Thunder in Paradise - Hawaii District Court Judges Issue Conflicting Opinions on Enforcement Scheme for Hawaii's Tip Statute - Hawaii Supremes to Weigh-in

Hotel and restaurant operators in the State of Hawaii have recently found their service charge practices subject to waves of challenges brought pursuant to H.R.S. § 481B-14 (the "Tip Statute"). The Hawaii Tip Statute is, in essence, a consumer protection statute that requires an employer to pay employee the entire service charge collected from customers as "tip income," if the employer fails to notify customers that a portion of the service charge will be retained by the employer for administrative and other costs. The Tip Statute challenges have sought to recover this allegedly owed "tip income" by, among other things, alleging that it constitutes unpaid wages under H.R.S. §§ 388-6, 388-10, and 388-11 ("Hawaii’s Wage Laws").

A recent decision by United States District Court for the District of Hawaii against Four Seasons, discussed in a September 9, 2011 blog entry, found that a Tip Statute action could be enforced via Hawaii’s Wage Laws. The Four Seasons decision was considered a significant blow to hotel and restaurant operators on this issue. However, another judge in Hawaii’s District Court recently issued an opinion that may breathe new life back into the defense that the legislature did not intend the Tip Statute to be enforced through Hawaii’s Wage Laws.

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