State lawmakers have backed off a plan that would have led to a steep pay cut for servers, bartenders and other tipped workers in some Colorado cities, but they still want to allow local governments to make similar changes on their own.

In a Friday night hearing, lawmakers on the House Finance Committee voted 11-2 to approve a heavily amended version of House Bill 25-1208, sponsored by state Representatives Steven Woodrow and Alex Valdez, both Denver Democrats. The bill concerns the “tip offset” — the dollar amount that employers can subtract from the minimum wage paid to tipped workers, as long as tips make up the difference — in cities and counties that have raised their local minimum wages above the statewide level.

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As originally introduced, HB-1208 would have forced those local governments to increase their tip offsetbeginning in October, threatening tens of thousands of workers with abrupt pay cuts of thousands of dollars per year. The proposal drew fierce pushback from progressive and labor groups and was the subject of two long, contentious committee hearings at the Capitol, where opponents accused Democrats of betraying low-wage workers while restaurant owners pleaded for relief from rising labor costs.

The amended version approved Friday night would allow cities and counties that increase their local minimum wages to increase their tip credits above the fixed $3.02 per hour set in current state law. In theory, a local governments could raise the minimum wage for non-tipped employees as high as it wished, while maintaining a tipped minimum wage of $11.79 an hour, the statewide minimum.

But HB-1208 would no longer mandate those tip credit increases, which would likely preserve the current tipped minimum wage of $15.79 an hour in Denver, where city council members have been adamantly opposed to any cuts.

“If the mark of a good compromise is that both sides leave dissatisfied, (this amendment) is a total banger,” Woodrow told lawmakers on the Finance Committee Friday night.

In a statement, a coalition of progressive groups offered a qualified endorsement of the compromise, which it said “avoids an immediate wage cut for tipped employees and preserves some local control.” But the amended bill, which only allows cities to increase their tip credits, should also allow the credits to be reduced or eliminated altogether, they argued.

“It’s still unfortunate that the bill only gives local control to local governments if they want to vote to keep their tipped minimum wage low, but will not allow them to vote to end the subminimum wage for tipped workers,” added the groups, including the Colorado AFL-CIO, One Fair Wage and Towards Justice.

Changes to minimum wage laws

After being advanced by the House Business Affairs and Labor Committee last month, HB-1208 stalled in the Finance Committee over the last several weeks amid pressure from labor groups and growing skepticism from Democratic lawmakers.

Bill proponents say that a solution to the tip credit issue has been a long time coming. In 2006, Colorado voters approved a constitutional amendment to raise the statewide minimum wage and adjust it annually based on inflation. The measure also fixed the state’s tip offset at $3.02 an hour.

Over time, the flat $3.02 credit has shrunk to a smaller and smaller percentage of the overall minimum wage — from over 40 percent in 2007, when the minimum wage was $6.85 an hour, to just 20 percent today, with the minimum wage set at $14.81. In cities that have passed local minimum wage hikes as allowed by a 2019 law, the percentage is even lower.

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In an earlier attempt at compromise on Friday, Woodrow and Valdez floated an amendment that would have given cities like Denver a period of several years to gradually fix their tip credits at 25 percent of the regular minimum wage. The proposal would have effectively frozen Denver’s tipped minimum wage at its current level, suspending annual increases based on inflation, for the next four years.

“If at one point (the tip credit) offered 40 percent relief, and now it offers 16 percent relief, (then) 25 percent relief … gets us pretty close to the middle of the relief that we’re looking to afford restauranteurs going forward into the future,” said Woodrow.

But after a delay of several hours, Woodrow asked the committee to approve the local control amendment instead.

HB-1208’s proponents argue that giving local governments the ability to increase tip offset will benefit workers more broadly, since multiple Colorado municipalities that have considered local minimum wage hikes in recent years have abandoned or scaled back their proposals out of concern for its effect on bars and restaurants.

Two Democrats on the Finance Committee, Representatives Lorena Garcia of Westminster and Yara Zokaie of Windsor, voted against advancing the bill.

“I don’t doubt that there is a problem in Denver of restaurants closing,” Zokaie said. “But I do doubt that the only solution is to take food out of the mouths of the people who make that restaurant run.”

Democratic Representative Brianna Titone of Arvada called herself a “reluctant yes” on the amended bill. Representative Sean Camacho, a Denver Democrat, said he had been a “hard no” on the original version of HB-1208 but thanked its sponsors for their efforts to “get this to a place that would make a tangible difference in our community.”

“I just hope this is enough,” Camacho said. “I hope this body did not let the people in our community down.”