According to the Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38, a tipped employee is any employee engaged in an occupation in which he or she customarily and regularly receives more than $30.00 per month in tips. Tips include amounts designated by credit card customers on their charge slips.
Tip Credits and Minimum Wage
Under COMPS Order #38, employers of tipped employees must pay a cash wage of at least $10.63 per hour if they claim a tip credit against their minimum hourly wage obligation.
If an employee's tips combined with the employer's cash wage of at least $10.63 per hour do not equal the minimum hourly wage of $13.65 per hour, the employer must make up the difference in cash wages. It is the policy of the Division of Labor Standards and Statistics that this rule applies on a weekly basis. The employee's tips combined with the employer's $10.63 cash wage must equal the minimum hourly wage when computed over a seven-day workweek in order for the employer to avoid making up any difference.
Employer Ownership of Gratuities (Tips)/Tip Pooling Among Employees
Colorado wage law (C.R.S. 8-4-103(6), updated Aug. 2, 2019) prohibits an employer from a claim to, right of ownership in, or control over an employee’s gratuities (tips). However, employers may require employees to share or allocate gratuities on a pre-established basis with other employees so long as the employer notifies each patron in writing. Such written notification includes notice on a menu, a table tent or receipt.
Under the COMPS Order, if the employer requires tipped employees to share their tips with other employees who do not customarily and regularly receive tips (such as management or food preparers), the tip credit towards minimum wage is nullified.
Credit Card Processing Fees
As C.R.S. 8-4-103(6) prohibits an employer from a claim to, right of ownership in, or control over an employee's gratuities (tips), deductions of credit card processing fees from an employee's gratuities are impermissible. Similarly, as C.R.S 8-4-105 prohibits deductions from wages except in specific circumstances, deductions from an employee's wages for credit card processing fees are impermissible. Further, under the COMPS Order such deductions nullify the allowable tip credits toward the minimum wage.
References
- Interpretive Notice &, Formal Opinion# 3: Tips (Gratuities) and Tipped Employees Under Colorado Wage Law
- Overtime Calculation Examples (See Tipped Employee)
- Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38 (Rule 1.10)
- C.R.S. 8-4-103(6) (Notice Requirements Employees Sharing Gratuities)
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