Service charges ruling to benefit workers

Several Maui hotels will probably have to pay out “millions of dollars” each after the Hawaii Supreme Court ruled Monday that the hotels violated the state’s wage law by withholding proceeds from service charges added to banquet bills, plaintiffs’ attorneys said.

“Its been a long time coming,” said Boston-based attorney Harold Lichten, one of the attorneys litigating the cases first filed in 2008.

He said that this ruling affected workers on duty during hotel banquets, weddings and conferences or other events for which the hotel levied a service charge.

Lichten’s partner, Shannon Liss-Riordan of the firm Lichten & Liss-Riordan, added: “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.”

The lawsuit claimed that the hotels added a preset service charge to customers’ bills for food and beverages and kept a portion of the proceeds or used the money to pay managers or other nontipped employees, who don’t serve food and beverages.

Hawaii Revised Statutes 481B-14 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 of the charges.

According to the plaintiffs’ attorneys, the ruling issued Monday has workers prevailing in cases against The Ritz-Carlton, Kapalua, Wailea Beach Marriott Resort & Spa and Four Seasons Resort Maui at Wailea.

Issues centering around whether sufficient disclosures about service charges have been made still need to be worked out with the Grand Wailea and Westin Maui Resort & Spa, Liss-Riordan said.

at The Ritz-Carlton, Kapalua, had no comment. Attempts to reach officials at other hotels were unsuccessful.

While the plaintiffs’ attorneys said that the monetary damages against the hotels will be determined soon in court, they estimated that the judgment will be in the millions of dollars per hotel with hundreds of workers per hotel receiving compensation.

Liss-Riordan said that the cases were the first to test a state law, passed in 2000, to prevent hotels and restaurants from keeping gratuities meant for workers. The case originally was filed in U.S. District Court in Honolulu but for technical legal reasons ended up in the Hawaii Supreme Court, which made its rulings Monday.

Lichten said employees of other hotels who think they are affected need to come forward in order to initiate a claim.

Although a majority of cases were potentially remedied by Monday’s decision, several other hotels already have settled with their workers.

In 2011, the Fairmont Kea Lani, Maui settled with approximately 240 present and former employees for $750,000. According to the settlement, the workers’ attorneys were slated to receive $250,000 and three plaintiffs who started the case were set to get an extra $25,000 each, according to previous reports.

In that case, the Fairmont Kea Lani management retained service charges applied to banquet and room service bills, according to court filings. In the negotiated settlement, the Kea Lani did not admit it violated any law.

A $200,000 settlement was reached between workers and the former Maui Prince Hotel. Lawsuits also were settled with the former Wailea Renaissance Resort, which closed in 2007. More details of the settlements in the Prince and Renaissance cases were not available.

The Boston-based firm has litigated dozens of similar cases across the country and has won in states including Massachusetts, New York and Florida, Liss-Riordan said.

* Melissa Tanji can be reached at

* This article includes a correction from the original published on Tuesday, July 16, 2013.