Colorado Workers’ Comp Exemptions: Who Qualifies for Benefits?
Learn which workers qualify, who’s exempt, and what to do if you’re misclassified as an independent contractor in Denver
Workplace injuries can happen unexpectedly, leaving workers with medical bills, lost wages, and uncertainty about their futures, which is why it’s crucial for Colorado workers to understand their rights to workers’ compensation benefits.
Unfortunately, not every worker in Colorado is automatically covered under workers’ comp, and your eligibility depends on how your job is classified under the law. This article will help clarify who qualifies for workers’ compensation in Colorado, the applicable exemptions, and what to do if you believe you’ve been misclassified.
What is Colorado workers’ compensation?
Colorado workers’ compensation is a system that provides benefits to employees who are injured or become ill due to their jobs. It covers medical expenses, lost wages, and rehabilitation costs to help injured workers recover and return to work. It also provides death benefits to dependents for funeral expenses and lost income if a worker dies from a work-related injury, illness, or disease.
In Colorado, most employers who employ even 1 employee (full- or part-time) are required by law to carry workers’ compensation insurance, even if the employee is a family member. This ensures that workers are protected in the event of a work-related injury, illness, or disease and shields employers from potential lawsuits related to workplace injuries.
Workers’ compensation is no-fault insurance, meaning workers don’t need to prove their employer caused their injury or health condition, but they do need to be able to prove that it’s a direct result of their job or work environment.
Who is considered an employee under Colorado law?
In Colorado, a person hired to perform services for pay is generally presumed to be an employee under the law. This means that workers are typically considered employees unless proven otherwise, and they are entitled to the protections and benefits, including workers’ compensation, that come with employee status.
To be classified as an independent contractor rather than an employee, certain criteria must be met. Specifically, the worker must:
- Be free from direction and control in how they perform their work. This includes having autonomy over how, when, and where the work is done without the employer dictating specific details.
- Operate an independent business that provides the same type of services they are performing. In other words, the worker must be engaged in a legitimate business separate from the employer.
It’s important to note that simply paying someone with a 1099 form or classifying them as an independent contractor does not automatically make them one under Colorado law. Instead, employers must be able to prove that the worker meets the legal definition of an independent contractor.
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Which workers are exempt from coverage under Colorado workers’ compensation law?
In Colorado, certain workers are exempt from mandatory workers’ compensation coverage, meaning their employer is not required to provide workers’ comp insurance. Workers who may not qualify for coverage include:
- Casual farmworkers and maintenance or repair workers who work for a business and earn less than $2,000 per calendar year.
- Licensed real estate agents and brokers working solely on commission.
- Ski area volunteers.
- Independent contractors who have their own businesses and are free from control in how they perform their work.
- Corporate officers and LLC members who own at least 10% of the company and formally reject coverage.
- Domestic workers, such as nannies and au pairs, who work less than 40 hours a week and fewer than 5 days per week.
- Drivers under a lease agreement with a common or contract carrier.
- Federal and railroad employees (covered by federal laws).
Each exemption has specific requirements, so it’s important for workers and employers to review their specific eligibility rules carefully.
Additional regulations for construction companies
Under Colorado workers’ compensation law, special rules apply to construction workers. Anyone performing work on a construction site must either be covered by workers’ compensation insurance or file a form with the Colorado Division of Workers’ Compensation (DOWC) to reject coverage. This requirement applies even to those who may work as independent contractors or sole proprietors.
Here’s how it works based on your business type:
- Corporations or LLC members. If you’re an officer or member of an LLC and wish to reject workers’ compensation coverage, you’ll need to fill out Form WC 43, “Rejection of Coverage by Corporate Officers or Members of a Limited Liability Company.”
- Sole proprietors or partnerships. If you’re a sole proprietor or partner performing construction work, you can reject coverage by completing Form WC 45, “Rejection of Coverage By Partners and Sole Proprietors Performing Construction Work on Construction Sites.”
Both forms are available on the Colorado Department of Labor and Employment (CDLE) website here.
It’s important to verify whether you or your contractors have the necessary workers’ compensation insurance or have properly filed these rejection forms. This ensures compliance with Colorado law and protects you from liability in case of workplace injuries.
What are the penalties for failing to carry the required workers’ comp insurance?
Any employer who fails to carry the required workers’ compensation insurance in Colorado can face serious consequences, including being fined up to $500 a day and having their business shut down.
If an employee is injured while an employer lacks coverage, the employer will be responsible for paying their claim and could also face an additional penalty of 25% of the worker’s benefit amount.
What should I do if I’m injured at work and I believe I’ve been misclassified as an independent contractor?
If you’ve been injured at work in Colorado and believe you’ve been misclassified as an independent contractor, follow these steps:
- Report your injury. Immediately notify your employer about your injury in writing, as Colorado law requires you to report a workplace injury within 10 days to qualify for workers’ comp benefits.
- Seek medical attention. Get medical care so you can receive an official diagnosis and begin treatment. Be sure to tell your doctor your injury occurred at work so you’ll have the necessary documentation to support your claim.
- File a complaint. If you believe you’ve been wrongfully classified, you should file a complaint with the CDLE to begin an investigation into your employment status.
- Contact an attorney. It’s highly recommended that you consult a local Colorado workers’ compensation attorney who can help you challenge your classification and ensure you receive the benefits you’re entitled to.
Unsure if you qualify for workers’ comp after an injury in Colorado? We can help!
If you’ve been injured at work in Colorado and are unsure if you qualify for workers’ compensation, especially if you believe you’ve been misclassified as an independent contractor, Babcock Tucker is here to help.
Our experienced Denver workers’ compensation attorneys can assess your situation, clarify your eligibility, and guide you through the process of filing a claim to ensure you receive the benefits and compensation you’re entitled to.
Don’t navigate this challenging time alone—contact Babcock Tucker today for a free consultation, and let us fight for your rights.
