by Mark Wiletsky
On November 8, Colorado voters decided to raise the state’s minimum wage to $12 per hour over the next four years. By about a 54-46 margin, voters passed Amendment 70, which changes the Colorado Constitution to gradually raise the minimum wage.
Gradual increases in minimum wage
Amendment 70 will raise Colorado’s hourly minimum wage by 90 cents each year, starting from the current minimum wage of $8.31. The annual increases will be as follows:
- $9.30 in 2017;
- $10.20 in 2018;
- $11.10 in 2019; and
- $12 in 2020.
Tipped employees will continue to be entitled to a minimum wage that is $3.02 less than the regular minimum wage. The minimum wage for tipped workers is currently $5.29 per hour plus tips. The tipped minimum wage will also go up by 90 cents each year until reaching $8.98 in 2020.
After 2020, annual adjustments will be made to reflect increases in the cost of living.
Adjustments already in Colorado Constitution
This is not the first time Colorado voters have approved a constitutional amendment increasing the minimum wage. In 2006, voters approved Initiative 42, which increased the minimum wage from $5.15 to $6.85 per hour and added a provision to the Colorado Constitution that requires an annual adjustment based on the Consumer Price Index (CPI). The measure was approved with 53 percent of voters voting “yes” and 47 percent voting “no.”
Under Initiative 42, the Colorado Department of Labor and Employment has set the state minimum wage each year, adjusting it either up or down according to changes in the CPI during the prior year. Under Amendment 70, the minimum wage will be adjusted only upward for increases in the CPI. It will not go down, even if the cost of living decreases.
Supporters and opposition
Colorado Families for a Fair Wage was the lead group supporting Amendment 70. Numerous unions, organizations, and officials, including Governor John Hickenlooper, also supported the measure. A key argument in favor of boosting the minimum wage was the high cost of housing in Colorado, which has gone up significantly in recent years. Proponents argued that a full-time Colorado worker making minimum wage earns about $17,285 per year, which is not enough to cover basic necessities such as health care and housing. As of November 1, 2016, the committee registered to support Amendment 70 had raised contributions of more than $5.3 million, outpacing opponents by more than $3.6 million.
Opponents of Amendment 70 included organizations such as Keep Colorado Working as well as numerous associations in industries that employ minimum wage workers. Opponents argued that increasing the state minimum wage would make it more expensive for businesses to hire workers, resulting in potential layoffs, reduced hours, and fewer benefits. They also asserted that increased costs would be passed on to consumers, meaning higher prices, which would counteract the increase in the minimum wage.
Preparing for the wage hike
On January 1, 2017, Colorado’s minimum wage will go up to $9.30 per hour ($6.19 for tipped employees). If you employ workers who make less than that amount, prepare for the increase. Make sure your payroll system and personnel are ready for the change. Also, remember that overtime will increase accordingly at 1½ times nonexempt employees’ regular rate. And don’t forget to post the new Colorado Minimum Wage Order Poster when it comes out.
Mark Wiletsky is a partner with Holland & Hart and a contributor to Colorado Employment Law Letter. He can be reached at mbwiletsky@hollandhart.com.