Committee advances bill clarifying cannabis businesses cannot claim tip credit

The Labor and Public Employees Committee on a motion to send House Bill 6842 to the floor agreed to move forward with language that makes clear cannabis establishments may not claim a tip credit toward the state minimum wage.

The bill, LCO 6614, says the labor commissioner may not count tips as part of the minimum wage calculation for employees of cannabis establishments. The language also makes clear that any cannabis establishment that pays an employee less than the state minimum wage is violating state law and places the rule in the cannabis statutes rather than in the Department of Labor wage-and-hour statutes.

Committee members debated whether the measure changes existing policy or simply clarifies it. The committee chair said, “I do wanna clarify for the record that at this time, there is no application process for any other employer, other than a hotel or a restaurant, to apply for through DOL.” The chair and supporters said moving the rule into the cannabis statute reduces confusion and helps prevent underpayment complaints that previously required Department of Labor investigation and remediation.

Representative Canino objected to the bill, arguing the change removes flexibility for employees and employers and could prevent establishments from later seeking to operate under a tipped model: “I would like for there to be an avenue for a company to maybe apply or to demonstrate that they that their employees are receiving an adequate amount of tips,” she said, and added, “I’m gonna have to be against this today simply because it is further violating the, employment negotiation process of employers and employees in the state.”

Senator Sampson noted there had been at least one prior instance of a cannabis establishment claiming a tip credit and being found in violation: “There was an occasion where this occurred,” he said during the discussion. Supporters said the Department of Labor previously investigated and ordered back pay when establishments claimed ineligible tip credits.

Action: The committee moved that House Bill 6842 (LCO 6614) be JFS to the floor. The motion was made and seconded; at the time of the meeting the clerk reported that votes on some agenda items would be held open until later and the tally for this item was not closed at the hearing.

The measure’s proponents said the change is designed to prevent future underpayment, while opponents warned it removes a pathway for employer–employee agreement on pay structures and expressed concern about creating statutorily fixed rules rather than leaving the matter to DOL or future legislative changes.

If the bill becomes law, its language would be codified in the cannabis statutes rather than the Department of Labor wage-and-hour statutes, according to committee discussion.

Votes at the hearing were recorded as held open.