There’s no denying that restaurant economics are disproportionately complicated. The reliance on tips as a part of worker compensation, and the intricate laws surrounding how those tips must be handled, add to the complication. Here’s a crash course on the issue at hand, and HB25-1208, the latest piece aimed to solve the problem.
Minimum Wage and Tip Credit Facts
- Each state has its own minimum wage. In Colorado, the minimum wage is $14.81 per hour.
- In Colorado, a recent law allows municipalities to raise their own minimum wage above the state minimum, which several cities and counties have done. In Denver the minimum wage was raised to $18.81 per hour, the eighth highest in the country.
- Federal law allows states to offer what is referred to as a “tip offset” or “tip credit”, which means businesses can pay employees a certain amount less than the minimum wage, as long as tips make up the difference in the effective wage.
- Colorado’s constitution set the tip offset at $3.02, meaning that today, a tipped employee can receive a base wage of $11.79 (which is $3.02 less than the minimum wage of $14.82).
- In Denver the base wage for a tipped employee is $15.79.
- When this tip offset was first set in 2006, the state minimum wage was $5.15 per hour, representing a 57% credit. Based on today’s state minimum wage, that amount represents a 26% reduction. Many legislators see this as a flaw in the original legislation that puts Colorado’s tip offset wage among the highest in the country.
- No business, including restaurants, are ever exempted from paying employees the minimum wage. Implementing HB25-1208 does not change the requirement to meet those minimums.
What HB-1205, the Restaurant Relief Act, Aims To Change
House Bill 1208 is designed to reset the tip offset system. Many business owners and legislators see the system as broken. They reason the flaw comes because the offset was originally set as a fixed number. Instead, it should have been a percentage of the minimum wage.
They argue that higher tipped wages leave less room for untipped wages, which creates an unfair wage gap between untipped kitchen staff and tipped servers and bartenders.
“Restaurants spoke from the heart during the [recent] hearing, explaining how their kitchen crews are being left behind when it comes to wages and how their businesses are in peril,” explained Colorado Restaurant Association (CRA) president and CEO Sonia Riggs in a press release. “If the tip credit isn’t fixed, we’re going to lose the hearts and souls of our communities, and thousands of workers will be out of work.”
The City of Denver reported 183 restaurants closed between June 2023 and June 2024. At the end of last year and beginning of this year alone we saw stalwarts shutter including Stoic & Genuine, Osaka Ramen, Cafe Brazil, Fruition, and Sushi Sasa. A driving factor in the rash of closures comes due to increased costs for labor, utilities, rent, food, and supplies.
In the past three years hundreds of restaurants have closed in Denver alone and thousands of jobs in the industry have been lost
What HB25-1208 Means For the Workers
Many of the restaurant owners we spoke with stated they don’t plan to change current wages at their establishments. They just want checks and balances to allow them realistic options as minimum wages continue to increase, hindering the ability to pay non-tipped employees a higher wage.
According to CRA member surveys, servers and bartenders in Denver today make an average of $39 to $42 per hour after tips, significantly higher than the municipal minimum wage. Non-tipped kitchen crews, on the other hand, make $19 to $23 per hour on average, without tips.
Overall, the sponsors of the bill, made up of both Democrats and Republicans, say that the Restaurant Relief Act is about lowering the percentage of the minimum wage employers have to pay toward the base minimum wage, so that they can better pay non-tipped employees and mitigate a tide of rising costs to keep the doors open and maintain jobs for the local economy.
Timeline For the Bill
HB25-1208 was brought to the House Business Affairs & Labor Committee on February 11. It was passed through the bi-partisan committee with an 11-2 vote on Thursday, February 20, 2025. Now it will move to the House Finance. Right now nothing has changed. Amendments are being drafted and the Finance Committee hearing should be scheduled soon.
Sponsors of the bill include state representatives Steven Woodrow (D), Alex Valdez (D), Ryan Armagost (R), Shannon Bird (D), Andrew Boesenecker (D), William Lindstedt (D), Tisha Mauro (D), and Chris Richardson (R). It has been endorsed by the CRA, EatDenver, the Hispanic Restaurant Association, the Colorado Chamber of Commerce, Downtown Denver Partnership, Downtown Boulder Partnership, Visit Denver, and the Tavern League.
What People Against HB25-1208 Have To Say
The campaign against HB25-1208 mainly revolves around the idea of restaurant owners trying to dock pay and deny employees a living wage. There’s been an aggressive push to discredit the vast majority of restaurant owners, employees, and others in the hospitality industry who support the bill.
One of the big players on this side of the debate is One Fair Wage (OFW) and its co-founder and president Saru Jayaraman. The company advocates for workers receiving a full minimum wage, including tipped employees. The group claims the sponsors and supporters of the bill don’t want to pay their workers a living wage. Even though documents have been presented showing how much the tipped workers make, around $35 to $45 per hour, OFW has not taken that into consideration.
During the hearing on February 20, Sarah Parady, an at-large member of the Denver City Council, testified against the bill. She sees the bill as cutting people’s paychecks and took to social media to talk about the “myriad harms caused by the tipping system (exposing workers to sexual harassment, gamesmanship with the tip pool, easy wage theft, and instability).”
She also wrote, “the best form of stimulus for restaurants and retail (better than tax cuts!) is raising minimum wage, because a city’s workers and its consumers are the same people.” Right now Parady, who is also a labor and public interest lawyer, hasn’t produced data to back up these claims.
As the bill moves forward and people debate the merits and consequences, keep in mind the facts, the real numbers, and the future if Denver’s beloved restaurants continue to wither under these major costs, and eventually close.
