Effective August 2, 2019, Colorado employers using tip pools must comply with new customer notice requirements.  Under H.B. 1254, which passed both houses of the legislature in the 2019 session and was signed by Governor Polis on May 13, tips are the sole property of the employee receiving them unless employers publish a notice on menus, table tents, or receipts, informing each customer that gratuities are shared by employees. 

The new law repeals and replaces Colorado’s previous statute, which allowed employers to retain a portion of employees’ tips, so long as the employer posted a 12-by-15 inch notice stating that tips were the property of the employer.  C.R.S. § 8-4-103(6).  Now, it will be unlawful for a business where patrons customarily tip employees to assert any claim to, right of ownership in, or control over gratuities. 

However, the law explicitly allows employers to have mandatory tip pools, and to set the allocations for those tip pools. 

As written, it is unclear whether the new law applies to voluntary, as opposed to mandatory, tip pools. It is possible the law does not apply to voluntary tip pools, because while the gratuity remains the sole property of the employee receiving it, the employee enters into a voluntary agreement to share with co-workers.  However, the state has not issued any regulatory guidance interpreting the statute.

The Colorado law does not require that any particular language be used in the notice, and allows the employer to choose which form of notice—menu, table tent, or receipt—it will use. The requirement that employers inform “each patron” implies that every menu, table tent, or receipt must contain the notice—as opposed to, for example, putting table tents on only every other table.

We will be carefully monitoring the state’s interpretation and enforcement of these new legal requirements, once the statute takes effect.