Information and Commentary on Class Action Cases Affecting Employers

Employment Class Action Blog

Home | Employment Class Action Blog

Employees&rsquo; Tip Ball Fails To Save Game; Series Continues
This blog and Baker Hostetler&rsquo;s <a href="http://www.hospitalitylawg.com/">HospitalityLawg</a> often come across the same cases, particularly because the hospitality industry is increasingly the target of employment class actions.&nbsp; The entry below was largely prepared by our hospitality industry team, who we thank for their efforts.
We along with our sister blog reported a few weeks ago that a hote&shy;lier <a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fwww.hospitalitylawg.com%2fhotel%2femployee-tipping-claims---hawaii-stiffs-hotelier%2f" target="_blank" rel="noopener">was found li&shy;able</a> by a Hawaii fed&shy;eral court for not&nbsp;dis&shy;trib&shy;ut&shy;ing 100% of "ser&shy;vice charges" to wait staff as tips.&nbsp; That&nbsp;re&shy;sult was pred&shy;i&shy;cated&nbsp;on read&shy;ing the fol&shy;low&shy;ing two laws in tan&shy;dem:
<ul>
<li><a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fwww.capitol.hawaii.gov%2fhrs2006%2fVol11_Ch0476-0490%2fHRS0481B%2fHRS_0481B-0014.HTM" target="_blank" rel="noopener">Hawai&shy;ian Revised Statutes &sect; 481B-14</a>, which re&shy;quires ser&shy;vice charges ap&shy;plied by ho&shy;tels or restau&shy;rants to be dis&shy;trib&shy;uted as &ldquo;tip in&shy;come&rdquo; un&shy;less it is clearly dis&shy;closed that the ser&shy;vice charge will be used to pay some&shy;thing other than wages or tips of em&shy;ploy&shy;ees. </li>
<li><a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fwww.capitol.hawaii.gov%2fhrscurrent%2fvol07_ch0346-0398%2fhrs0388%2fHRS_0388-0006.htm" target="_blank" rel="noopener">Hawaii Re&shy;vised Statutes &sect; 388-6</a> con&shy;cern&shy;ing &ldquo;With&shy;hold&shy;ing of Wages.&rdquo; This statute pro&shy;hibits em&shy;ploy&shy;ers from de&shy;duct&shy;ing, re&shy;tain&shy;ing or oth&shy;er&shy;wise caus&shy;ing not to be paid &ldquo;wages&rdquo; to an em&shy;ployee.&nbsp; </li>
</ul>
In the ear&shy;lier case, the de&shy;fen&shy;dant hote&shy;lier was un&shy;suc&shy;cess&shy;ful in ar&shy;gu&shy;ing that that the above statutes were am&shy;bigu&shy;ous.&nbsp; But if you watched the <a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fespn.go.com%2fmlb%2frecap%3fgameId%3d311028124" target="_blank" rel="noopener">World Se&shy;ries</a>, you know that&nbsp;dif&shy;fer&shy;ent um&shy;pires have dif&shy;fer&shy;ent strike zones.&nbsp; So if we ex&shy;tend Chief Jus&shy;tice Robert's <a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fwww.time.com%2ftime%2fspecials%2fpackages%2farticle%2f0%2c28804%2c1900851_1900850_1900847%2c00.html" target="_blank" rel="noopener">fa&shy;mous metaphor</a>,&nbsp;we shouldn't be sur&shy;prised that a dif&shy;fer&shy;ent court had a dif&shy;fer&shy;ent call.
In <a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2flaw.justia.com%2fcases%2ffederal%2fdistrict-courts%2fhawaii%2fhidce%2f1%3a2008cv00529%2f83308%2f125" target="_blank" rel="noopener">Vil&shy;lon</a>, Dis&shy;trict Court Judge Leslie Kobayashi&nbsp;un&shy;der&shy;took a de&shy;tailed re&shy;view of both statutes and con&shy;cluded that the plain&shy;tiffs may have chased a bad pitch.&nbsp; Here's a short play-by-play:
<ul>
