Colorado’s state legislature this week passed HB25-1208, a bill that would allow Denver and other local governments to lower the base wages that must be paid to tipped employees in restaurants and other businesses.
The bill was highly controversial, pitting Democrats against Democrats and restaurant workers against their employers. But the final version is something of a compromise.
An earlier version would have forced some cities to lower the minimum base wage, or “tipped minimum wage,” that is paid to waiters, bartenders and others — leading to criticism that state lawmakers were trying to stomp into local affairs and cut wages for workers.
The final version took a different approach. Instead of forcing cities like Denver to cut the tipped minimum wage, the legislature is giving them the option to do so.
“We believe this bill is a step towards allowing local governments to adjust their tip offset for what works in their community,” said Rep. Lindsey Daugherty, a Democratic sponsor of the measure. “Many communities like mine want to protect their local Colorado-grown restaurants and we believe that that's what this bill is doing.”
Gov. Jared Polis has indicated he will sign the bill.
Owners versus workers
The restaurant industry argues that it needs a break on high labor costs, blaming an unintended collision of different laws for driving up tipped minimum wages in Denver, Edgewater and Boulder, where they are above the state minimum.
Restaurant owners “wanted to be able to take the money [from reducing base wages] and use that to either pay higher rents, pay higher food costs, pay higher labor costs for the back of the house or add it to their bottom line so they can stay in business,” said Sen. Judy Amabile, a Democratic sponsor from Boulder.
But some progressives and labor advocates still opposed the amended bill.
Their chief criticism: The bill allows cities to lower the tipped minimum, but it doesn’t allow them to raise it.
Some city leaders would like to eliminate the concept of the tipped minimum altogether, instead guaranteeing that all employees get the full minimum wage, whether or not they are tipped in addition. That still would not be allowed under HB25-1208.
“Those council members said clearly ‘We want full local control,’” said Sen. Julie Gonzales, a Denver Democrat who opposed the measure. “Please give us the language that would actually give us the full parameters that we need to be able to be responsive to the small business owners and to the workers in our respective communities.”
In a statement, the governor’s office expressed support for the bill — and called on local governments to follow up by cutting their tipped minimums.
“The Governor supports efforts geared toward keeping restaurants that make our communities unique open while ensuring workers receive fair wages,” wrote spokesperson Eric Maruyama.
“While HB25-1208 could be stronger, it is a start and will give local jurisdictions the local control to adjust their tip credit, or risk losing independent restaurants and jobs that are so important to our communities.”
Why did the tipped minimum wage become an issue?
A few Colorado cities have raised the minimum wage for all workers in recent years, reaching as high as $18.81 per hour this year in Denver. That has caused the tipped minimum wage to rise as well. Under current law, the tipped minimum is always $3.02 less than the minimum wage.
As a result, tipped staff in Denver currently get at least $15.79 an hour from their employers, plus tips. Local officials have little power to change that.
But under the new law, local leaders could vote to lower the tipped minimum wage.
The bill would allow local leaders to choose from a range of reductions. For example, if the bill were in effect today, Denver leaders could go as low as $11.79 for the tipped minimum. (That is already the tipped minimum in most Colorado cities; it is derived by subtracting $3.02 from the statewide minimum wage.)
The fight could head to Denver next.
When the bill becomes law, it could set up another political fight in Denver, which has one of the highest tipped minimum wages in the state and in the country. Restaurant owners have put significant pressure on Mayor Mike Johnston to bring down labor costs, but a majority of council members came out in stark opposition to an earlier version of the bill.
The other areas affected by the measure are Edgewater, unincorporated Boulder County and the city of Boulder, all of which have raised their local minimum wages above the statewide standard.
The earliest local governments could lower their tipped minimum wage is Jan. 1, assuming the law is signed. It’s unclear whether or when Denver could consider such a change.
“Still too early to say,” wrote Jon Ewing, a spokesperson for Denver’s mayor. “We’ll review the finished legislation and discuss with Council to determine next steps. What is clear is that more must be done to help the restaurant industry, and we’ll keep working to ensure businesses can hire a full staff and pay those employees a fair, living wage.”
The bill was sponsored by representatives Alex Valdez and Steven Woodrow of Denver; Sen. Judy Amabile of Boulder; and Sen. Lindsey Daugherty of Jefferson County.
All of the bill’s sponsors are Democrats, but the bill passed with significant Republican support. Most of the opposition came from fellow Democrats.
