Restaurant owners sue over change in minimum wage law

Wooden Nickel and Trough protest voter-approved amendment

Two local restaurants have joined in a lawsuit protesting a state constitutional amendment that raises the state’s minimum wage annually, based on inflation.

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The suit was filed on behalf of the Wooden Nickel restaurant in Crested Butte and the Trough in Gunnison, and five other restaurants around the state on Thursday, August 21 in Denver District Court. It names Governor Bill Ritter as the defendant.
Public issues consultant Jan Rigg, who is a spokesperson for the plaintiffs, says the complaint comes two years after Colorado voters approved Amendment 42.
The amendment increased the state’s minimum wage from $5.15 to $6.85 per hour for most employees, and from $2.13 to $3.83 for tipped workers like waiters and waitresses. The voter-approved amendment also included a provision that increases the minimum wage annually, based on the Consumer Price Index used in Colorado.
The last piece is the problem, according to Rigg, and is the reason there was broad-based opposition to the measure. “People were starting to understand it wasn’t just raising the minimum wage, it was going far beyond that,” she says.
The initial complaint points out that there is not a Consumer Price Index for the state of Colorado and notes that the state is using an index for the Boulder-Denver area. The index is a measure of the average change over time in the prices paid by consumers for goods and services.
Those prices may be significantly different in rural areas like Gunnison County. “The rural communities have been impacted more (by the minimum wage hike),” Rigg says. “In that climate, a business has to think of every January that the cost of doing business will change, maybe significantly. That’s the problem.”
According to the suit, the state minimum wage increased to $7.02 an hour generally and $4 an hour for tipped employees on January 1, 2008.
Rigg says the Respect Colorado’s Constitution committee protested Amendment 42 two years ago because the measure had no safeguards to protect businesses if inflation increased dramatically. Florida adopted a similar minimum wage provision in 2006, Rigg says, but put in a fail-safe. “The difference was put in the language that the state legislature could adjust it,” she says. “We didn’t do that—it’s a constitutional amendment. It immediately made it an issue and a problem.”
Crested Butte/Mt. Crested Butte Chamber of Commerce director Christi Matthews says the lawsuit raises a valid point in that the cost of living in Gunnison County is often different from the Front Range. “I think it’s indicative of what we see in legislation—it often reflects what’s happening in the Denver area and doesn’t take into consideration smaller communities.”
However, Matthews says she can see the issue from both the employee’s and employer’s perspectives. “It’s tough,” she said, noting that employees must be able to make ends meet while mandates on businesses often don’t account for the subtle differences in community’s economies.
With the lawsuit now before the courts, Rigg says they expect more restaurant owners and other industry representatives to join on it. “I don’t think anyone is surprised that there’s a lawsuit,” she said. “It was passed by such a slim margin.”