lee, DLIR’s labor law enforcement specialist. “Once it’s distributed, then it becomes wages. That’s when we can enforce what is owed. But if the employer doesn’t keep records, then we won’t know how much tips are allocated to each employee.”
The bill died in the House Labor Committee on Thursday.
