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Understanding wage and hour laws for tipped workers in CO

Colorado restaurateurs have a lot on their plates, which can sometimes lead to lawsuits filed on behalf of disgruntled employees. That’s why it’s vital for business owners to be fully aware of all applicable laws to ensure they remain in full compliance, especially when it comes to employee pay.

The Colorado Department of Labor and Employment provides clarifications on wage and hour laws for tipped workers, who can receive tips as cash or via credit card payments. Tips earned over the course of shift must add up to the prevailing minimum wage (which for workers in Colorado is currently $8.31 an hour). To this end, restaurateurs can pay employees a rate of $5.29 only if this rate combined with any tips equals the mandated minimum wage over the course of a given work week.

If tips are made via credit card, employers that subtract any fees for processing credit transactions from an employee’s tipped wages subsequently invalidate their ability to be eligible for tip credits. Additionally, sharing of tips among workers not usually in receipt of tips (which includes cooks or management personnel) also invalidates tipped wage regulations.

Many employers may be wondering how they can remain in compliance with tipped worker wage and hour laws. Daily Business Review provides some useful advice to this end, such as remaining mindful of tip pooling procedures. Tip pools should only be comprised of workers who are traditionally tipped, and those who are not should be excluded. Some tipped employees may be engaged in tasks don’t entail tipping, and in this case it’s important to compensate workers accordingly for their time. 

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