Colorado restaurants that are begging state leaders for help during a time of mounting closures came away from two days of intense hearings this week with a plate half full, seeing one priority bill get bipartisan backing while another got watered down significantly.
On Thursday, the House Finance Committee voted 9-3 to advance House Bill 1282, which would bar credit-card payment networks from charging restaurants and retail shops fees on the portion of customer bills involving taxes and tips. Restaurateurs told the committee they lose tens of thousands of dollars annually being charged fees for money they don’t get to keep — money they otherwise could put to staff salaries, rents and other rising costs.
Then on Friday, after two weeks of negotiations, sponsors of a bill to lower minimum wages for tipped workers in cities that have hiked them above state minimum-wage levels were forced to compromise their bill to get it out of the same committee, albeit on an 11-2 vote. The new language in HB 1208 doesn’t require high-wage cities to cut server minimum wages by expanding the tipped credit, but it lets any local government consider growing that credit if it remains at least $3.02 below the local minimum wage for other workers.
Both bills, which come after a year in which 22% of Denver restaurants shuttered and more eatery owners warn of imminent demise in the face of rising costs and regulations coupled with slowing consumer traffic, head next to the full House for debate. And they leave the Colorado Restaurant Association that is spearheading both efforts to continuing fighting against labor advocates on one front (HB 1208) while going toe to toe with banks and credit-card companies on HB 1282.
Rolling back minimum wages at restaurants
A sushi roll at Sushi-Rama RiNo, a restaurant that owner Jeff Osaka had to close because of rising costs
Despite protests from workers’ groups and some workers, HB 1208 cleared the House Business Affairs & Labor Committee on an overwhelming 11-2 vote on Feb. 20. It sought to require jurisdictions that have raised minimum wages above the state’s $14.81 mark — $4 an hour over that mark in Denver’s case — to revert to an $11.79 minimum wage for tipped workers rather than a max credit of $3.02 an hour less than their own wage requirement.
Restaurateurs said the change is needed because the mandatory yearly pay hikes for tipped servers and bartenders, many of whom end up making between $39 and $42 hourly with those tips, are taking money away from other expenses such as food and the pay given to non-tipped back-of-the-house workers like cooks and dishwashers. Reducing the hourly pay of highly compensated servers by a couple of dollars per hour will allow restaurants to hire more non-tipped workers or boost their pay rather than having to consider cutting staff or hours even further, many said.
That initial committee approval, however, brought a flurry of threats and sabotage by opponents of the bill against both sponsoring Democratic Reps. Steven Woodrow and Alex Valdez of Denver and the restaurants that testified in support of it. Restaurateur Jeff Osaka said he was targeted with one-star online reviews, boycotts and “tasteless” comments on social media. House Speaker Julie McCluskie and Majority Leader Monica Duran railed against the tactics, saying such targeting “threatens the very principles of democracy we all swore to uphold.”
Opponents didn’t let up during a March 3 hearing before the finance committee as they claimed $4-per-hour pay cuts to tipped workers would lead to a spike in homelessness and a decrease in life expectancy. Restaurant worker Matt Ross called the bill “an act of war by the owning class.”
A choice between watering bill down or seeing it die
Sonia Riggs is president and CEO of the Colorado Restaurant Association
“Colorado Democrats, the electorate is watching, and we will remember the legislators advocating for profits over people,” warned Devin Dewey, an entertainer at Denver’s Diamond Cabaret strip club. “We will mobilize accordingly.”
With support for the bill eroding, Woodrow presented a compromise Friday that would allow local governments to readjust the tipped minimum wage — if they keep it at least $3.02 below their regular minimum wage — but would not do it automatically. CRA President/CEO Sonia Riggs said in a statement Saturday that while the bill won’t offer immediate help to eateries that are struggling, it offers “a shred of hope” that local governments could answer businesses’ pleas.
