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July 18, 2013

Lawsuit May Affect Hawaiian Hotel Fees

In the past, Hawaiian hotels have operated by collecting tips from customers and passing on a portion of those tips to the employees who earned them as service fees. However, the state's hotel workers could see payouts in the millions from hotels after the Hawaiian supreme court ruled against those practices earlier this week, declaring them a violation of Hawaiian law.

According to Hawaii News Now, hotels and other businesses in Hawaii can only collect tips if they disclose that the hotel itself is going to keep a portion of the money. Attorneys hired on behalf of the employees filed a class-action lawsuit against Hawaiian hotels, and are seeking large payouts for their clients. Attorney John Perkin filed eight of these suits, and claims that the total damages could exceed $10 million, with one lone Kauai hotel on the hook for $3 million.

The ruling regarded two Maui hotels, the Wailea Marriott Resort and the Westin Maui, where several banquet service workers alleged in their lawsuit that the hotels imposed a 20 percent service charge but did not distribute the proceeds to workers. Instead, the hotels allegedly kept portions of the F&B proceeds or used it to pay managers or other non-tipped employees. This is in violation of Hawaii Revised Statutes 481B-14, which 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..

"Its been a long time coming," Boston-based attorney Harold Lichten, one of the attorneys litigating the cases first filed in 2008, told Maui News. Lichten stated that the ruling is benefiting workers on duty during hotel banquets, weddings and conferences, as well as any other events for which the hotel levied a service charge.

"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."

Jim Bickerton, an attorney with at least six cases pending regarding the Hawaii service charge violations, told the Kansas City Star that Hawaii hotels keep as much as one-fifth to one-sixth of all service charges on average.

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