The Maui News

Minimum wage is set to rise from $10.10 per hour to $12 per hour starting Saturday under a new state law, the Department of Labor and Industrial Relations announced Thursday.

Act 114, which was passed by the state Legislature earlier this year, will raise minimum wage incrementally to $14 per hour on Jan. 1, 2024; $16 per hour on Jan. 1, 2026; and $18 per hour on Jan. 1, 2028.

Saturday’s increase will be the first hike in the minimum wage since 2018. Hawaii’s eventual minimum wage of $18 per hour would be the highest in the nation, though automatic minimum wage boosts in other states could propel rates higher than Hawaii’s by then.

The measure earned widespread support from lawmakers at the start of the session in a state with some of the highest costs of living. However, it stalled near the deadline as legislators debated the issue of a tip credit, which allows businesses to pay less than the minimum wage if the tips employees receive raise their salary to a certain level above the minimum wage. The concern was that employees working on the front lines and pulling in hundreds in tips would get the same increase in minimum wage as those who work in the back and don’t get tips.

The final version of the law does allow a tip credit. Employees customarily tipped may be paid at rates lower than the minimum wage, provided the combined amount the employee receives from their employer and in tips is at least $7 more than the minimum wage, according to the department. With the minimum wage at $12, that means the employee’s combined wage and tips must equal at least $19 per hour.

The new law permits rates at $1 below the minimum wage beginning Saturday, $1.25 below the minimum wage beginning in 2024 and $1.50 below the minimum wage beginning in 2028.

An employee working 30 hours per week and receiving $255 in tips for the week, for example, is making an average of $8.50 in tips per hour. This combined with the $12 minimum wage is more than $19 per hour, meaning the employer can pay the worker $11 per hour (the $12 minimum wage minus the maximum $1 tip credit).

For more information on the tip credit and charts, visit labor.hawaii.gov/wsd/files/2022/06/Tip_Credit_Notice_with_exhibits_June2022.pdf.