Edgewater on Tuesday became Colorado’s first city to take advantage of a new state law allowing it to increase its minimum wage without automatically pulling up the lower wage collected by tipped workers.
The state law, which took effect in June, allows municipal governments that set their own minimum wages to create a bigger pay gap among restaurant positions — typically front of the house vs. back of the house — than the difference set by the state.
The vote by the Edgewater City Council on Tuesday was 4-3, with a main sticking point arising over whether to add a cost-of-living increase for tipped workers. That increase did not pass in the final vote.
The takes effect Jan. 1.
By Colorado law, the minimum wage for tipped workers is pegged at $3.02 less than the standard minimum wage — meaning that when the standard minimum rises, so does minimum pay for servers and other tipped positions, even if those workers make good money with tips.
Edgewater’s measure will raise the city’s hourly minimum wage from $16.52 to $18.17 in the new year. But the tipped minimum wage will remain the same in 2026 as it is this year — $13.50 an hour.
The restaurant industry has long complained that the “tip credit” — put in place by state lawmakers nearly 20 years ago — burdens eateries with more overhead at a time when dining establishments have been struggling to regroup in the wake of draconian, pandemic-fueled government restrictions placed on their operations.
For restaurants in Edgewater, Denver and Boulder — cities that have set their own minimum wages above the state threshold, currently $14.81 per hour — the mandatory linkage of the two classes of pay creates an upward ratchet effect that burdens businesses with extra labor costs.
Denver and Boulder have yet to address the tip credit issue.
In June, Gov. Jared Polis signed into law a measure that allows cities in Colorado to increase the gap between the tipped minimum wage and the standard minimum wage. Boulder County also sets its own minimum wage.
That means the tip credit in Edgewater will rise from $3.02 an hour to $4.67 an hour in the new year — the first time that gap has been widened in Colorado.
Councilwoman Hannah Gay Keao pushed to add a 2.7% cost-of-living adjustment for tipped workers, which would have the effect of narrowing the tip credit by more than 30 cents an hour. She, along with two colleagues, voted no on the measure once it was stripped of the cost-of-living increase.
“That’s essential to give workers the same value of their money as they have in 2025,” she said.
But Councilwoman Joie Iten said Tuesday that small restaurants in Edgewater are getting crushed by labor costs and need the relief the ordinance brings. Or they could pack up and leave, she said.
“Currently, we need to help the business owner,” she said.
The council agreed to revisit the issue in July to decide how to proceed with the city’s minimum wage structure for 2027.
