You clock in, smile through double shifts, hustle between tables, and depend on tips to cover rent, groceries, and gas. But what do you do when those unpaid tips never show up? How do the unpaid tips in Colorado really work? What are the options to pay tipped employees, and does the state minimum wage matter?
These are all valid questions, and we’ll be covering them in this detailed guide for employers who don’t pay employees justly. In some cases, they may even try to seize someone’s overtime pay or start keeping tips.
Colorado’s Hospitality Industry and Its Trends
Colorado’s hospitality industry has many tipped employees finding themselves short-changed—not by customers, but by employers who misuse tip pools, deduct credit card processing fees, or mislabel mandatory service charges.
It’s unfair. It’s illegal. And the good news? You have the law on your side. This guide breaks down your rights under Colorado law, the Fair Labor Standards Act, and federal regulations while walking you through the legal steps servers can take to get what they’re rightfully owed.
Understanding Tipped Employment in Colorado
Like many states, the Colorado law requires employees and workers to get their wages for six hours or more. However, this might be different for tipped workers and other employees.
What is a Tipped Employee?
Under both federal law and Colorado minimum wage rules, you’re considered a tipped employee if you regularly receive more than $30 a month in tips.
This applies to most front-of-house roles, like servers who wait tables or bartenders in the hospitality industry. Recognizing your status is key because it determines what wage rules apply to you.
Minimum Wage and Tip Credits
Colorado allows employers to pay a lower tipped minimum wage as long as you make enough tips to earn the full minimum wage.
In 2025, that’s $15.00 per hour worked, with a tip credit of up to $3.02. In plain terms? If your tips received don’t cover the gap, your employer is legally required to make up the difference.
Legal Use of Tip Pools
A valid tip pool can include only employees who normally receive tips. That means managers, supervisors, and non-tipped employees like cooks or dishwashers are strictly off-limits. Both federal law and Colorado law enforce this to protect your earnings.
Common Violations in Tip Pooling
Here are the common violations in tip pooling that one should look out for during their work:
1. Redistributing tips to non-tipped employees:
This is one of the most frequent violations in the service industry. If your tips are being handed over to back-of-house staff like dishwashers or cooks, who don’t directly interact with customers.
It’s necessary to know what’s illegal under both state and federal law. These workers don’t qualify under a valid tip pool, and you could be entitled to those withheld earnings.
2. Requiring servers to share tips with managers or supervisors:
It doesn’t matter if your manager helped set the table. If they’re classified as a supervisor, they cannot take a cut of pooled tips.
The Fair Labor Standards Act forbids it, with no exceptions. If you’re pressured to tip out a boss, your employer is in violation and could owe you back pay.
3. Failing to inform employees of the tip pooling arrangement:
Your employer can’t spring a tip pooling arrangement on you without notice. If they do, they forfeit their ability to claim the tip credit. Transparency isn’t just good ethics—it’s the law, and if it’s lacking, you’re likely being shorted.
These tip violations break wage laws and can trigger serious consequences for employers, including hefty fines and mandatory restitution. Moreover, it can also launch a worker’s compensation lawsuit that can cost thousands of dollars in penalties.
Therefore, employers should keep the unpaid tips in Colorado in check and pay them timely before they take legal steps.
Service Charges vs. Tips
Customers often assume that mandatory service charges are the same as tips, but legally, they’re not. Under Colorado law and federal regulations, these charges are considered wages and belong to the employer—unless clearly passed to you. If you’re not receiving them, your employer still has to pay you the full minimum wage. Don’t let confusion rob you of your earnings.
Credit Card Processing Fees and Tips
Let’s be clear: Employers in Colorado cannot take a cut of your tips to cover credit card processing fees. If they do, they are illegally dipping into your wages. Those fees are a cost of doing business, not something you should be paying for. If this is happening to you, it’s time to speak up.
Dual Jobs and Non-Tipped Duties
Do you spend part of your shift doing prep work, restocking, or cleaning? If that non-tipped work exceeds two hours or 20% of your given workweek, your employer must pay you the full minimum wage for that time.
This is especially relevant for dual jobs where you’re both serving and doing other tasks. Under the final rule from the Department of Labor, blending roles doesn’t mean you lose out on fair pay.
Employer Obligations and Penalties
Your employer is legally required to:
Accurately track tips received:
Keeping an honest record of your tips received is not optional. If your employer is cutting corners here, it’s a red flag that you may be getting shorted.
Properly calculate tip credits:
The math has to be exact. Your employer can only claim a tip credit that bridges the gap between the tipped minimum wage and the full minimum wage. Anything else is wage theft.
Ensure mandatory tip pools meet legal standards:
A mandatory tip pool must be a valid tip pool. If your employer includes non-tipped employees, supervisors, or managers, it’s illegal. And yes, you can fight it.
Avoid requiring tipped workers to share tips with non-tipped employees:
You worked for those tips. Being forced to give them to someone who doesn’t regularly earn tips is unlawful and actionable.
Pay the correct wage every pay period:
No excuses. If your wage (base + tips) doesn’t meet the minimum wage obligation for each pay period, your employer is breaking the law.
When employers cut corners on any of these, they risk audits, hefty fines, and legal action from the Department of Labor and the Federal Department of Labor.
Legal Action Servers Can Take
If you’re dealing with unpaid tips in Colorado, here are the real-world legal steps servers can take:
Document all hours worked and tips received:
Write everything down—shifts, tips, tasks. These records are critical for proving underpayment, especially around non-tipped duties or minimum wage gaps.
Request wage statements from your employer:
It’s your right to know what you’re being paid. If your pay period reports don’t add up, that’s a red flag worth investigating.
File a complaint with the Colorado Department of Labor or the federal Department of Labor:
These agencies exist to protect workers. Filing a formal complaint is free, and it often leads to investigations, settlements, and recovered wages.
Consult with a labor attorney to assess possible claims:
Lawyers who know wage laws and tip regulations can spot violations quickly. Don’t go it alone—an experienced attorney can help you build a strong case.
Take legal action to recover unpaid wages, tips, and damages: If all else fails, suing your employer is a powerful move. Courts can award you back pay, damages, and attorney fees. Many servers have done it—and won.
Additional Resources To Read On
- Colorado Department of Labor and Employment
- U.S. Department of Labor Wage and Hour Division
- Legal aid organizations specializing in employee tips and wage laws
Conclusion
If you’re a server in Colorado and missing tips, you’re not alone—and you’re not powerless. Know your rights. Understand your minimum wage obligation. Spot illegal tip pooling arrangements. And don’t hesitate to act. Every tipped employee deserves fair pay for honest work.
Whether it’s fighting over mandatory service charges, getting paid for non-tipped duties, or reclaiming stolen tips, the law is on your side.
Need Legal Help? Contact Bourassa Law Group
If you’re a tipped employee facing unpaid tips, illegal tip pools, or minimum wage violations in Colorado, the Bourassa Law Group is here to help.
Our attorneys specialize in wage laws, employee rights, and the hospitality industry. Let us help you claim what you’ve rightfully earned.
Contact Bourassa Law Group today for a free consultation and stand up for your rights.
1-800-870-8910