by Paul Saito
The Hawaii Legislature has passed a bill that will increase the minimum wage from $7.25 to $10.10, with hikes every year from 2015 to 2018. Senate Bill (SB) 2609 also will increase the state’s tip credit from 25 cents to 75 cents over the next two years. The bill will be sent to Governor Neil Abercrombie, who has supported the measure throughout the process and is expected to sign it into law.
SB 2609 will increase Hawaii’s minimum wage from $7.25 per hour to $10.10 per hour over the next four years. On January 1, 2015, the minimum wage will increase to $7.75. The rate will rise to $8.50 on January 1, 2016, and $9.25 on January 1, 2017. Finally, on January 1, 2018, the minimum wage will rise to $10.10.
Also, the bill will increase the state’s tip credit from 25 cents to 50 cents beginning January 1, 2015. On January 1, 2016, the tip credit will rise to 75 cents. Employers with tipped employees can apply the tip credit to reduce the minimum wage as long as employees earn $7 more than the minimum wage when tips are included.
Bottom line for Hawaii employers
While some may ask Governor Abercrombie to veto the bill, a veto is unlikely given the governor’s support of the minimum wage increase during the legislative session. Employers should prepare for the hikes and determine whether applying the increased tip credit will be beneficial. Employers should consult their accountants and legal counsel to address concerns on complying with the increases.