Key Issues When Considering Independent Contractors In Colorado

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Key Issues When Considering Independent Contractors In Colorado

Today more than ever Colorado businesses are evaluating the need for full time vs. part time employees. Many firms are also considering using a third party firm for certain functions. Misclassification of contractors and employees can be a problem when it comes to Colorado workers’ compensation and employment laws. The Department of Labor (DOL) is cracking down on employers who misclassify independent contractors who really should be employees. If you are an employer who hires contractors, the DOL has issued new guidelines to help you.

The DOL offers these six factors for employers to use as a test to differentiate between an employee and a sub-contractor.

The six factors or questions in the “economic realities” test include:

  1. Is the work an integral part of the employer’s business?
  2. Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
  3. How does the worker’s relative investment compare to the employer’s investment?
  4. Does the work performed require special skill and initiative?
  5. Is the relationship between the worker and the employer permanent or indefinite?
  6. What is the nature and degree of the employer’s control?

Source: DOL-Administrator’s Interpretation No. 2015-1


  • A contractor who hires an auto mechanic to service the company vehicles is not part of the day to day work of the contractor and therefore, the auto mechanic would not be defined as an employee.
  • If a cabinet maker, who is hired by a contractor to provide cabinets for a job, hires a part time person to fulfill the order, that worker would be considered an employee.

For over 10 years, we have focused on reducing insurance costs and improving coverage for Colorado businesses which make up over 80% of our current clientele. Since he knows all the details of real estate risks, you are in good hands with Steve!  Coverage for contractors include Commercial Auto, General Liability, Inland Marine, Property, Workers Compensation and more.

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