DENVER — Colorado's restaurant industry is split over a new bill moving through the legislature.
House Bill 25-1208 aims to change the state’s rules around minimum wage for tipped workers in order to give restaurants financial relief. Restaurants continue to close across the Denver metro and the state, though the severity of the crisis was a topic of debate Monday.
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.
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According to HB25-1208 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.
As introduced, HB 25-1208 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. An amendment introduced on March 3 changed that proposal to setting a tipped minimum wage at roughly 65% of the minimum wage in a municipality. Denver’s current tipped minimum, for example, is about 84% of the city’s minimum wage.
Supporters say the bill 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.
On Tuesday, dozens of restaurant owners, employees and community members gathered at the Weathervane Cafe in Denver to speak out against the bill. Weathervane Cafe's owner, Lindsay Dalton, opposes the bill, saying it'll impact employee wages and could also hurt the economy overall.
"When they cut these people's wages, that is like a huge part of their audience. The service industry goes out to dine. Like, that's it's our industry, it's our community. We go to bars, we go to restaurants. And not having any disposable income will have an even further effect on the economy," she said.
Dalton said there are other ways to cut costs without affecting workers who are already struggling to make ends meet.
"We're a really small business, you know. We offer PTO, we offer health care, and we have no problem keeping up with the minimum wage increases. If we can do it, any one of these businesses can do it," Dalton said. "I understand it is a really trying time. We're slow, too. Sales are down like 10%, but if you can't weather that without undercutting your lowest paid workers, your business plan — your business itself — is not a viable business, in my opinion."
On the other hand, Chrissy Strowmatt, general manager at the Blue Bonnet Restaurant in Denver, is in favor of the bill.
"We're just trying to survive. So this alone will, it appears, from my calculation, save us about $200,000," she said.
Strowmatt said the legislation will help level out pay for all workers, not just those who receive tips.
"Those back-of-house employees who've been there for 25 years are capped at $21 an hour, so they make half of what the front of the house, what the tipped employees are making, which that isn't right," Strowmatt said.
Denver Mayor Mike Johnston supports HB 25-1208. In a statement, a spokesperson from his office said, "Current tipped minimum wage laws, while well-intended, are creating difficult burdens for restaurant owners and causing steep pay disparities between servers and back-of-house employees. Doing nothing is not an option. We remain committed to working with legislators to find a commonsense solution that ensures wages stay high and businesses remain open."
Denver7's Ryan Fish contributed to this report.
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