<li>Judge Kobayashi first&nbsp;noted that &sect; 481B-14 used the phrase "tip in&shy;come," while &sect; 388-6 re&shy;ferred to "tips."&nbsp; From this she noted that&nbsp;the&nbsp;Hawaii Leg&shy;is&shy;la&shy;ture had elected to use dif&shy;fer&shy;ent ter&shy;mi&shy;nol&shy;ogy, but that it wasn't "read&shy;ily ap&shy;par&shy;ent" what the dis&shy;tinc&shy;tion was. </li>
<li>This am&shy;bi&shy;gu&shy;ity al&shy;lowed&nbsp;Judge Kobayashi to delve into the leg&shy;isla&shy;tive his&shy;tory, which proved to be il&shy;lu&shy;mi&shy;nat&shy;ing.&nbsp; Turns out &sect;481B-14 was orig&shy;i&shy;nally pro&shy;posed as an amend&shy;ment to the Hawaii wage and hour laws, in&shy;clud&shy;ing&nbsp;&sect; 388-6.&nbsp; But, based on con&shy;cerns raised by the In&shy;ter&shy;na&shy;tional Long&shy;shore and Ware&shy;house Union and the Hawaii De&shy;part&shy;ment of La&shy;bor and In&shy;dus&shy;trial Re&shy;la&shy;tions, the bill was&nbsp;con&shy;verted to a new sec&shy;tion in the con&shy;sumer pro&shy;tec&shy;tion law with the pur&shy;pose of&nbsp;en&shy;hanc&shy;ing "con&shy;sumer pro&shy;tec&shy;tion with re&shy;spect to ser&shy;vice charges im&shy;posed by ho&shy;tels and restau&shy;rants on the sale of food and bev&shy;er&shy;ages."&nbsp; </li>
<li>From this, Judge Kobayashi de&shy;ter&shy;mined that the laws&nbsp;were not of the same sub&shy;ject mat&shy;ter, and thus could not be con&shy;strued with ref&shy;er&shy;ence to each other.&nbsp;&nbsp;</li>
</ul>
Judge Kobayashi&nbsp;then cleared the bases as far as&nbsp;those fans of the&nbsp;dis&shy;pas&shy;sion&shy;ate um&shy;pire ap&shy;proach are con&shy;cerned:
This Court is sym&shy;pa&shy;thetic to Plain&shy;tiffs' po&shy;si&shy;tion.&nbsp; There is an un&shy;just and gap&shy;ing hole in the statute: if De&shy;fen&shy;dant ul&shy;ti&shy;mately pre&shy;vails on Plain&shy;tiffs' Chap&shy;ter 480 claim and Plain&shy;tiffs' can&shy;not en&shy;force the al&shy;leged &sect; 481B-14 vi&shy;o&shy;la&shy;tion through any other means, ar&shy;guably no one will en&shy;force the vi&shy;o&shy;la&shy;tion. . . . Un&shy;for&shy;tu&shy;nately, it is not this Court's place to sit as the Leg&shy;is&shy;la&shy;ture does and try to cre&shy;ate a new en&shy;force&shy;ment mech&shy;a&shy;nism to re&shy;place or sup&shy;ple&shy;ment an old one, no mat&shy;ter how in&shy;ad&shy;e&shy;quate and un&shy;fair the orig&shy;i&shy;nal statu&shy;tory scheme may be.
In the end, Judge Kobayashi elected to de&shy;fer to a closer, the Hawaii Supreme Court, as to the ques&shy;tion of whether food and bev&shy;er&shy;age em&shy;ploy&shy;ees can en&shy;force al&shy;leged vi&shy;o&shy;la&shy;tions of &sect; 481B-14 through Hawaii's wage and hour laws.&nbsp; We can bet that the <a href="https://myowa.bakerlaw.com/cvpn/aHR0cHM6Ly9iaGV4aGMuYmFrZXItaG9zdGV0bGVyLmNvbQ/owa/redir.aspx?C=9320d4c3b1f2465e8b480cdf9a8eac8d&amp;URL=http%3a%2f%2fwww.bsds.com%2flawyer-attorney-1369655.html" target="_blank" rel="noopener">plain&shy;tiffs&rsquo; bar</a> will be look&shy;ing to pitch its way out of a jam when it comes to the pre&shy;cise lan&shy;guage of the ques&shy;tions to be cer&shy;ti&shy;fied.&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Bottom Line:&nbsp; Tipping policies are becoming a target for class action wage and hour litigation.&nbsp; There is split of authority in Hawaii regarding the scope of relief, and the treatment of &ldquo;service&rdquo; fees that will be of great significance to hospitality employers.

Hawaiian Court Finds That Employees Were Not Entitled To Resort Service Charges