What Is The Tipped Wage About?
by Dr. Arcelita Imasa
My sister works in a restaurant, and she receives tips. Can you please explain what this tipped wage is about? What does the law say about tipped workers?
– Reader
Dear Reader,
The issue of tipped wages based on Hawaii’s tip credit law is about the practice of paying employees less than the minimum wage because restaurants want customers to make up the difference.
While some legislators and restaurant owners say there is only a small difference (currently $1.25 an hour) between the tipped wage ($12.75 per hour) and the minimum wage of $14.00, when you add that up over the year it’s actually around $3,000.
Therefore, tipped wages are about tip rip-off! Many states such as Nevada, California, and Washington state pay the full minimum plus tips.
Hawaii Workers Center also thinks that most employers in Hawaii are likely not implementing its tip credit law correctly as will be demonstrated in this news story: The U.S. Department of Labor’s Wage and Hour Division investigated and found L&L Hawaiian Barbecue on Kahului, Maui violated the law by illegally keeping a portion of its employees’ tips and depriving them of their lawful overtime wages.
“This restaurant employer willfully violated the Fair Labor Standards Act by deliberately underpaying workers their overtime wages and pocketing a portion of the tips they earned,” according to the Dept. of Labor. Back wages recovered included $58,600 in unpaid overtime wages and $8,791 in withheld tips for 21 employees.
Hawaii Workers Center thinks through the tip penalty “credit,” business owners are putting themselves in jeopardy of committing wage fraud. So, let us save employers from making this mistake and save employees from suffering from wage theft!
Hawaii Workers Center pushes for the elimination of the tip credit. Unfortunately, for this year, our tip credit bill did not pass.
Despite in-person testimonies from members of our Restaurant Workers United and the over 100 pieces of written testimony in support of ending the tip credit, the bill was eventually deferred.
We, however, thank Sen. Henry Aquino, chair of the Senate Committee on Labor and Technology, and Senator Kurt Favella for their efforts in introducing and championing this bill.
In the end, the lack of support from their colleagues showed how strong the business interests were in opposing it.
“Although I am of course disappointed, I believe the opportunity now exists, with the recent news of another dining establishment found by the U.S. Department of Labor to have committed wage theft over tips, that employers will realize it is much easier to simply pay the full-minimum wage plus tips rather than risk miscalculating the tip credit and committing wage fraud,” says Hawaii Worker Center’s director Sergio Alcubilla.
However, we must continue our organizing until the bill eliminating the tip credit is passed.
The news above on the Department of Labor’s investigation regarding rampant wage theft in Hawaiʻi restaurants demonstrates that a One Fair Wage law is needed!
If the U.S. Department of Labor is truly determined to fight wage theft in restaurants, it should be on our side to work to pass the One Fair Wage law and eliminate the tip rip-off for tipped workers.
Have you experienced wage theft? The Hawaiʻi Workers Center is here for you; reach out to us at phone number (503)967-5377 or (503)WORKERS).
We have helped workers across several industries fight and win back wages from wage theft and discrimination. We also offer Know Your Workers’ Rights trainings. Contact nelson@hawaiiworkerscenter.org to request training.
Sincerely,
Hawaii Workers Center
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DR. ARCELITA IMASA is a practicing family physician and the secretary of the Hawaii Workers Center’s Executive Committee of the Board. She grew up in the Philippines before migrating to Hawaii with her family more than a decade ago.
