SB2744 - Tip Credit Adjustment Summary

• Increases Hawaii's tip credit from 25 cents to $1.25 per hour upon approval, allowing employers to credit tips toward minimum wage requirements.

• Beginning January 1, 2011, establishes a formula allowing tip credit to equal 25 percent of tips claimed by an employee as income, with a minimum cash wage of $6 per hour required from the employer.

• Maintains requirement that combined employer wages plus tips must equal at least 50 cents more than the applicable minimum wage ($7.25 per hour).

• Addresses inflation erosion of the tip credit, which had only been adjusted once since 1969 when the minimum wage was $1.40 and the credit was set at 20 cents.

• Directs relief toward non-tipped employees like cooks and food preparation workers who typically earn lower wages and are more likely to be primary household providers.