Colorado legislature passes bill punting to local governments when it comes to how much servers are paid

A contentious bill pitting many restaurant owners against workers over how much tipped employees should earn was approved by the Colorado legislature Tuesday, with the restaurant industry feeling like it had achieved a small victory. 

While the industry sought to offset tipped workers’ paychecks with more of their gratuities, therefore reducing their base pay in some scenarios, the decision has been punted to local governments. 

Under House Bill 1208, which now heads to Gov. Jared Polis, relief won’t come immediately — if ever. Especially not in Denver, where dozens of restaurant owners testified that high minimum wages exacerbated their struggles to survive and keep up with rising food, rent and insurance costs. Some members on Denver’s City Council had opposed the change.

The measure, should it be signed by the governor, would give local governments in parts of the state where the minimum wage is higher than the state’s minimum the option to increase the tipped-wage credit. Right now, the credit is $3.02 statewide, no matter what the local minimum wage is. 

The credit is deducted from the minimum wage to determine how much a restaurant must pay a server.

Restaurants have complained that the static credit is untenable for them in places like Denver and Boulder, where the local minimum wage is higher than the statewide base of $14.81. 

“It does give us hope for some help down the road. It also protects the tip credit at $3.02 an hour because we know there are some people that would like to have that completely eliminated, which would be devastating to the restaurants,” said Chris Strowmatt, general manager of Blue Bonnet Cafe in Denver, who testified before legislators multiple times in support of the bill. She said she received harassing phone calls and bad online reviews that had nothing to do with eating at the restaurant as a result of her advocacy. 

“I’m looking forward to it becoming a local jurisdiction issue.”

Polis will have to review the final bill, said Eric Maruyama, a spokesperson for the governor. But he added that Polis “supports efforts geared toward keeping restaurants that make our communities unique (and) open while ensuring workers receive fair wages.” 

“While House Bill 1208 could be stronger, it will give local jurisdictions the local control to adjust their tip credit,” Maruyama said.

In Colorado, restaurant workers who earn tips can be paid less than minimum wage — or $3.02 less, which is called the tipped credit. 

While local minimum wages increased significantly in the past several years, the tipped credit remained at $3.02, which meant that tipped workers saw their wages rise faster and restaurant owners had to budget for the higher pay rate. Restaurants said that took away money to pay more non-tipped workers, who don’t benefit from customer tips. A shared tip pool is only allowed if everyone earns at least minimum wage.

Now it’s up to local governments to decide. And Sen. Judy Amabile, a Boulder Democrat and main sponsor of the bill, said she got involved after her city passed a higher minimum wage — but not as high as she’d hoped.  Boulder City Council kept it lower because of concern of how it’d raise tipped wages at struggling restaurants . This seemed like an answer.

“I am happy with the results,” Amabile said in an email. “We got to a reasonable compromise. I believe the bill will help restaurants, while also encouraging local governments around the state to raise their minimum wage for all workers in their jurisdictions.”

Boulder City Councilman Matt Benjamin, who voted in favor of the city’s higher wage, said he’s running for reelection and if he returns, he plans to request the City Council to “deliberate this issue next year as part of our next year’s work plan.

“I hope there’s a majority of council that is interested in beginning that process.”

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But the tipped minimum wage has been a combative topic. Had the bill passed as originally introduced, it would have effectively lowered tipped workers’ base wages by $4 an hour in Denver, which has the state’s highest tipped minimum wage of $15.79. 

Boulder, Boulder County and Edgewater also have higher minimum wages than the state’s. 

Nicole Speer, also a member of Boulder City Council, isn’t so sure. She opposed the bill. 

“I’m not fighting it,” Speer said. “But what I would have liked to see is just complete, full local control over the minimum wage, including the tip credit. … In our council deliberations last fall when we were discussing the local minimum wage ordinance that we eventually passed, we said we would revisit the issue in a few years once we had some data on the local impacts of the changes.”

Worker advocates felt let down by Democrat lawmakers who pushed the bill. When Kjersten Forseth, political and legislative director for the Colorado AFL-CIO, first heard about the bill in Polis’ State of the State address, she reached out to the two Democratic state representatives who sponsored the measure to figure out a different way to help restaurants — be it through rent or supply chain improvements.

She got nowhere, she said. 

“It felt like an exceptional betrayal and nothing like I ever would have expected coming off an election year where it was very clear nationally that workers, blue collar workers, don’t feel like Democrats are representing them. One of the first bills out of the gate was a bill to literally cut blue collar workers wages,” Forseth said. “I kept hitting a wall in the conversations. It just got uglier and uglier. … They decided this was the answer.”

Nothing will change overnight for workers or restaurants, or even anytime soon. 

But it could lead to more local governments adopting a higher minimum wage than the state’s $14.81, regardless if they also increase the tipped credit or keep it the same. If cities choose not to change the tipped credit — several Denver City Council members spoke out against raising it — the measures would be up to the local community to lobby lawmakers. 

“There’s a couple of city council members that believe the tip credit should be eliminated altogether,” said Strowmatt, whose restaurant is in Denver. “But I believe they’re up for election next year. So, we can hope for a better, business friendly Denver City Council after the election.”

Alejandro Flores-Muñoz, who opposed the bill as owner of Combi Cafe, fears that could happen based on the heavy support from restaurants and industry groups. As a restaurant worker who now owns his own place and pays his staff $25 an hour, he worries about the workers if there is a change in Denver’s City Council.

“I feel that’s a long shot especially in Denver where the City Council was super opposed to this bill. However, if in the next election City Council changes, tipped workers could be at risk,” said Flores-Muñoz, who plans to reopen the taco shop in Littleton in May. “This is putting the most vulnerable folks in the labor force to perhaps have to fight a battle of not getting cut. … Instead of doing whatever they need to do as a business to reduce costs, the first thing they look at is labor and how they can pay them less.”

While the number of restaurants in Denver is up since the pandemic plunge in 2021, according to city sales-tax records, data is only through 2023 and many of the city’s high-profile restaurants  have closed in the past year. The Colorado Restaurant Association said that last year, 38 members dropped out due to lack of funds while 99 went out of business. 

“Are we concerned that this bill might mean no relief for Denver restaurants if local lawmakers won’t make changes to the current tip offset? Absolutely,” Sonia Riggs, president and CEO of the Colorado Restaurant Association, said in an email. “But we’ll continue to actively educate elected officials and the public about the realities of the increasing wage gap between tipped and non-tipped employees in our industry — and hope they listen. We are up for the challenge and will continue to push for fair and equitable wages for all restaurant teams.”