Restaurant Labor Costs in Colorado
Colorado’s minimum wage is $15.16 an hour, with a minimum cash wage of $12.14 for tipped employees and a tip credit of $3.02. The state rate is indexed, so it moves every year rather than only when the legislature acts, and Denver operates its own higher local minimum.
Figures verified July 2026
Statutory rates
| Rate | Per hour | Source |
|---|---|---|
| State minimum wage1 | $15.16/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Minimum cash wage (tipped employees) | $12.14/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Maximum tip credit | $3.02/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
1 Indexed annually. Denver sets a higher local rate.
Next scheduled change: 1 January 2027. Colorado indexes its minimum wage annually, effective 1 January.
On role-level pay data
The Bureau of Labor Statistics publishes Colorado medians by role, linked below. Denver and the mountain resort markets both sit above the state figure, for quite different reasons.
From an hourly rate to a labor cost percentage
The rates above are what you may not pay below. What an hour costs you is larger, once the on-costs below are added, and the labor cost percentage calculator will turn the two halves into a figure you can compare. The prime cost calculator then tells you whether that number and your food cost together leave room for rent and profit.
Tips and tip handling
Colorado allows a fixed tip credit of $3.02, giving a cash wage of $12.14 for tipped employees against the $15.16 state minimum. Because the state rate is indexed, the cash wage climbs every January without anyone passing a law, so build an annual increase into your model as a default rather than an exception.
If you need to write this down for your team, the tip-out policy generator produces a plain-language policy document, and the tip-out calculator handles the nightly split.
What else drives your labor cost here
Indexation compounds quietly
A rate that climbs automatically every January is easy to under-model across a three-year horizon. Build the increase into your plan as a default rather than treating each New Year as a surprise.
Denver runs its own numbers
The Denver ordinance sits above the state minimum and updates on its own schedule. If you trade in the city, that's your rate.
Payroll taxes and paid leave
Employer payroll taxes, unemployment insurance and Colorado's paid leave contributions layer over the hourly rate, and each one grows as the indexed floor does.
For what your percentage should be measured against, see the cost benchmarks by type of food business.
Run your own numbers
Frequently asked questions
What is the minimum wage in Colorado?
$15.16 an hour, with a minimum cash wage of $12.14 for tipped employees and a $3.02 tip credit. Denver sets a higher local rate.
Does Colorado’s minimum wage rise automatically?
Yes, it’s indexed and adjusts annually, normally effective 1 January.
Is Denver’s minimum wage different?
Yes, Denver operates a local ordinance above the state figure with its own update schedule.
Labor costs elsewhere
- Restaurant Labor Costs in the United StatesFederal floor, the tip credit, BLS median pay by role, and the national benchmarks.
- Restaurant Labor Costs in ArizonaA flat $3.00 tip credit differential, which is unusually simple to model.
- Restaurant Labor Costs in WashingtonThe highest state minimum in the country, and no tip credit.
Rates on this page are reproduced from the government sources listed below and were last checked on 20 July 2026. They are published for orientation and are not legal advice — before you set pay, confirm the current figure against the primary source for your jurisdiction, including any local ordinance that may exceed it. The headline rate at time of writing was $15.16 per hour.
Sources
- U.S. Department of Labor, Wage and Hour Division — Minimum Wages for Tipped EmployeesRevised 1 January 2026 · Government / statistical