Thousands of Hawaii hotel employees could recover millions in lost tips following a ruling released by the state Supreme Court.
Thousands of current and former Hawaii hotel employees could be in line to recover millions in lost tips following a ruling released Monday by the state Supreme Court. The class-action suit has yet to be litigated, but Labor Radio reported this week that it could be worth as much as $10 million.
The case is not unique as workers across the nation’s service sector report rampant, ongoing theft of wages, tips and overtime pay by their employers. According to a report by CNN Money, more than 7,000 such lawsuits were filed across the U.S. in 2011 — a 400 percent increase since 2000.
More than a decade later, the fight continues
The Hawaii case dates back to 2000, when hotel workers first filed a class-action lawsuit claiming that they had been shorted millions of dollars after hotel management took all or part of tips given to workers. The case has experienced delays and setbacks since then, creeping forward until the State Supreme Court ruled this week that it could proceed — a decision hailed as a major step forward by hotel workers and their attorneys.
How exactly does this wage theft occur? Imagine a situation where a patron gives a gratuity to a server or hotel employee with the expectation that the tip will be kept by the worker for his service.
In Hawaii, workers allege that management often requires them to pool gratuities into a collective fund, with managers taking a portion and then distributing the rest evenly among the workers. If found to be true, it’s a crime with two sets of victims — workers who lose out on tips, and tourists who have been duped into believing they were compensating the hotel employees who open doors, clean rooms, serve in restaurants and bring suitcases to their rooms. This, attorneys claim, is a form of wage theft totalling millions of dollars.
Hawaii News Now reports that attorney John Perkin has filed eight separate suits claiming that the total lost tips could exceed $10 million.
“I would say it’s going to be north of $10 million. We have $3 million on one hotel on Kauai alone,” Perkin said.
“Its been a long time coming,” said Boston-based attorney Harold Lichten to Maui News. “We are really pleased with the Supreme Court’s ruling. It took us five years but this is a great day for workers in Hawaii.”
Lichten and Perkin believe that the hotels are in violation of a Hawaii law that requires hotels and restaurants to distribute service charges for food and beverage services entirely to employees unless customers are informed that management retains a portion.
“When patrons pay service charges, it looks like a gratuity and then they don’t tip,” Shannon Liss-Riordan, an attorney whose firm has cases pending against Four Seasons, Ritz Carlton, Grand Wailea and Starwood, told the Kansas City Star. “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.”
Some of the workers belong to Unite Here Local 5, a union representing workers at several Hilton, Ramada and Sheraton locations. Eric Gill, Local 5’s financial secretary-treasurer, spoke to KHON 2 news about the impact the case could have on low-wage hotel workers represented by the union.
“This is very important for Hawaii’s working people,” he said. “Many of us work for tips and rely on them. And of course, if management takes a share and doesn’t say so, then the guest thinks they’ve given a tip and the worker doesn’t get it.”
The Supreme Court decision affects few of the Local 5 hotel workers, since their contracts already have provisions preventing this type of theft.
Local 5 spokesperson Paola Rodelas offered Mint Press News this official statement when contacted for comment:
“Local 5 applauds the Supreme Court for upholding workers’ rights. Tipped workers who work at Local 5 hotels will not see much effect from this ruling, because Local 5 members have many protections for our tips built into our contracts. For those workers who do not have the protection of a Local 5 contract, this decision is a step forward toward justice, fairness, and better working conditions.”
All of this occurs as the Hawaii tourism industry is booming, with millions of visitors flocking to the state for its picturesque beaches and beautiful weather each year. According to a report by the Pacific Business News, 7.99 million visitors came to Hawaiian islands in 2012, spending $14.3 billion. The glowing report was originally published by the Hawaii Tourism Authority in January using industry data.
“We could not have achieved this momentous year without the hard work and dedication of the people that support our industry — from the bellmen, storekeepers and flight attendants to the Legislature, business community and residents — we all came together to help Hawaii,” said Hawaii Tourism Authority President and CEO Mike McCartney.
Wage theft: An epidemic across the U.S.
The case is a big deal for workers who rely upon tips to supplement paltry wages. In the service industry, it is legal for employers to pay some employees less than minimum wage, since servers, busboys and others make the majority of their wages in tips.
This type of wage theft is not isolated to Hawaii hotel workers and has become rampant across the U.S., according to recent reports.
Last year, CNN reported a 400 percent increase in wage-and-hour violation claims over the last 11 years, a statistic that some experts believe only exposes a fraction of the numerous unreported wage thefts.
This follows a 2008 report by the National Employment Law Center that estimates that 15 percent of the average low-wage worker’s annual income is lost to wage theft, underpayment and denied overtime, among other methods of stealing.
The NELP study is based upon a review of working conditions in New York, Los Angeles and Chicago.
More recently, a report examining the conditions for fast food workers in New York City found that 84 percent reported some form of wage theft.
As a rule, fast food workers do not receive tips, so the wage theft reported involves a much more obvious set of crimes in which employers simply withhold a part of a worker’s salary or deny overtime pay.
The findings come from an Anzalone Liszt Grove research survey of 500 of the city’s fast food workers, unveiled in May when hundreds of fast food workers were demanding a minimum wage of $15 and the right to form a union without intimidation.