The Colorado Department of Labor and Employment has proposed Colorado Minimum Wage Order Number 29, which would increase the state minimum wage to $7.78 per hour, and to $4.76 per hour for employees who regularly receive tips, starting January 1, 2013.  An employee is a "tipped employee" if he or she retains all tips and the employee customarily and regularly receives more than $30 a month in tips.  If an employee's tips combined with the employer's direct wages do not equal the $7.78 state minimum wage, the employer must make up the difference.

The Colorado Minimum Wage Order Number 29 would apply to the retail and service, commercial support service, food and beverage and health and medical industries.  There are few exemptions to the state minimum wage: employees whose physical disability has been certified by the Director of the CDLE to significantly impair such disabled employee's ability to perform the duties involved in the employment, and unemancipated minors under 18 years of age, may be paid 15% below the minimum wage ($6.61 per hour).

Pursuant to a Colorado Constitutional provision approved by the voters, the minimum wage must be adjusted annually, based on the Consumer Price Index.  The current Colorado minimum wage is $7.36 per hour and $4.34 per hour for tipped employees. 

The balance of proposed Minimum Wage Order Number 29 is unchanged from its predecessor.  Not only must employers observe this change in the minimum wage(s), but must change the notice posters in workplaces.

At this time, public comments regarding proposed Minimum Wage Order Number 29 are under consideration. Final approval of the proposal is expected during November 2012.

Arizona employers should also be aware of a similar increase in its state minimum wage, to $7.80 an hour and $4.80 an hour for tipped employees, beginning January 1, 2013.  Seven other states, in addition to Colorado and Arizona, adjust their minimum wage rates based on the rate of inflation.  Washington has the highest state minimum  wage ($9.19 starting next year).

These increases in the state minimum wages will leave unchanged the federal minimum wage of $7.25 per hour and $2.13 per hour for tipped employees.