Recently enacted Colorado HB 1210 repeals the state's 20-year-old preemption law that prohibits state localities from passing ordinances requiring a minimum wage that differs from state law.

Effective January 1, 2020, Colorado localities may start passing ordinances that provide for a local hourly minimum wage that is higher than the statewide minimum wage (currently, $11.10 an hour and scheduled to increase to $12 per hour effective January 1, 2020). The number of localities allowed to pass ordinances increasing the minimum wage is limited to 10% of the local governments in the state (local governments may enter into intergovernmental agreements to establish local hourly minimum rates).

Certain restrictions apply:

• The local government may only increase the local minimum wage by up to $1.75 or 15%, whichever is higher, each year until the local minimum wage reaches the percentage enacted by the local government.
• The increase in the local minimum wage must take effect on the same date as scheduled for an increase to the statewide minimum wage.
• Any enacted local minimum wage ordinance must include a tip credit for food service employers of tipped employees that is equal to the tip credit provided for by the state constitution.
• All adult employees and emancipated minors must be paid at not less than the local minimum wage.
• Before enacting a minimum wage ordinance, a local government must consult with surrounding local governments and stakeholders within the locality, including Chambers of Commerce, small and large businesses, businesses that employ tipped employees, workers, labor unions, and community groups.

Ernst & Young LLP insights

The repeal of Colorado's preemption law goes contrary to a recent trend of states enacting laws that prohibit localities from enacting ordinances affecting minimum wage or mandating other employee benefits.

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