SB3020

SECTION 1. The legislature finds that many employees at food, beverage, and service establishments increasingly rely on tips paid by customers to earn a reasonable wage.

The legislature finds, however, 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 $72,000 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 are likely undetected, depriving local workers of their earnings. Tip theft is often difficult to identify because tips are frequently split by employers among front and back of house employees without disclosing to customers or 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 at physical locations of the establishment's business, including brick and mortar premises, mobile vehicle, or other temporary sites of business; at each point of customer check-in, check‑out, and final transaction; or an otherwise publicly visible location where customers are reasonably expected to pay for their purchase or service received. 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 or 808-322-4808 for the county of Hawaii.",

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

(b) The department of labor and industrial relations may adopt rules pursuant to chapter 91 to establish fines for any food, beverage, and service establishment in violation of this section."

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, 2026.

INTRODUCED BY:	_____________________________

Report Title:

DLIR; Food, Beverage, and Service Establishments; Transparency; Tips; Allocation; Disclosure; Penalties

Description:

Requires 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. Allows DLIR to adopt rules to establish fines.

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

THE SENATE	S.B. NO.	3020
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII