Local Governments Tip Offsets for Tipped Employees

New pay rules for Colorado tipped workers

Beginning July 1, 2025, Colorado sets a $3.02 hourly baseline tip offset for local minimum wages. This lets employers count tips toward part of the required wage. It covers food and beverage workers who regularly receive tips, only when state law allows an offset. Local governments with minimum wages above the state minimum must adopt a new offset by September 1, 2025, effective by October 1, 2025. That offset equals the local minimum wage minus the state minimum wage, plus $3.02. Local governments adopting higher minimum wages from September 1, 2025, through October 1, 2026, must also adopt that formula. Beginning October 1, 2026, local governments can raise or lower offsets, but cannot lower them below $3.02. Cuts cannot exceed $0.50 in any 12 months. Increases cannot let employers pay cash wages below the state minimum wage minus $3.02. Separately, local minimum wage laws cannot cover travel between outside locations with no work stops inside the jurisdiction. Refueling, personal meals, and personal errands do not count as work stops.