§388-10 Penalties. (a) Civil. Any employer who fails to pay wages in accordance with this chapter without equitable justification or violates this chapter or the administrative rules adopted under this chapter shall be liable:
(1) To the employee, in addition to the wages legally proven to be due, for a sum equal to the amount of unpaid wages and interest at a rate of six per cent per year from the date that the wages were due; and
(2) For a penalty of not less than $500 or $100 for each violation, whichever is greater. The penalty shall be deposited into the labor law enforcement special fund.
(b) Criminal. Any employer who does not pay the wages of any of the employer's employees in accordance with this chapter, or any officer of any corporation who knowingly permits the corporation to violate this chapter by failing to pay wages of any of its employees in accordance with this chapter, or any employer or the employer's agent or any officer or agent of a corporation who discharges or in any other manner discriminates against any employee because the employee has made a complaint to the employee's employer, or to the director, or to any other person that the employee has not been paid wages in accordance with this chapter, or has instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceedings, or any employer who wilfully fails to comply with any other requirements of this chapter shall be fined not less than $100 nor more than $10,000 or imprisoned for not more than one year, or punished by both fine and imprisonment for each such offense. [L 1963, c 158, pt of §3; am L 1965, c 77, §1(b); Supp, §95-9; HRS §388-10; am L 1977, c 89, §1; gen ch 1985; am L 1994, c 84, §1; am L 1999, c 22, §1; am L 2017, c 135, §3; am L 2018, c 187, §2]
The legislative history of §481B-14, as interpreted by the Hawaii supreme court in Davis, allows plaintiff hotel employees to recover for unpaid service charges imposed without the requisite disclosure set forth in §481B-14, through a claim brought pursuant to §§388-6 and 388-11 and this section. 835 F. Supp. 2d 914 (2011).
When a hotel or restaurant applying a service charge for the sale of food or beverage services allegedly violates §481B-14 by: (1) not distributing the full service charge directly to its employees as "tip income" (in other words, as "wages and tips of employees"); and (2) failing to disclose this practice to the purchaser of the services, the employees may bring an action under §§388-6 and 388-8 and this section to enforce the employees' rights and seek remedies. 130 H. 130, 306 P.3d 175 (2013).
Where employers imposed a service charge at banquets and other functions held at employers' hotels, and retained a portion of the service charge income without disclosing that practice to customers, service employees were entitled to an award of double damages under this section. 133 H. 1, 323 P.3d 792 (2014).
Where employers imposed a service charge at banquets and other functions held at employers' hotels, and retained a portion of the service charge income without disclosing that practice to customers, the circuit court correctly held that "tip income" retained by employers in violation of §481B-14 constitutes "compensation" earned by service employees for purposes of bringing a claim under this section and §§388-6 and 388-11. 133 H. 1, 323 P.3d 792 (2014).
Employer has burden of proving "equitable justification" for failure to pay wages; civil penalty justified. 5 H. App. 106, 679 P.2d 627 (1984).