From making guests feel at home to ensuring even the pickiest customers enjoy their experience, tipped employees often work hard to deliver excellent service and bring home a livable paycheck. Unfortunately, not all employers are as diligent about ensuring that workers who receive tips get their fair wage share.
Colorado law designates any employee who regularly takes in at least $30 of tips per month to be a tipped worker. While a tipped employee may not receive the state’s minimum wage of $12 per hour outright, his or her weekly income must meet or exceed that amount, regardless of actual tips taken in—even if that means that the employer has to make up the difference.
How do tip credits work?
Effective March 16, 2020, the Colorado Overtime and Minimum Pay Standards Order #36 states that tipped employees must receive a cash wage of a least $8.98 per hour. Employers of tipped workers may claim a tip credit of no more than $3.02 that counts toward meeting the state’s minimum wage. However, the employer also bears the responsibility of making up the difference in cash wages if weekly tips are not adequate to meet the hourly wage obligation.
Is tip-sharing allowed?
State law does allow businesses to require employees to share pooled tips. However, important limits apply. If an employer requires workers to share gratuities, the workers who split gratuities must have positions that regularly receive tips. If a business chooses to pool tips among nontipped employees, i.e. bussers, food preparers or hostesses, then the business cannot use tip credits to offset the minimum $12-an-hour wage.
Do employers have any claim to tips?
The Colorado Wage Act states that it is illegal for an employer to claim rights to tips or gratuities intended for employees, including gratuities designated on credit card charge slips. If a business charges a pre-established gratuity—for instance, a 15% service charge on parties over six—the company may be able to claim it as corporate income so long as the business clearly informs patrons of that policy in writing.