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Boulder staff present options to modify tip offset; council narrows options for further study
Summary
City staff outlined four options for using new local authority on the tip offset (current offset $3.02). Council members split on timing and approach and through straw polls removed the maximum offset option but kept status quo and two moderated offset options plus a councilmember proposal to pause increases with a sunset for further study.
City staff briefed the Boulder City Council on April 2 about the city's newly granted authority under state law to modify the tip offset employers may apply against the city's minimum wage for tipped workers. Assistant City Manager Mark Wolf and project manager Megan Wilson Elkholt reviewed national context, local data, equity analysis, conceptual policy options and a proposed engagement timeline aimed at a possible June 18 public hearing.
Megan Wilson Elkholt explained that the tip offset (sometimes called a tip credit) sets the base wage for tipped employees at the minimum wage minus the offset; in Colorado the statutory offset is $3.02. Under the state law passed last year, Boulder (and other jurisdictions with minimum wages above the state floor) can increase the offset within a capped range so the base wage for tipped employees remains above the state base. Staff modeled options ranging from status quo to a moderate increase to a model that sets the offset to a fixed percent of the minimum wage, up to the maximum permitted by the statute. Staff presented illustrative 2027 impacts using assumptions (40‑hour workweek, an example restaurant with 10 full‑time tipped workers) and noted corrections to the memo after receiving updated 2025 sales tax data.
Equity analysis highlighted that restaurant workers include a disproportionate share of women and people of color and that impacts would differ across front‑ and back‑of‑house roles. Staff recommended engagement through Be Heard Boulder and partnerships with industry and labor groups and proposed a tentative June 18 hearing and council action so any adopted change could be implemented by January 1, 2027.
Council members asked detailed questions about the data sources, seasonal worker participation (CU Boulder students and summer hires), wage theft reporting, the timeline for 2025 labor and sales tax data, and the trade‑offs between protecting workers' base pay and giving restaurants cost relief. Several members urged additional process improvements for restaurants (permitting, process streamlining) alongside any wage policy decision.
After discussion, council straw‑polled on the options: status quo (Option 1) remained on the table, staff's Option 2A (status quo with specified adjustments) and Option 2B (moderate offset increase) were retained for further study, the maximum offset option (Option 3) was taken off the table, and a councilmember proposal to pause increases (a temporary freeze at the existing tipped base with a sunset for a comprehensive review labeled —Option M— in the discussion) also received support for further analysis. Council directed staff to refine analysis and engagement scope; several members asked staff to coordinate with the city advisory commissions and to return with the 2025 economic data.
