Tipped Wage Laws in Colorado

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The Fair Labor Standards Act (FLSA) states that all employees must be paid the highest minimum wage afforded by federal, state, or local law. In Colorado, the minimum wage (as of January 2020) is $12.00, meaning all employees—including those who make tips—must be paid at least this amount per hour worked. However, tipped employees are also subject to a “tip credit.” Essentially, the tip credit allows employers to pay tipped employees less than minimum wage as long as the employees make up the difference in tips.

At USA Employment Lawyers, we assist tipped employees throughout the state of Colorado with all types of wage and hour issues. If your employer failed to pay you the minimum required wage or used the tip credit to unlawfully reduce your pay, our firm can help you understand your options and take legal action. We also assist businesses in defending claims.

Understanding the Colorado Tip Credit

As previously mentioned, the tip credit allows employers to pay tipped employees—such as restaurant servers, bartenders, and hotel workers—an amount that is less than the state’s minimum wage. The reasoning behind this is that the employee is expected to make up the difference in tips. In Colorado, businesses get a $3.02 tip credit so the minimum wage after the tip credit is $8.98 plus tips.

What you need to know about Colorado's tipped employee wage laws:

• If a tipped employee does not make up the difference between the lower wage ($8.98/hour) and the state minimum wage ($12/hour) in tips, the employer is responsible for making up the difference.
• The tip credit only applies to hours that the employee spends working for tips. If a bartender spends six hours of an eight-hour shift mixing drinks and receiving tips and two hours of that shift cleaning, the employer may only claim the tip credit for those six hours.
• An employer may require “tip pooling,” in which all tipped employees contribute a percentage or portion of their tips to a total pool that is then divided amongst all employees. If an employee is obligated to pool his or her tips, he or she must still receive the full minimum wage.
• An employee cannot be required to distribute his or her tips to other employees that do not normally make tips. This includes cooks, dishwashers, employers, and in some cases, managers and/or supervisors.

The laws regarding tipped wages and the rights of tipped employees in Colorado can be very complex. Arguably the most important thing for both employees and employers to remember is that tipped employees must receive at least the Colorado state minimum wage of $12.00 per hour, whether it is paid by the employer or the difference made up in tips by the employee.

If you need assistance with a tipped wages issue, reach out to USA Employment Lawyers for a free case evaluation. Our knowledgeable and experienced attorneys can help you work to protect your rights.