Even with the change, HB 1208 still drew “no” votes from two progressive Democrats, including Rep. Yara Zokaie of Fort Collins, who warned that it will face lawsuits because the state constitution requires that the tipped credit be no more than $3.02 hourly. But the amendment got several Democrats to go from “no” to “yes” on the bill, with Rep. Bob Marshall of Highlands Ranch saying it also might get some cities who had declined to raise minimum wages because of the small size of the tipped credit to do so now.
“If the mark of a good compromise is that both sides leave unsatisfied, Amendment L018 is a total banger,” Woodrow told the committee.
Reducing restaurants’ swipe fees
Colorado state Rep. Max Brooks speaks at an event at the Colorado Chamber of Commerce.
Yet restaurants still could get some help in terms of what they must pay in swipe fees — the typically 2% to 4% per-transaction fees credit cards dictate that card-accepting businesses must pay to card issuers, which typically are banks. Under HB 1282, sponsored by GOP Rep. Max Brooks of Castle Rock and Democratic Rep. William Lindstedt of Broomfield, tips and taxes would be exempt from such fees, fees on charitable donations would max out at 0.3% and merchants or consumers could sue payment-card networks for violating the law.
With 60% of retail transactions now done by credit card and with Visa and Mastercard controlling 80% of the card market, merchants are subject to swipe fees among the highest in the world that they have no power to negotiate, said Brennan Duckett, director of technology and innovation policy for the National Restaurant Association. A CRA survey found the average restaurant paid about $150,000 in swipe fees annually, Riggs said.
Brenda Lucio, owner of eight Front Range restaurants, said she paid $144,556 in 2024 just on swipe fees involving taxes and tips — money she otherwise could have used to pay staff in a year when customer traffic slowed. Several restaurant and brewery owners said they have an ideological problem being forced to pay fees on money they immediately must turn around and give to either workers or the government.
“Paying fees on taxes we collect and remit to the state feels like a tax on taxes,” said Carlin Walsh, owner of Elevation Beer Co. in Poncha Springs and chairman of the Colorado Brewers Guild.
Pushback from credit-card networks
Colorado House candidate Sean Camacho speaks at a Colorado Chamber of Commerce event.
But banks and card companies involved in the payment-card networks argued that the fees are needed to maintain the services offered by their networks to shops and eateries that choose to accept credit cards and take advantage of the convenience they offer. And they and several dissenting legislators, most notably Democratic Rep. Sean Camacho of Denver, warned that only the federal government can regulate multistate banks, meaning that passage of the bill would generate a lawsuit against Colorado.
Brian Yates, senior director of state government affairs for the Electronic Transactions Association, said that because of federal pre-emption on bank regulations, HB 1282 would only impact Colorado-chartered banks and leave them at a competitive disadvantage. Other opponents warned the loss of revenues created by the bill would force credit cards to end reward programs and hurt businesses that benefit from them, though bill supporters called those hollow threats at a time when cards must compete to earn customers.
“Well-intentioned attempts to help your small businesses by changing a global payment system is something we think you ought to take slowly,” added Steve Rauschenberger of the Electronic Payment Coalition.
Wide coalition supports restaurant effort on swipe fees
Illinois is the only state to have passed a similar bill, and a federal court struck down parts of its bill. Brooks said he and Lindstedt crafted HB 1282 around what that decision allowed, including specific regulation of payment-card networks rather than of banks, and sponsors got support from six of the committee’s eight Democrats and three of its five Republicans.
“I also don’t believe that profits should be based or made off of obligated tax payments or off of the good will of the people,” said Rep. Lorena Garcia, a progressive Democrat from Adams County. “This is a great example of how a policy can bring together your resident capitalists and your resident socialists, and we can say, ‘This is a good policy.’”
HB 1282 is scheduled for debate in the House as early as Tuesday. HB 1208, which received approval from the finance committee around 8:15 p.m. Friday, has not been calendared yet for House debate.