In the state of Colorado, the minimum wage is $12 per hour as of January 2020. This is the absolute minimum amount of money that employers can legally pay their hourly employees in the state. Though the federal minimum wage is $7.25 per hour, employers in Colorado are required to pay their hourly workers the higher state wage.
However, not every hourly worker is entitled to receive $12 per hour for their labor. Between the differences in federal and state wages and the exceptions to the minimum wage laws within Colorado, it can be difficult to know exactly how much your labor is worth.
To eliminate some of this confusion, let’s go over the current minimum wage laws in Colorado, explain who can be paid a different wage, and look at some of the changes to Colorado’s minimum wage laws that you can expect to see in the future.
Table of Contents
- 1 2020 Minimum Wage in Colorado: $12.00 per hour
- 2 2020 Denver Minimum Wage
- 3 Colorado Minimum Wage Increase News
2020 Minimum Wage in Colorado: $12.00 per hour
For hourly employees in Colorado, the minimum wage is $12 per hour. The minimum wage is tied to the Consumer Price Index that reflects the amount of inflation experienced in the United States each year. When inflation rises, so does the minimum wage, and when it falls, the minimum wage decreases.
You must be a legal adult or an emancipated minor to receive the hourly rate of $12.00. There are three main groups who are exempt from this rate and may be paid less: tipped workers, students, and new employees under the age of 20.
On January 22, 2020, Colorado also adopted the Colorado Overtime and Minimum Pay Standards (COMPS) Order #36, to raise the minimum wage for salaried employees to $35,568 per year, starting in July 2020. As of March 16th, 2020, all employees in all private industries will be covered; previously, under Order #35, only employees in retail and service, commercial support service, food and beverage, and the health and medical industries were covered.
Order #36 will also increase the annual minimum wage for salaried employees year-over-year according to the following schedule:
- January 1, 2022: $875.00 per week ($45,500 per year);
- January 1, 2023: $932.69 per week ($48,500 per year);
- January 1, 2024: $990.38 per week ($51,500 per year);
- January 1, 2025: $1048.08 per week ($54,500 per year);
- January 1, 2026: $1,105.77 per week ($57,500 per year);
- January 1, 2027: Adjusted annually according to the CPI.
Tipped: $8.98 per hour
The minimum wage for tipped employees in Colorado is $8.98 per hour. The Colorado Department of Labor and Employment (CDLE) defines a tipped employee as “any employee engaged in an occupation in which he or she customarily and regularly receives more than $30 per month in tips.” Waiters, bartenders, baristas, hairdressers, and valets are just a few of the professionals who may qualify as tipped employees in Colorado.
Employers may pay tipped employees less than the normal minimum wage to offset the tips they receive. This is deducted from their pay as a “tip credit,” which cannot exceed $3.02 per hour. When the maximum tip credit is taken, tipped employees can be paid no less than $8.98 per hour; combined with tips, they must earn a minimum hourly rate of $12.00. Depending on how many tips you earn in a shift, your wage rate may change. If you don’t receive any tips during your shift, you must be paid at least $12 per hour.
Students: $10.20 per hour
Some students may also be exempt from receiving the normal state minimum wage and receive a student wage of $10.20 per hour. Employers can pay full-time high school and college students who work part-time 85% of the minimum wage — currently, that’s no less than $10.20 per hour. Workers are only eligible to be paid this rate for up to 20 hours per week. Further, this only applies to certain jobs, such as university work-study programs, and not every employer in the state.
New Employees: $4.25 per hour
Following regulations set by the Fair Labor Standards Act, the state of Colorado allows any employer to pay newly hired workers under the age of 20 a “training wage” of $4.25 per hour. This wage only applies to the first 90 days of employment. If you are over the age of 20, you must be paid the standard minimum wage. If you are under the age of 20, you must be paid the standard minimum wage after 90 days of employment.
Weekly: $480.00 per week
If you work a standard full-time week of 40 hours and are paid the minimum wage of $12 per hour, you will earn $96 per day, or $480 each week. This amount does not account for Colorado state taxes or federal taxes, the cost of benefits, or retirement contributions. Furthermore, many employees do not work exactly 40 hours per week. Depending on these other factors, your actual weekly wages may be lower than this estimate.
Annually: $24,960.00 per year
Working a standard 40-hour week for all 52 weeks in a year will result in annual earnings of $24,960 when you’re making $12 per hour. Again, this estimate does not account for taxes or other wage deductions. It also does not take vacation or sick leave into consideration. For some reason or another, you may not work 52, 40-hour weeks in a year, and your actual wages may be lower than this amount.
Overtime: $18.00 per hour
In certain circumstances, you may be eligible to receive overtime pay in Colorado; for someone earning the minimum wage, that results in $18 per hour. Colorado Department of Labor and Employment notes that hourly employees must be paid 1.5 times their regular wage when they either:
- Work more than 40 hours in a single week;
- Work more than 12 hours in a single day;
- Work more than 12 consecutive hours, regardless of when the day starts or ends;
If you earn more than the minimum wage and work any overtime hours, you’re also entitled to 1.5 times your usual wage for all overtime hours worked.
In addition, Colorado state law neither mandates nor prohibits holiday pay when you work on a holiday; whether you receive holiday pay, and if so, how much, is left to the discretion of your employer. Holiday hours only count toward overtime if you actually worked on the holiday itself.
2020 Denver Minimum Wage
Denver has become the first city in the entire state of Colorado to set its own minimum wage. In November 2019, the Denver City Council passed Council Bill 19-1237, which raised the city’s minimum wage for hourly employees to $12.85 per hour on January 1, 2020. This bill has also paved the way for year-over-year increases to the minimum wage.
On January 1, 2021, the Denver minimum will increase to $14.77 per hour, and then again to $15.87 per hour on January 1, 2022. After the 2022 increase, the minimum wage will be adjusted annually based on the same CPI as the statewide minimum wage. This bill also raises the minimum wage for individuals with disabilities, who, according to state law, can be paid well under even the federal minimum wage
Colorado Minimum Wage Increase News
Other states, such as Oklahoma and New York, are currently looking at or enacting legislation for statewide minimum wage increases. The latest change in Colorado minimum wage law for hourly employees was passed on November 8, 2016.
Effective since January 2017, Amendment 70 outlined a path to increase the Colorado minimum wage by $0.90 each year, until it reached $12 per hour in January 2020. In 2021 and beyond, the minimum wage will be recalculated yearly to account for inflation and increased costs of living based on the Consumer Price Index. This amendment currently governs minimum wage law in Colorado.
It is now possible that the minimum wage may drop in Colorado, depending on how the adjustments are reflected in the Consumer Price Index. If the minimum wage in Colorado ever drops below $7.25, employers will be required to pay their workers the federal minimum wage.
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