Colorado Allows Local Minimum Wage Increase

The State of Colorado recently passed House Bill 1210 to allow local governments to increase the local minimum wage under certain restrictions. Many states prohibit local governments from increasing local minimum wage. House Bill 1210 may encourage other states to follow suit.

In the United States, the Federal Minimum Wage amount is $7.25 per hour; however, many states have a minimum wage rate higher than the federal amount. State minimum wage takes precedence over the federal minimum wage as long as it is higher than the federal minimum wage. In many states where the cost of living is above average, the state minimum wage rate is above the federal minimum wage rate to compensate for the cost of living.

The state of Colorado has a state minimum wage rate of $11.10 per hour, which will increase to $12 per hour on January 1, 2020. Earlier this year, Colorado created House Bill 1210 to allow local governments to pass ordinances increasing the local minimum wage under certain restrictions. These restrictions include:

• Each year the local minimum wage can only be increased by 15% or $1.75, whichever is higher, until the local minimum wage reaches the desired amount.
• The local minimum wage increase can only occur on dates approved for a statewide minimum wage increase.
• The minimum wage increase must include a tip offset equal to the tip offset stated in the state constitution.
• Adult employees and emancipated minors must be paid at a rate equal to or higher than the local minimum wage.
• The local government wishing to raise the local minimum wage must consult with a wide range of employers and stakeholders in the area that have tipped employees.

House Bill 1210 will allow local governments to pay employees according to the cost of living in the area. Many states are prohibiting their local governments from enacting laws similar to Colorado's House Bill 1210. Colorado is going against the trend by allowing more localities to establish local minimum wage rates that are higher than the state's minimum wage rates. House Bill 1210 may encourage other states to follow suit.

Local minimum wage rates change frequently and, as a payroll professional, that may be difficult to track. Symmetry Software’s Minimum Wage tool tracks minimum wage based on job type, job function, location, and more including historical and future minimum wage rates.