Understanding Colorado’s minimum wage laws is essential for employers in the Centennial State. These regulations affect thousands of businesses and countless workers who rely on fair pay for their work.
Besides legal compliance, understanding these laws also helps create a workplace where employees feel valued and properly compensated. Of course, the Colorado Department of Labor and Employment (CDLE) also enforces these standards, making it critical for employers to stay informed about wage requirements, especially as they change from year to year.
Key Takeaways
- Colorado’s minimum wage adjusts annually based on cost of living rates to ensure workers maintain purchasing power.
- Employers must prominently display current wage information and maintain accurate employee payroll records.
- Different minimum wage rates apply to tipped employees, minors, and certain exempt workers under specific conditions.
Overview Of Colorado Minimum Wage Laws
The Colorado minimum wage system follows a unique structure, adjusting annually based on cost of living increases. The state implemented this progressive policy to provide both statewide standards and local control in certain jurisdictions.
Legislative Background
Colorado’s minimum wage framework is primarily governed by Amendment 70, which voters approved in 2016. This constitutional amendment set a schedule of annual increases to reach $12.00 per hour by January 2020, with subsequent adjustments tied to the Consumer Price Index (CPI). This approach has positioned Colorado among states taking independent action above the federal minimum wage standard.
In 2019, the state legislature passed HB19-1210, giving local governments limited authority to set their own minimum wage rates. This significant change allowed municipalities like Denver and Boulder to set city-specific, local minimum wage floors above the statewide minimum.
The Colorado Department of Labor and Employment oversees wage enforcement through its Division of Labor Standards and Statistics, ensuring compliance across the state.
Current Colorado Minimum Wage Rates and Historical Increases
As of March 2025, the statewide Colorado minimum wage rate stands at $14.81 per hour for untipped workers and $11.79 for tipped employees. These figures show Colorado’s CPI-linked approach in action, with the minimum wage consistently growing from its 2020 base rate of $12.00 per hour.
Denver and Boulder have implemented their own higher wage scale, currently at $18.81 and $15.57 per hour, respectively, as of January 2025. Likewise, several mountain resort communities are exploring similar local minimum wage ordinances to address their higher costs of living.
Note, however, that small businesses with annual gross sales below $500,000 not engaged in interstate commerce may qualify for exemptions. In some instances, these businesses can follow the federal minimum wage of $7.25 instead of Colorado’s higher rate.
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Minimum Wage Rates and Tipped Workers
Colorado’s minimum wage laws include special provisions for employees who regularly receive tips as part of their compensation. These allowances toe the line between protecting workers’ income and recognizing the unique economics of tipped industries.
Understanding Tip Credits
The tip credit system allows employers to pay tipped employees a lower base wage, provided their tips bring their total hourly earnings to at least the full minimum wage. With Colorado’s regular minimum wage at $14.81 per hour in 2025, employers can pay tipped workers a lower cash wage $3.02 below an employee’s base wage. However, a new bill might change the allowable difference in Denver and Boulder.
Simply put, employers must make sure the combination of direct wages and tips equals at least the full minimum wage for each hour worked. If a tipped employee’s tips plus the lower cash wage don’t reach the standard minimum wage, the employer must make up the difference.
This system creates a shared responsibility between employers and customers for tipped workers’ compensation. But there’s a critical caveat for employers to keep in mind—tips are the property of employees, not employers. They cannot be used for any purpose other than as a credit against minimum wage obligations or a valid tip pool.
Colorado’s Approach To Tipped Wages
Looking at the tip credit system a bit closer, the $3.02 per hour wage deduction in 2025 means tipped employees must receive at least $11.79 per hour in direct wages from their employer ($14.81 - $3.02).
The state’s approach differs from the federal standard, which permits a larger tip credit of $5.12 per hour, as set by the Fair Labor Standards Act (FLSA). Colorado employers must inform employees about the tip credit system, including:
- The amount of cash wage the employee will receive
- The additional amount claimed by the employer as a tip credit
- Notice that the tip credit cannot exceed the actual tips received
Wage Increase Schedule and Calculations
As stated, Colorado’s minimum wage increases follow a systematic approach based on inflation and legislation. Understanding the schedule of increases and proper calculation methods helps both businesses and workers ensure compliance with the state’s labor laws.
Future Projections And Adjustments
Colorado’s $14.81 per hour minimum wage in 2025 represents a 2.9% increase from the 2024 rate of $14.42. This adjustment reflects Colorado’s indexing minimum wage to inflation through the Consumer Price Index for All Urban Consumers (CPI-U) in the Denver-Aurora-Lakewood area.
