Grants set to help Denver small businesses give tipped workers a livable wage

DENVER — There's a movement among Denver restaurants to pay their staff a livable wage before tips. It can be a big challenge for small businesses, but the owners Denver7 spoke to say it is possible.

"I was honestly kind of shocked to see how many cafes we have here in Denver, but very few are owned by women. Fewer are owned by folks that speak or represent the culture of where the coffee is coming from," said Kristin Lacy, co-owner of Convivio Cafe.

When she and her co-owner were starting out, it was important to them to pay their staff minimum wage, even though they are also tipped workers. Lacy remembers the reaction she got from one investor.

"This funder looks back at me and said, 'How am I supposed to trust you if you're going to be paying basically $20 an hour to a barista for unskilled work?'" Lacy recalled. "And I said, 'To be honest with you, if we can't make that work, then I don't want to open the restaurant.'"

It hasn't always been easy. Lacy said many small businesses are suffering through the same challenges of rising food costs, rising rents, utility costs, permits and licensing.

Many Denver restaurants, big and small, offer sub-minimum wage for their tipped workers.

"You have a lot of people in the city who are both workers and consumers. If they experience a pay cut, that creates a vicious circle where people are not going out to eat as much. They may be being evicted," said Denver City Councilmember Sarah Parady.

The nonprofit One Fair Wage wants to solve that problem. On Wednesday, the group awarded five locally owned restaurants with grant funding to help them find ways to stay profitable while also paying their staff a livable wage.

"It makes workers very vulnerable to have to live on the biases and harassment and whims and moods of customers," said Saru Jayaraman, co-founder of One Fair Wage.

The money pays for training and assistance in identifying solutions, like adjusting menu prices or finding ways to work with suppliers to cut costs.

Convivio Cafe is one of the recipients, and the owners believe the grant will keep them on the right path.

"The other part that's important with this minimum wage is having the education and the participation of the community," said Lacy.

Parady agreed that customers play a role.

"If menu prices were just actually set at what the customer is expected to pay, and tipping becomes more of an extra, that would make things more predictable for everybody," she said.

One Fair Wage is accepting applications from restaurants that are interested in the training and assistance opportunities. More information can be found on their website.

Tipped workers bill on Polis' desk

Meanwhile, Colorado lawmakers are trying to provide relief to restaurants by adjusting pay for tipped employees.

Tipped workers can make a base wage less than minimum wage because tips are meant to make up for that difference, if not exceed it. If tips are low, those workers would still legally need to be compensated enough to reach the overall minimum wage of their jurisdiction.

According to House Bill 25-1208 sponsor Rep. Alex Valdez, D-Denver, when state lawmakers allowed cities and counties to set higher local minimum wages in 2019, they did not address the minimum wage for tipped workers. Instead, that number is determined by a “tip offset” that is set at $3.02 under the Colorado Constitution.

Colorado’s minimum wage is $14.81 an hour. Its tipped minimum wage is that number minus the tip offset of $3.02, which comes to $11.79 an hour. Denver’s minimum wage is $18.81 an hour, meaning the tipped minimum wage is $15.79.

Valdez called the preset tip offset a “mistake” that is leading to inflated payrolls, which contribute to restaurant closures.

Previous coverage of HB25-1208:

• Colorado restaurant owner in support of tipping bill, aimed at providing wage relief
• Tipped workers bill serves up strong reactions at Colorado House hearing
• Denver7 speaks with restaurant owner, manager on opposite sides of House Bill 25-1208

As introduced, HB25-1208 would have required the $11.79 tipped minimum wage statewide, raising the tip offset in cities like Denver, Boulder and Edgewater, which have raised their overall minimum wages. However, the bill was amended in the legislature to instead allow local governments with a minimum wage higher than the state's to increase the tip offset, if they so please. Governments, however, cannot impose a tip offset that would make tipped employees earn less than the state minimum wage minus $3.02 ($11.79 an hour).
Local governments would be allowed to adjust their tip offset beginning Jan. 1, 2026.

Supporters say adjusting the tip offset would provide more financial flexibility that could save more restaurants from shutting down and allow more equitable pay for "back of house" workers like cooks and dishwashers, who typically make less than servers, hosts and bartenders. Critics, however, say it would cost thousands of tipped workers thousands of dollars when it’s already tough to make ends meet. Additionally, they argue there are other ways to address struggling restaurants, such as working to subsidize rising rent or food costs.

The bill passed through the state legislature and was sent to Governor Jared Polis on May 2.

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