Minimum Wage Increases January 1, 2016 to $8.50

Minimum wage increases   
Back in 2014, the legislature passed   Act 82 Session Laws of Hawaii 2014,  that raised Hawaii's minimum wage incrementally to $10.10 per hour by January 1, 2018.  As of January 1, 2016, the minimum wage is raised to $8.50 per hour.  January 1, 2017, the minimum wage goes up to $9.25 per hour.


Tip credit increases
As part of the minimum wage increase, the tip credit was also increased.  As of January 1, 2016, the tip credit is 75 cents.  The tip credit remains at 75 cents even when minimum wage increases to $9.25 and $10.10.

Employers with regularly tipped employees who make at least $20 per month in tips ( See Hawaii Administrative Rule 12-20-11), may be eligible to take the tip credit of 75 cents if the employee's tips plus the wage paid equal $15.50.  This means that with minimum wage of $8.50, an employer can pay wages of $7.75 if the tips of the employee are equal to $7.75 per hour. Additional records are required to be kept to take this credit, see Hawaii Administrative Rule 12-20-12).

If employees earn less than $7.75 per hour in tips, the employer may be eligible to take a tip credit less than 75 cents.  A tip credit guideline published on the Wage Standards Division website provides the details and calculations of these scenarios.  See Exhibit 3, ( page 4) for 2016, Exhibit 4 (page 5) for 2017 and Exhibit 5 (page 6) starting January 1, 2018.

Other Resources
Minimum wage poster
Wage and Hour Law, Chapter 387, Hawaii Revised Statutes
Wage Standards Division Website:  labor.hawaii.gov/wsd

New Minimum Wage Poster Available on Website

The 4-step increase in Hawaii's minimum wage of Act 82 Session Laws of Hawaii 2014, began January 1, 2015, by increasing the minimum wage to $7.75 per hour.   The new notice that is required to be posted can be found on the Wage Standards webpage (labor.hawaii.gov/wsd).

In addition to the minimum wage increases, the heavily debated tip credit, also increased from 25 cents to 50 cents as well as the trigger to allow the credit.  Previously, employers were allowed to take a 25 cent tip credit if the employee made at least an additional 50 cents an hour above the minimum wage (at least 75 cents per hour in tips).    As of January 1, 2015, employers may take a 50 cent tip credit as long as the employee earns at least $7 more than the minimum wage, or $14.75 an hour including tips.  This means the employee must make at least $7.50 an hour in tips for the employer to take the 50 cent credit and pay a cash wage of $7.25 instead of the statutory $7.75.

(How the $7 figure for tip credit was arrived at is discussed in the April 22, 2014 blog on Minimum Wage Update.)

The Wage Standards Division recognizes that this could be a little confusing and developed a chart to identify the amounts that need to be earned in tips by employees and the amount of cash wages paid by the employer in various situations.  The chart can be found by clicking here.  Note that Exhibit 1 pertains to last calendar year 2014, Exhibit 2 to calendar year 2015, Exhibit 3 to calendar year 2016, etc.

A reminder that employers are required by law to keep payroll records under section 387-6, Hawaii Revised Statutes, section 388-7, Hawaii Revised Statutes, and Hawaii Administrative Rules 12-20-12.   Employers must be able to prove that employees did in fact earn the $7.50 in tips to take the 50 cents tip credit, which makes accurate record keeping a tool that protects the employer.

Minimum wage

    Similar Ideas
     Just when I thought Hawaii was going to get ahead of the federal minimum wage the President announces in his State of the Union that he wants to raise minimum wage to $9.00 and then tie it to an index that will automatically adjust it, and reminds everyone his competition agrees with him!  This is what he said:

Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher. So here’s an idea that Governor Romney and I actually agreed on last year: let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.
        See http://www.whitehouse.gov/the-press-office/2013/02/12/president-barack-obamas-state-union-address-prepared-delivery
 

    If this sounds familiar, on January 22, Governor Abercrombie made a similar statement.

 Many of Hawaii’s residents are the products of plantation-era workers – people who worked and toiled in the fields, earning the bare minimum in order to afford a better opportunity for their families.

Today, there still exists a hard-working sector of our society that deserves continued recognition. These are the working-class residents who earn the minimum wage. The minimum wage, currently at $7.25 per hour, has not increased for over 6 years. Nineteen other states plus the District of Columbia have higher minimum wage rates than Hawaii, with less to confront in terms of cost of living.

Therefore, I will be proposing a bill to increase the minimum wage by $1.50, to $8.75 starting in January 2014. Minimum wage earners provide immediate infusion of dollars into the economy. Everyone is worthy of their labor. Industry and corporations do not lack for support in these halls. Neither should those who work the hardest for the least return.
    See: http://governor.hawaii.gov/2013-state-of-the-state/

What's the difference?
      The Governor has already introduced  House Bill 916, that proposes we raise the minimum wage to $8.75 as of January 1, 2014, then each first of the year beginning January 1, 2015, the consumer price index would be used to keep the minimum wage on pace with the economy.  Ten other states already do a version of this.  See Arizona, Colorado (Article XVIII, Section 15 Colorado Constitution), Florida, Missouri, Montana, Nevada, Ohio,  Oregon, Vermont and Washington.

    The cost of living index used to adjust minimum wage in House Bill 916 is  the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).  This is the same type of index used in calculations in other states with this method.  The difference will be the Consumer Price Index used for each state will relate to the respective State, while the National minimum wage will likely be a national average.   So while similar adjustment factors are used, the percentages of the change will be different to reflect the local area experience.

      Another measure modifying the minimum wage that is still active in the Senate is Senate Bill 331,SD2.  This bill increases the minimum wage in three stages ($8.25 by January 1, 2014; $8.75 by January 1, 2015; and $9.25 by January 1, 2016) then each year from January 1, 2017 adjusts the minimum wage by the same index as House Bill 916, although SD2 articulated Honolulu region.

     Finally, there is a third minimum wage provision House Bill 1028,HD2 ,  that has just four stages of increase ($7.75 on January 1, 2014; $8.25 January 1, 2015,  $8.75 on January 1, 2016 and $9.00 on January 1, 2017 HD2 version)  without any adjustment by the Consumer Price Index.  If the President is successful in putting a minimum wage of $9.00 in place with adjustments each year by the Consumer Price Index, the proposal in House Bill 1028 will not keep up with the federal limits.

Tip credit
      House Bill 916,  also includes an increase in tip credit.  Employers who have tipped employees would be allowed to deduct 30 cents from the minimum wage as long as the employee is earning a combined amount from wage and tips of an additional 50 cents per hour in tips.  So if the minimum wage were $8.75,  the employer may pay the tipped employee $8.45 per hour, as long as the combined amount of wages and tips is at least $9.25.

    SB 331, SD 2, now contains an undetermined amount of tip credit.

(This blog was updated 3/4/13 to reflect current Senate and House Drafts)




 

Feds Match Hawaii's Minimum Wage

Last month's increase in the federal minimum wage to $7.25, doesn't affect Hawaii employees because our minimum wage has been $7.25 since January 1, 2007. Minimum wage in the Territory of Hawaii was first determined in 1942, four years after a federal minimum wage was introduced. Originally, there was a higher standard for Oahu than the Neighbor Islands, but a State standard has been in place since 1958. Federal law allows the States to set a higher minimum wage if they choose. Before 1992 Hawaii was setting standards to catch up with increasing federal standards. From 1992 to July 24, 2009, Hawaii's minimum wage was higher than the federal standard. For a short history on the Hawaii minimum wage go to: http://hawaii.gov/labor/rs/a-short-history-of-the-minimum-wage