Looking closer, the state calculates annual increases based on the previous year’s August-to-August change in the CPI-U in accordance with Amendment 70. Just remember, local jurisdictions with higher costs of living may set higher minimum wages, like Denver’s $18.81 per hour in 2025.
Overtime Minimum Wage Compliance
Overtime calculation requirements state that employers must pay 1.5 times the regular rate for hours worked beyond 40 in a workweek (or beyond 12 hours in a workday). This equates to a minimum of $22.22 per overtime hour in 2025.
Example Calculation for a 45-hour workweek:
- Regular hours (40): 40 × $14.81 = $592.40
- Overtime hours (5): 5 × $22.22 = $111.10
- Total weekly wages: $703.50
Employers should maintain detailed time records and pay stubs showing hours worked, regular and overtime rates, and total compensation. Non-compliance can result in back pay requirements and substantial financial penalties, depending on the circumstances.
Employee Rights And Employer Obligations
Colorado employees have specific rights under the statewide minimum wage, creating distinct legal responsibilities for employers.
Wage Dispute Resolution
Workers who believe they haven’t received proper minimum wage or overtime pay have several options for addressing wage disputes. First, employees can file a wage complaint with the Colorado Department of Labor and Employment within two years of the violation.
The CDLE investigates complaints and can order payment of back wages. Employees can also pursue private legal action, sometimes allowing for the recovery of additional damages beyond unpaid wages.
During the dispute process, workers should maintain detailed records of hours worked, pay received, and any related communications with employers. These records can strengthen their position when filing complaints. To protect employees pursuing this route, Colorado law prohibits employer retaliation against workers who file wage complaints or inquire about their rights.
Compliance And Penalties
To reiterate, employers can face significant consequences for failing to meet minimum wage requirements. Penalties include paying back wages plus a 50% penalty for willful violations, and repeated violations can even lead to criminal charges and more substantial fines.
Businesses must display current minimum wage posters in visible locations where employees can easily see them. These posters must be in English and Spanish.
Employers must maintain accurate records of:
- Hours worked by employees
- Wages paid
- Applicable exemptions
- Overtime calculations
The CDLE conducts routine inspections and targeted investigations based on complaints. Small businesses aren’t exempt from these requirements, though some may receive educational resources before enforcement actions.
Key Resources For Employers
Thankfully, Colorado employers aren’t alone in their efforts to get and stay compliant with state wage laws. Specifically, businesses have two state sources offering guidance, tools, and updates on minimum wage compliance—the CDLE and Office of the Governor.
Colorado Department Of Labor And Employment
The CDLE is the primary resource for employers on minimum wage compliance in Colorado. Their Division of Labor Standards and Statistics maintains comprehensive information about wage requirements and provides regular updates whenever changes occur.
Employers can access several tools through the CDLE website, including downloadable workplace posters that businesses legally must display. These posters contain the current minimum wage rates and are updated annually.
The department also offers a dedicated employer hotline (303-318-8441) where business owners can speak directly with labor specialists about specific wage questions, compliance concerns, or other essential issues.
Key CDLE Resources:
- Interpretive guidance documents
- Compliance assistance programs
- Workplace poster downloads
- FAQ sections addressing common payroll questions
- Email notification service for regulatory updates
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Office Of The Governor
The Office of the Governor provides strategic oversight for minimum wage policies and communicates significant changes to employers throughout Colorado. The Governor’s office typically announces major wage adjustments well before implementation dates.
Employers can register for the Governor’s email updates to receive timely notifications about upcoming minimum wage changes and other labor regulations affecting their businesses.
The official website features an employer resource section with links to economic forecasts, business impact analyses, and implementation timelines for wage increases.
Important Governor’s Office Tools:
- Executive order archives related to labor standards
- Press releases announcing wage policy changes
- Implementation schedules for upcoming adjustments
- Economic impact reports on minimum wage increases
- Regional business assistance coordinators
The Office maintains relationships with chambers of commerce and industry associations to disseminate wage information through trusted business networks.
Staying Compliant with Mosey
Navigating Colorado’s minimum wage laws in 2025 requires diligence and a clear understanding of wage laws from employers. With annual adjustments tied to inflation, tipped employee provisions, and local variations to state minimum wage laws, businesses have much to stay informed on, or risk some costly financial and reputational penalties.
Mosey streamlines multi-state employment management, automating labor notices and posters in every state, tracking legislation changes, and providing up-to-date lawyer-written policies for your handbook. Now, businesses can use Mosey to get and stay compliant with Colorado wage laws. Whether it’s guidance on policies, payroll, or state-specific regulations, our experts are here to help. Book a demo with Mosey today to find out more.
