Colorado lawmakers want to increase wages for tipped workers

Opponents say it will hurt small businesses and employees
Colorado lawmakers want to increase wages for tipped workers
Posted at 9:50 PM, Feb 14, 2024
and last updated 2024-02-15 08:32:12-05

DENVER — Earlier this week, Colorado lawmakers unveiled plans for a new bill that aims to increase the wage for tipped workers.

At an event where a handful of legislators worked as servers for an hour, State Representative Javier Mabrey, D - Denver and Jefferson Counties, explained the goals of the bill.

“This bill is about giving municipalities the opportunity to increase the subminimum wage, or eliminate the subminimum wage, for tipped workers if they choose that they want to do that," Mabrey said. “This is about local control, and it's also about empowering restaurant workers."

The minimum wage in Colorado is $14.42 an hour. Tipped workers' minimum wage is $11.40 with a tip credit of $3.02. The tip credit is the difference between the two wages. According to Mabrey, the bill would give local municipalities the option of eliminating that tip credit and boosting tipped workers up to $14.42 an hour while still collecting tips.

Tip credits are a legal way for employers to count tips as being directed toward employee minimum wage. All tipped workers must still make minimum wage as a combined result of their pay plus tips.

“This isn't about eliminating tips. It's about elevating that baseline to the minimum wage," said Mabrey. “We're hearing that the basic protections that we're trying to provide to people will halt business from operating as it's operating right now, and that's going to lead to cost going up for consumers. However, there's no data given.”

Mabrey said there is always fear of change, and that the policy has worked well in other states. He, along with the nonprofit organization One Fair Wage, pointed to other states that do not utilize a tip credit: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.

"When they've done this, we see higher restaurant sales, higher small business growth rates in the restaurant industry, higher overall job growth rates in the restaurant industry and higher tipping averages," said Saru Jayaraman, president and co-founder of One Fair Wage. “If we were to put this on the ballot today, it would pass. Most people agree with this.”

The Colorado Restaurant Association (CRA) does not agree with this concept. Colin Larson, director of government affairs at the CRA, said there are several inaccuracies in the way this is being portrayed.

“They claim that people make a subminimum wage in Colorado, which is not true. It is illegal for anyone, regardless of if they're tipped or non-tipped, to take home a subminimum wage," Larson said. “What does exist currently in Colorado law, and what this law would seek to take, to eliminate, is what's called the tip credit.”

Larson said on average, Colorado tipped workers make $37 an hour, according to data from 2022.

“If this bill passes, we will see service charges everywhere, we will see front of house tipped employee positions eliminated, job losses, and loss of earning potential for bartenders, servers, the people who are making good money right now," said Larson. “They're being disingenuous when they claim that this is going to help servers and bartenders. This will absolutely devastate the industry."

Larson also said the bill has the potential to impact certain parts of Colorado differently.

“You'll see a patchwork of regulation. And you'll see a lot of movement of jobs of restaurant closures, restaurant reopenings. It will introduce a lot of chaos based on what cities decide to eliminate this, where they're located geographically," said Larson.

Adam Hodak is the owner of The L, a full-service bar along Broadway. Hodak said if the bill became law, it would impact two groups of people the most — small business owners and their employees.

"When you decrease that tip credit, you're putting more pressure on the businesses. They're having to increase their prices, they're having to cut their labor. So you're hurting small businesses that can't afford filling in these margins," said Hodak. “You're talking $3 an hour on top of an already incredibly expensive minimum wage... You will start seeing those service fees more and more and more. Because that is what a business owner can take and use to make up for that increase in labor... Ultimately, it's just going to continue making Denver a more and more expensive place to eat and drink.”

Hodak said the only way he could support the bill is if it did not impact full-service bars and restaurants.

"Then you're looking at Starbucks and things of that nature. And that's actually why you're seeing unionization within Starbucks because they aren't relying on tips," Hodak said.

Denver7 requested a copy of the draft of the bill from Mabrey but did not receive a response.

On Monday, Mabrey said the bill will be introduced this week. He said it will go to the Business Affairs & Labor Committee in the House of Representatives first.

D7 follow up bar 2460x400FINAL.png
The Follow Up
What do you want Denver7 to follow up on? Is there a story, topic or issue you want us to revisit? Let us know with the contact form below.