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Hawaii Supreme Court rules in favor of workers in hotel tip case

By Allison Schaefers

LAST UPDATED: 04:32 p.m. HST, Jul 15, 2013

The Hawaii Supreme Court certified this morning that hotel service staff can recover money from hotels that collected service charges and kept a portion to pay their administrative costs instead of distributing them to the employees as gratuities. 

The decision means that lawsuits filed in U.S. District Court in 2008 by Boston law firm Lichten & Liss-Riordan on behalf of workers at eight Hawaii hotels, including Marriott and Starwood properties can finally move forward. 

"We contend that service charges must be paid to employees," said attorney Shannon Liss-Riordan. "When patrons pay service charges, it looks like a gratuity and then they don't tip. We've brought cases like this across the country, but Hawaii is one of three states along with Massachusetts and New York that has an explicit law to address this issue."

The cases, which were the first to test a Hawaii state law which legislators passed in 2000 to prevent hotels and restaurants from keeping gratuities meant for workers, have been hung up in court for years. The cases stalled in 2009 when defense lawyers for the Four Seasons Hotel Ltd. argued that employees couldn't sue under the state law because legislators placed it within an area of consumer protection statues as opposed to labor and wages statutes. Following the challenge, U.S. District Court Judge Helen Gillmor referred the case to the Hawaii Supreme Court for interpretation.

This latest ruling from the Hawaii Supreme Court means that the pending hotel cases can now move forward and paves the way for potentially thousands of Hawaii service staff to recover remedies from their employers that could total millions of dollars, Liss-Riordan said. 

"Altogether, potentially thousands will be affected by the decision that came out today," she said. "The food and beverage industry throughout Hawaii has to recognize that they have to come into compliance with Hawaii state law."

