The Fight for $15's Impact on Colorado Employers

The national campaign to raise the minimum wage (“Fight for $15”) may soon have an impact on Colorado employers.  California and New York recently became the first two states to enact legislation that will eventually raise the minimum wage in those states to $15.00.[1]  While Colorado’s attempts to pass similar legislation in 2015 failed,[2] the Fight for $15 campaign has inspired a 2016 ballot initiative that would significantly increase the state’s minimum wage, and state Democrats recently introduced legislation that would punish large employers who fail to pay more than $12.00 per hour.  This article analyzes Colorado’s current minimum wage and past Fight for $15 efforts, the 2016 ballot initiative and recently introduced legislation, and how they would have a tremendous impact on Colorado employers.

A.        Colorado’s Current Minimum Wage and Previous Fight for $15 Efforts

Colorado’s minimum wage is currently $8.31 per hour, over a dollar more than the federal minimum wage of $7.25 per hour.[3]  For tipped employees, the difference is even more staggering, as Colorado requires employers to pay tipped employees at least $5.29 per hour, over three dollars more than the federal tipped minimum wage of $2.13 per hour.[4]  Colorado also annually adjusts its minimum wage for inflation.[5]  In 2015, Colorado Democrats, with support from the Fight for $15 campaign, introduced two bills in the state legislature in an attempt to raise the minimum wage to $12.50 per hour, but Republicans killed both.[6] 

B.        The Fight for $15’s Continued Push to Increase Colorado’s Minimum Wage.

That failure has not stopped the Fight for $15 campaign’s push to substantially increase the state’s minimum wage.  The Colorado Families for a Fair Wage, a state group with similar goals as the national Fight for $15 campaign, recently filed paperwork to get a constitutional amendment on the November 2016 ballot.[7]  The amendment would increase Colorado’s minimum wage to $12.00 by 2020.[8]  To get on the ballot, a title-setting board would need to approve the initiative’s language and then the initiative would need to get approximately 100,000 valid signatures.[9]  Colorado voters would then need to pass the amendment for it to go into effect.

Colorado Democrats also unveiled legislation this week that would punish large employers in the state.[10]  The proposed legislation would require employers with more than 250 employees to pay a penalty up to one dollar for each hour worked by an employee who earns less than $12.00 per hour.[11]  Employers who provide health insurance to the employee may offset the fine up to the amount the employer paid for the employee’s healthcare costs.[12]  If enacted, Colorado would become the first state with such a penalty.[13]  Republicans, who control the state Senate, will likely kill the bill if the House passes the legislation, and Democratic Governor John Hickenlooper has also expressed concerns with the bill.[14]

C.        Potential Impact on Employers

Both the ballot initiative and proposed legislation would have a significant impact on Colorado employers.  Increasing the minimum wage by nearly fifty percent or imposing up to a dollar per hour penalty would lead to substantial cost increases for Colorado employers.  Specifically, the restaurant industry, which typically only has a profit margin of three to six percent and relies heavily on low-wage workers to stay in business,[15] would likely be required to either eliminate jobs or reduce hours, decreasing the quality of service.  Further, there has been little, if any, research regarding the effects of such a substantial increase in the minimum wage or imposition of a penalty, and there is a strong possibility that an unknown or unintended consequence could prove even more disastrous than the significant cost increases.

D.        Conclusion

The proposed ballot initiative to increase Colorado’s minimum wage, and proposed legislation punishing employers will have a significant impact on Colorado employers if enacted.  Campbell Litigation will continue to track these action and report back when further updates are available.

[1] See Gerald B. Silverman, New York Governor Signs Minimum Wage, Family Leave Bill, Bloomberg BNA Daily Labor Report (Apr. 4, 2016); Laura Mahoney, California Governor Signs $15 Minimum Wage Bill, Bloomberg BNA Daily Labor Report (Apr. 4, 2016).  Several other states are also considering similar legislation.  Campbell Litigation intends to discuss the national implications of the Fight for $15 campaign in a future article.

[2] Joey Bunch, Colorado lawmakers begin debate for a $12.50 minimum wage by 2020, The Denver Post (Mar. 23, 2015), http://www.denverpost.com/news/ci_27770131/colorado-lawmakers-begin-debate-12-50-minimum-wage (last accessed Apr. 7, 2016)

[3] 7 Colo. Code Regs. § 1103-1 (Jan. 2016).

[4] Id.

[5] Colo. Const. art. 18 § 15.

[6] Ed Sealover, Ballot initiatives would hike Colorado’s minimum wage, Denver Business Journal (Feb. 18, 2016), http://www.bizjournals.com/denver/blog/capital_business/2016/02/ballot-initiatives-would-hike-colorados-minimum.html (last accessed Apr. 7, 2016).

[7] Matt Kroschel, New Push On To Raise Colorado’s Minimum Wage To $12 An Hour By 2020, CBS 4 Denver (Feb. 18, 2016), http://denver.cbslocal.com/2016/02/18/new-push-on-to-raise-colorados-minimum-wage-to-12-an-hour-by-2020/ (last accessed Apr. 7, 2016).

[8] Id.  The amendments would raise the minimum wage to $9.30 in 2017, $10.20 in 2018, $11.10 in 2019, and $12.00 in 2020.

[9] Sealover, supra note 6.

[10] David Olinger, Colorado bill targets large companies without health insurance plans, The Denver Post (Apr. 5, 2016), http://www.denverpost.com/news/ci_29729258/colorado-bill-targets-large-companies-without-health-insurance (last accessed Apr. 7, 2016).

[11] Id.

[12] See House Bill 16-1435.  Because most large employers are required to provide health insurance for full-time employees, the fine, in effect, will typically only apply to hours worked by part-time employees who do not receive health insurance.

[13] Id.

[14] Joey Bunch, Hickenlooper wary of Democrats’ bill to fine employers over insurance, The Denver Post (Apr. 6, 2016), http://www.denverpost.com/news/ci_29733905/hickenlooper-wary-democrats-bill-fine-employers-over-insurance (last accessed Apr. 7, 2016).

[15] Bunch, supra note 2.