Understanding the Minimum Wage in Colorado
Minimum wage isn’t as simple as many make it out to be anywhere – not just in Colorado. There are parts of the law regarding minimum wage in CO that you must know. Understand that there are actually three different types of minimum wage in Colorado:
Details of Minimum Wage in CO
1. State Minimum Wages in Colorado
2. Federal Minimum Wage
3. Tipped Minimum Wages in Colorado
These three types of minimum wage in Colorado vary wildly, so it’s crucial to understand how they work when it comes to employment law.
The state minimum wage is the law in Colorado specifically with the minimum wage in Colorado established: $7.64 per hour since this January 1st of 2012.
However, the United States government also stipulates its own minimum wage as law, called the federal minimum wage. Currently that wage is $7.25 per hour.
Additionally, Colorado also allows what’s called a tipped minimum wage in Colorado, and by law that is currently $4.62 an hour. A tipped minimum wage in CO is one that allows an employee to accept tips – such as waiters and waitresses, hairstylists, etc. etc.
What happens when either the federal wage or state minimum wage in CO is different? Standard law applies that the state has to follow the minimum wage that is higher. So know that employers would be required to follow the state minimum wage in CO of $7.64 an hour.
Know this, though….
Minimum Wages in Colorado Can Change
So it’s crucial to keep an eye annually on how the laws change for minimum wages in Colorado. Typically two months before a new year would be the norm for a state government – or the federal government – to announce changes in minimum wage.
Here are the two prior minimum wages in Colorado for both standard and tipped:
1. January 1, 2011 – Minimum Wage $7.36/hour – Tipped Wage $4.34/hour
2. January 1, 2010 – Minimum Wage $7.24/hour – Tipped Wage $4.34/hour
In addition, in the law of the Colorado Constitution, specifically in Article XVIII, Section 15, it states that the state minimum wage must be adjusted annually for inflation purposes. So expect the minimum wage to always change one way or another.
Tipped wages also fluctuate, but employers can’t allow no more than $3.02 per hour in tips for the purpose of offsetting the minimum wage. That simply means that if the law says an employee must earn at least $4.62/hour, that’s outside of all tips up to $3.02 an hour for any company.
This is important to understand, however –
If by law the employee’s actually covered by both federal and state minimum wage laws, the employer must follow the federal tipped wage law, which is currently $2.13 per hour. In the case of Colorado, the state tipped wage amount happens to be higher, so the standard rule applies and the company must pay the higher amount.
It’s also paramount to understand that an employee’s tips must be added to the amount of $4.62 per hour and equal the minimum hourly wage – either state or federal, whichever one is highest – and if not, the employer must make up the difference under cash wages.