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bpet wrote:
Great decision on the part of the courts . . .employers should not be allowed to get away with skimming and stealing tips intended for workers, especially in the hospitality industry which is notoriously low-paying.
on July 15,2013 | 12:22PM
WooWoo wrote:
bpet, you should check out how much hotel workers make in Hawaii. You'd be surprised. Don't get me wrong, I think it's a good thing that they get paid well. I'm just saying don't characterize them as low paid. Low paid would be a teacher.
on July 15,2013 | 12:39PM
808warriorfan wrote:
I agree...Local 5 here is strong and more power to the employees if they are able to make a living. I also agree about our teachers.
on July 15,2013 | 12:58PM
stingray65 wrote:
Local 5 is making good money out of those Hotel Workers. For doing what?
on July 15,2013 | 01:40PM
allie wrote:
true..I am glad this decision was made. People tip their server, not the hotel admin. The servers are your neighbour, your friends, your future, me!
on July 15,2013 | 02:36PM
aomohoa wrote:
Maybe I would care if you didn't add "me". LOL Your have no future here so we don't care about your pizza job that takes no skill at all.
on July 15,2013 | 04:25PM
turbolink wrote:
Allie apparently got promoted from cashier.
on July 15,2013 | 04:32PM
mikethenovice wrote:
Writing on this blog requires no skill. Same as the CEO. All the CEO does is hire a lot of smart people to think for him/her.
on July 15,2013 | 05:55PM
mikethenovice wrote:
Even the richest man, Andrew Carnegie, believed that teachers should receive a pension. Todays wealth are greedy. Only want to see their name on the Forbes richest person's list. They should copy the old time wealthy who believe in sharing.
on July 15,2013 | 05:53PM
mikethenovice wrote:
Then why do they catch the bus?
on July 15,2013 | 05:49PM
serious wrote:
Sure, the Supreme court is voted in by Unions!!!
on July 15,2013 | 01:37PM
ISCREAM wrote:
If you read carefully it says "service charge" ... they are trying to make a hotel service charge a "tip".
on July 15,2013 | 03:32PM
WooWoo wrote:
Let the uninformed comments begin. In a hotel, there is a difference between a service charge and a gratuity (tip). The distribution of service charges in a hotel banquet facility has always been above board. Yes, the hotel kept a portion, but employees got their share. The distribution of the service charges has always been part of the agreement between the union, Local 5, and the management of the various hotels. So the court is now saying that even though the employees and their union agreed to the split (for, literally, decades), management has to pay them back the service charges.
on July 15,2013 | 12:23PM
Woo-Woo, maybe you should rephrase your comment then. If you are trying to do what the courts have already done, then you neednt try and backstep into your explanation as we dont need another interpretation of what the courts have already ruled on.
on July 15,2013 | 01:19PM
ISCREAM wrote:
GG read again...the courts have decided only that a court case can go forward...not that the service charge is a tip...
on July 15,2013 | 03:34PM
RetiredUSMC wrote:
If management wants to further gouge the Guest then call the charge what it is an Admin. Charge ! See what the guests say about that. The Hotel bill has more add on's then a government contract.
on July 15,2013 | 04:27PM
saywhatyouthink wrote:
They can continue to do it as long as they make it clear to hotel guests that the service charge does not go exclusively to the workers and the hotel takes a cut. What they're doing now is misrepresenting the situation and leading people to think the money is going to their wait staff. Shame on them!
on July 15,2013 | 10:30PM
localguy wrote:
Good to see the courts slap down greedy employers who think nothing of taking as much as they can from everyone. Now they are going to have to dig very deeeeep to pay this settlement. Hmmmm, wonder if the courts addressed interest charges???
on July 15,2013 | 12:26PM
allie wrote:
including Outrigger...
on July 15,2013 | 02:36PM
turbolink wrote:
Please validate this charge you just made. Evidence?
on July 15,2013 | 04:33PM
Anonymous wrote:
Which hotels will this decision bankrupt?
on July 15,2013 | 12:35PM
IAmSane wrote:
LOL none.
on July 15,2013 | 04:32PM
gthx1138y wrote:
Payment of back "wages" and "tips" has far-reaching consequences. If a large group of workers is told they can potentially recoup 10 years of back wages, but the employer has to file for bankruptcy protection in order to do it, who does that benefit exactly? The tax raminifactions are huge to BOTH. Businesses have some protections based on loss & income through the IRS tax code and amendments, but of course, you can't eat tax credits or pay rent with write-offs. Hmm, this one needs a lot more thought than just, "hey da workers gonna get their fair share!"
on July 15,2013 | 12:41PM
WooWoo wrote:
Yes, it will get complicated. I wonder if the union will ask for a portion of the back pay as union dues. It would only be fair.
on July 15,2013 | 12:45PM
false wrote:
This is a WIN for WHO again? The cost will always be passed on to the consumer. yes THEY won the battle, but WE lose the war...
on July 15,2013 | 12:47PM
allie wrote:
Hotels should lower their admin. costs. This decision is the right one for our hard working service industry employees!
on July 15,2013 | 02:37PM
turbolink wrote:
Professor Greenspan, tell us how, by lowering admin charges, hotels will sustain salaries, pay additional taxes you often advocate, and earn enough profit to warrant the risk and effort of providing this service?
on July 15,2013 | 04:37PM
ufried wrote:
Union 1 consumers 0... AGAIN!!
on July 15,2013 | 12:50PM
false wrote:
Keeping score? Hawaii union 1 / consumers 0... AGAIN! lol
on July 15,2013 | 12:52PM
mikethenovice wrote:
Union members are also consumers.
on July 15,2013 | 05:56PM
false wrote:
We should have an IRS agent in every bar. Just think how many jobs that would add. Hope and Change.
on July 15,2013 | 01:00PM
mikethenovice wrote:
IRS? I Refill (with) Shots (of drinks). IRS.
on July 15,2013 | 05:57PM
Ronin006 wrote:
The state of Hawaii keeps 10% of the .05% excise tax it collects for the rail project to cover its administrative cost. If hotels cannot keep a portion of service charges to cover their administrative costs, how can the state continue to keep a portion of the rail surcharge?
on July 15,2013 | 01:22PM
Mahalo wrote:
Bravo... finally someone for the employees not the employers
on July 15,2013 | 03:47PM
mikethenovice wrote:
It should be equal for both parties. A chair has four legs of equal length.
on July 15,2013 | 05:58PM
mikethenovice wrote:
It's about time someone looks out for the little guy. Tired of management getting fatter.
on July 15,2013 | 05:49PM
Ronin006 wrote:
The state has been keeping 10% of the rail surcharge it collects as administrative costs. Does the court's ruling mean the state will have to pay the city the 10% it has kept and still is keeping?
on July 15,2013 | 06:13PM
pjb wrote:
I thought I heard that customers that were also ripped off by this policy would be reimbursed what happened to that?
on July 15,2013 | 07:55PM
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