SB3235

SECTION 1. The legislature finds that one job should be enough to meet a person's basic needs. According to the department of business, economic development, and tourism, a single adult requires an income of $62,234 to achieve self-sufficiency in Hawaii, while a single parent with one child requires an income of $107,682. Yet, at the current statewide minimum wage rate of $16.00 per hour, a full-time minimum wage employee earns only $33,280 annually. Moreover, as of 2025, the National Low Income Housing Coalition estimates that a minimum wage worker would have to work one hundred seven hours per week to afford a one-bedroom rental home at local fair market rent.

The legislature further finds that increasing the State's minimum wage will help Hawaii's economy by giving low-wage workers greater purchasing power. According to the department of labor and industrial relations, in 2018, following four consecutive years of minimum wage increases, the state unemployment level reached an all-time low of two per cent, demonstrating that increasing the minimum wage rate does not adversely impact statewide employment.

The legislature additionally finds that research shows minimum wage increases have not harmed small businesses. A 2023 University of California, Berkely study found that small businesses generally do not cut jobs after minimum wage hikes, but instead benefit from lower worker turnover and easier hiring. Economists have also found that the employment effects of raising the minimum wage were outpaced by wage gains, indicating that higher minimum wages strengthen workers' incomes without broadly undermining small business viability.

Accordingly, the purpose of this Act is to uplift the financial well-being of working families in Hawaii by:

(1) Amending the minimum monthly guaranteed compensation an individual must earn to be exempt from certain wage and hour requirements;

(2) Requiring the minimum wage to increase to $18.00 per hour beginning January 1, 2027, instead of January 1, 2028;

(3) Increasing the minimum wage on January 1 of 2028, 2029, and 2030;

(4) Prohibiting tipped employees from being paid less than the minimum wage; and

(5) Beginning on September 30, 2030, and on September 30 of each year thereafter, requiring the department of labor and industrial relations to calculate an adjusted minimum wage rate.

SECTION 2. Section 387-1, Hawaii Revised Statutes, is amended by amending the definition of "employee" to read as follows:

""Employee" includes any individual employed by an employer, but shall not include any individual employed:

(1) At a guaranteed compensation totaling [~~$4,000~~] $ or more a month, whether paid weekly, biweekly, or monthly;

(2) In agriculture for any workweek in which the employer of the individual employs less than twenty employees or in agriculture for any workweek in which the individual is engaged in coffee harvesting;

(3) In or about the home of the individual's employer:

(A) In domestic service on a casual basis; or

(B) Providing companionship services for the aged or infirm;

(4) As a house parent in or about any home or shelter maintained for child welfare purposes by a charitable organization exempt from income tax under section 501 of the federal Internal Revenue Code;

(5) By the individual's sibling, sibling-in-law, child, spouse, parent, or parent-in-law;

(6) In a bona fide executive, administrative, supervisory, or professional capacity or in the capacity of outside salesperson or as an outside collector;

(7) In the propagating, catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacean, sponge, seaweed, or other aquatic forms of animal or vegetable life, including the going to and returning from work and the loading and unloading of those products before first processing;

(8) On a ship or vessel and who has a Merchant Mariners Document issued by the United States Coast Guard;

(9) As a driver of a vehicle carrying passengers for hire operated solely on call from a fixed stand;

(10) As a golf caddy;

(11) By a nonprofit school during the time that the individual is a student attending the school;

(12) In any capacity if by reason of the employee's employment, in that capacity and during the term thereof, the minimum wage that may be paid to the employee or maximum hours that the employee may work during any workweek without the payment of overtime, are prescribed by the federal Fair Labor Standards Act of 1938, as amended, or as the same may be further amended from time to time; provided that if the minimum wage that may be paid to the employee under the Fair Labor Standards Act for any workweek is less than the minimum wage prescribed by section 387-2, then section 387-2 shall apply in respect to the employee for that workweek; provided further that if the maximum workweek established for the employee under the Fair Labor Standards Act for the purposes of overtime compensation is higher than the maximum workweek established under section 387-3, then section 387-3 shall apply in respect to the employee for that workweek; except that the employee's regular rate in that event shall be the employee's regular rate as determined under the Fair Labor Standards Act;

(13) As a seasonal youth camp staff member in a resident situation in a youth camp sponsored by charitable, religious, or nonprofit organizations exempt from income tax under section 501 of the federal Internal Revenue Code or in a youth camp accredited by the American Camping Association; or

(14) As an automobile salesperson primarily engaged in the selling of automobiles or trucks if employed by an automobile or truck dealer licensed under chapter 437."

SECTION 3. Section 387-2, Hawaii Revised Statutes, is amended to read as follows:

"§387-2 Minimum wages. (a) Except as provided in section 387-9 and this section, every employer shall pay to each employee employed by the employer, wages at the rate of not less than:

(1) $6.25 per hour beginning January 1, 2003;

(2) $6.75 per hour beginning January 1, 2006;

(3) $7.25 per hour beginning January 1, 2007;

(4) $7.75 per hour beginning January 1, 2015;

(5) $8.50 per hour beginning January 1, 2016;

(6) $9.25 per hour beginning January 1, 2017;

(7) $10.10 per hour beginning January 1, 2018;

(8) $12.00 per hour beginning October 1, 2022;

(9) $14.00 per hour beginning January 1, 2024;

(10) $16.00 per hour beginning January 1, 2026; [~~and~~]

(11) $18.00 per hour beginning January 1, [~~2028.~~] 2027;

(12) $20.00 per hour beginning January 1, 2028;

(13) $22.00 per hour beginning January 1, 2029; and

(14) $24.00 per hour beginning January 1, 2030.

(b) [~~The hourly wage of a tipped employee may be deemed to be increased on account of tips if the employee is paid no less than:~~

~~(1)~~ ~~25 cents;~~

~~(2)~~ ~~50 cents per hour beginning January 1, 2015;~~

~~(3)~~ ~~75 cents per hour beginning January 1, 2016;~~

~~(4)~~ ~~$1.00 per hour beginning October 1, 2022;~~

~~(5)~~ ~~$1.25 per hour beginning January 1, 2024; and~~

~~(6)~~ ~~$1.50 per hour beginning January 1, 2028,~~

below the applicable minimum wage by the employee's employer and the combined amount the employee receives from the employee's employer and in tips is at least 50 cents more than the applicable minimum wage; provided that beginning January 1, 2015, the combined amount the employee receives from the employee's employer and in tips is at least $7.00 more than the applicable minimum wage.] On September 30, 2030, and on September 30 of each year thereafter, the department shall calculate an adjusted minimum wage rate to replace the minimum wage rate established under subsection (a). The adjusted minimum wage rate shall be calculated to the nearest twenty-five cents using the highest calculation produced by adjusting the minimum wage rate according to an annual gross domestic product per capita calculation for the State to be determined by the department of business, economic development, and tourism, or using the United States Bureau of Labor Statistics' consumer price index for urban Hawaii, or a successor index, for the twelve months prior to September 1 of each year as calculated by the United States Department of Labor; provided that if in any year the adjustments based on the gross domestic product per capita calculation would result in a lower minimum wage rate, the adjusted minimum wage rate shall remain the same as the minimum wage rate in effect for the year in which it is calculated."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3235
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII