Update: Colorado wages set to fall, questions emerge for tipped workers

DENVER Colorado employers may reduce the pay of non-tipped minimum-wage employees by three pennies an hour and cut the pay of tipped workers by at least that amount beginning Jan. 1, according to the Colorado Department of Labor and Employment and state restaurant association officials. Yet, there is some uncertainty as to how much restaurateurs will be able to shave from the minimum wage paid to tipped employees.

The wage reduction is based on a state constitutional amendment passed by voters in 2006 that calls for the minimum wage to be adjusted annually based on changes in the cost of living. Until now, inflation has pushed Colorado’s pay floor higher, but that is about to change.

Colorado’s pending wage decrease is believed to be the first among the 10 states that have mechanisms to adjust minimum-wage rates annually based on inflation indexes. The other states with such mechanisms are Arizona, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington.

According to a recent Colorado Department of Labor and Employment notice, beginning Jan. 1, the state’s minimum wage will decrease from $7.28 an hour to $7.24 for non-tipped employees and from $4.26 an hour to $4.22 for workers receiving gratuities.

Most Colorado employers, however, will not get the full benefit of the four-cent reduction in wages for non-tipped employees because they will have to meet the current federal minimum wage of $7.25 an hour.

And there is some uncertainty as to how much restaurateurs will be able to shave from the minimum wage paid to tipped employees, according to Peter Meersman, chief executive and president of the Colorado Restaurant Association. Meersman said a provision in Colorado law holds that the minimum wage for tipped employees will be $3.02 an hour less than that paid to non-tipped workers. What’s unclear, he indicated, is whether in 2010 that $3.02 hourly tip credit will be applied against the new state minimum wage of $7.24 an hour, resulting in a $4.22 hourly minimum wage for tipped workers, or against the federal minimum wage of $7.25, yielding a $4.23 an hour pay floor for staffers who receive gratuities. Meersman said the CRA is seeking to have the matter clarified by state officials.

The Colorado reduction is based on a 0.6-pecent reduction in the Denver-Boulder-Greeley Consumer Price Index between the first half of 2008 and the first half of 2009.

The restaurant association’s Meersman said the use of that heavily urban CPI to set statewide wages is controversial. He said a lawsuit by rural restaurateurs filed last year to force the state to create a new consumer price index that better reflects the economies of their areas is still in play. The Denver District Court hearing the matter did not grant the operators’ request to stay the 2009 wage hike of 3.7 percent based on the disputed CPI, but neither has it granted a state motion to dismiss the case, the CRA executive noted.

Some advocacy groups for the working poor have urged employers not to take the reduction. Meersman said the CRA will explain to members the changes in the wage law for the coming year, but would not make a recommendation as to whether they should take the reduction or maintain current wage levels.

Ahearing to allow public comment about the proposed order to lower the wage in accordance with the inflation-adjuster mechanism is set for Nov. 6 in Division of Labor chambers in Denver.

Contact Alan J. Liddle at [email protected] [3].