STAND. COM. REP. NO. 1182-14
Honolulu, Hawaii
, 2014
RE: S.B. No. 2609
S.D. 1
H.D. 1
Honorable Joseph M. Souki
Speaker, House of Representatives
Twenty-Seventh State Legislature
Regular Session of 2014
State of Hawaii
Sir:
Your Committee on Labor & Public Employment, to which was referred S.B. No. 2609, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO MINIMUM WAGE,"
begs leave to report as follows:
The purpose of this measure is to update the minimum wage by:
(1) Increasing the minimum wage by a specified amount from January 1, 2015, to January 1, 2017; and
(2) Changing the tip credit amount.
Your Committee has amended this measure by:
(1) Deleting its purpose section;
(2) Changing the amounts of the minimum wage as follows:
(A) $7.75 per hour beginning January 1, 2015;
(B) $8.50 per hour beginning January 1, 2016;
(C) $9.25 per hour beginning January 1, 2017; and
(D) $10.10 per hour beginning January 1, 2018;
(3) Increasing the amount of the tip credit allowed as follows:
(A) 50 cents per hour beginning January 1, 2015;
(B) 75 cents per hour beginning January 1, 2016; and
(C) $1 per hour beginning January 1, 2017;
(4) Specifying that for each taxable year the tip credit shall become available in the calendar week after the employee's wages and tips exceeds 250 percent of the poverty level as determined by the Director of Labor and Industrial Relations and shall remain available for the remainder of the calendar year;
(5) Requiring the Director of Labor and Industrial Relations to establish by March 1 of each calendar year the poverty level threshold to be used for determining the tip credit for that calendar year;
(6) Requiring the Director of Labor and Industrial Relations to use the poverty guidelines for Hawaii of the United States Department of Health and Human Services to establish the applicable poverty level threshold that will trigger applicability of the tip credit;
(7) Changing its effective date to July 1, 2014; and
(8) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.
Your Committee notes that President Obama's decision to exercise executive power to pay federal contractors at the rate of $10.10 per hour beginning in 2015 has increased pressure to follow suit and raise the minimum wage to over $10 per hour. Such an adjustment would be justified as the minimum hourly wage in Hawaii has not increased since January 1, 2007. However, recognizing the interconnected nature of Hawaii's economy and the difficulty that some small businesses may have with absorbing a rapid increase, your Committee has recommended a more moderate rate of increase over the next four years to enable businesses to plan for these increases.
Your Committee has heard much discussion on the issue of a tip credit, which places a portion of the cost of employee pay directly on the generosity of the customer. This issue is generally limited to employers in the restaurant industry who have informed your Committee of the high hourly rate of pay earned by tipped employees, which is usually a direct function of the per person cost of a meal. Your Committee sought to reconcile the great disparity in the per person cost of meals in the wide range of restaurant establishments by providing an increase in the amount of the tip credit allowed and by creating a "poverty trigger" that would ensure that tipped employees earn at least 250 percent of the United States Department of Health and Human Services poverty guideline for Hawaii before an employer may claim the tip credit.
Your Committee further notes that it is sensitive to concerns that an increase in the minimum hourly wage may be accompanied by a higher cost of living. However, your Committee notes that prices of goods and services continue to rise and the buying power of minimum wage earners continues to diminish.
As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2609, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2609, S.D. 1, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,
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____________________________ MARK M. NAKASHIMA, Chair |
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