Denver’s minimum wage for 2020 is yet to be finalized, but some in the restaurant industry are preparing to fight over it.
A revised minimum wage proposal introduced by Denver Mayor Michael Hancock and City Councilwoman Robin Kniech would increase the untipped minimum wage to $12.85 beginning on January 1, 2020. (The current minimum rate is $11.10 per hour.) This is down from $13.80/hour in their original proposal, but up from the $12/hour as the law currently stands.
The proposal, which will go to city council this month for approval, would next raise the untipped base rate to $14.77 on January 1, 2021 and to $15.87 on January 1, 2022. After that, it would be tied to the Consumer Price Index. The 2021 wage reflects the maximum 15 percent per year increase allowed by a new law signed by Governor Jared Polis in May that goes into effect at the beginning of 2020.
The problem for some in the restaurant industry is both the rushed timing of Denver’s proposal and its effect on the tipped wage. State law mandates that tipped staff receive $3.02 per hour below the minimum wage, so the new proposal would pay tipped staff a base hourly rate of $9.83. Most tipped restaurant employees, though, already make well above minimum wage. Sonia Riggs, president and CEO of the Colorado Restaurant Association (CRA), says that servers at casual restaurants take home around $19–25 per hour, and tipped workers at upscale restaurants can make upwards of $50 per hour.
“The tipped wage is a top priority for us,” Riggs says. “We’re looking at our options for pursuing a larger tip credit (than the $3.02 per hour) as minimum wage increases. The result is a bigger disparity between the front and back of house. The back-of-house employees are already getting above the minimum wage, so there’s no required raise for them.”
She’s referring to the large wage gap between the front of the house staff (the people you see when eating out, like servers and bartenders) and back of house (like cooks and dishwashers). Tips, which more than make up for that $3.02 mandated difference (and if they don’t, employers make up the difference to bring tipped employees up to minimum wage), result in servers making more than managers and, in some cases Riggs says, more than owners.
It makes it hard for restaurants to hire back of house staff, especially line cooks, when their wages lag so far behind the tipped workers up front. With most cooks already making above the proposed minimum wage, the pay bump would only help servers, thus exacerbating the gap. And if restaurants raise menu prices to account for increased labor costs, that worsens the imbalance even further.
Riggs says that the CRA is starting to meet with state legislators and hopes to put together a bill addressing the tipped wage for the 2020 session, but her immediate concern is with the timing of the Denver minimum wage proposal, which she believes goes against the timeframe stated in the new law. “We’re watching closely what city council does regarding exercising our legal options. We’ll know more at the end of the month,” Riggs says.
While a lawsuit can’t be brought forth unless the proposal passes, the CRA has already consulted with law firms who agreed their case has merit because the timing is off. With the new minimum wage law not going into effect until January 1, 2020, local governments shouldn’t be able to raise minimum wages until the next scheduled state increase on January 1, 2021. “Our biggest issue is the legality on the timing. Had Denver waited a year and done it the way the rest of the cities and the legislature clearly intended… It’s very explicit. The fact that they’re outright ignoring that is very concerning to us,” Riggs says.
Katie Lazor, executive director of EatDenver, a nonprofit group of more than 200 locally owned, independent restaurants, agrees. Although it isn’t a lobbying organization and won’t be leading the charge at the capitol, EatDenver supports the CRA in its efforts to change existing state law regarding the $3.02 tip credit and the potential lawsuit against the city of Denver.
“If that limitation [the tip credit] didn’t exist, EatDenver would not have spent the time and energy having these minimum wage conversations with the city,” Lazor says. “That limitation at the state level, which the mayor and city council have no control over, is enough of a challenge for the restaurant industry that we have to do what we can to either delay it or prevent it from going up in the meantime.”
The minimum wage proposal is scheduled to be voted on by the Finance & Governance committee on November 12. The first reading for City Council will be held November 19, and the second reading, with a one-hour courtesy public hearing, will be on November 25 at 5:30 p.m.