What You Should Know about Workers’ Compensation in Colorado

The state of Colorado requires all employers in the state to carry workers’ compensation insurance. This requirement applies regardless of whether your employees are family members, part-time, or full-time. Every individual that you pay to perform a given task is presumed to be your employee.

However, in certain circumstances, Colorado workers’ compensation requirements don’t obligate you to have this insurance. Workers’ comp insurance benefits both employers and employees. It provides your employees with medical treatment and income replacement in case of a work-related injury or illness. On the other hand, it protects employers from lawsuits. An employee can’t sue their employer once they have accepted workers’ compensation benefits.

The Colorado Division of Workers’ Compensation (DOWC) is responsible for enforcing workers’ compensation laws in the state. The DOWC also provides information on workers’ comp to both employees and employers.

Here are the key elements of workers’ compensation insurance in Colorado:

Workers’ Comp for Businesses Without Employees

Colorado’s workers’ comp requirements don’t apply to self-employed individuals. If your business is a partnership or a sole proprietorship, Colorado requirements don’t consider you an employee, and as such, you aren’t obligated to carry workers’ coverage. However, as a sole proprietor, you may still benefit from having a workers’ comp policy. For instance, it can supplement lost wages if you are incapable of working because of workplace-related illnesses or injuries as well as cover your medical expenses. Moreover, some clients only work with businesses that carry workers’ comp.

Construction Industry

If you own a construction company, you must carry workers’ compensation insurance or explicitly reject the coverage, regardless of whether the business is a partnership or a sole proprietorship.

Will Independent Contractors Count as Employees?

Anyone who works for you is assumed to be your employee unless proven otherwise. To demonstrate someone who works for you is not your employee but an independent contractor, the person in question must:

  • Be free to perform their duties without your direction and control.

  • Own an independent business that provides that particular type of service or product.

It’s worth noting that a 1099 employee isn’t necessarily a contractor.

Rejection of Coverage

If your firm is an LLC or a corporation, everyone in your firm is considered an employee of the company. Therefore, you either need to carry workers’ comp coverage or sign a form that indicates that you’ve rejected coverage. For you to be eligible for rejection of coverage, you must meet these two requirements:

  • Own not less than 10% of the business.

  • Be an LLC member, a chairman of the board, president, vice-president, treasurer, or secretary.

If your enterprise already carries workers’ comp insurance, but you want to reject coverage, talk to an insurance agent to get more information on what you need to do.

Other Exemptions

You aren’t required by the law to get workers’ comp for these workers:

  • Domestic workers for private homeowners if the worker provides their services for less than five days weekly or less than 40 hours weekly

  • Real estate brokers and agents who are paid on commission

  • Casual ranch and farm labor or repair and maintenance workers for businesses if their services cost less than $2000 annually

  • Ski volunteers

  • Railroad workers who are covered by the federal law

  • Motor carriers that charter vehicles from or to drivers, based on particular conditions.

Penalties for Not Having Colorado Workers’ Comp Insurance

If you don’t have a workers’ comp policy, your business can be shut down, and you can be penalized (up to $500 in fines for each of the days you are uninsured). Furthermore, if an employee gets a work-related injury or illness, you will be forced to pay the claim out-of-pocket in addition to paying a fine (25% of the workers’ benefits).

Reporting Injuries

In case of a work-related injury, you must inform your insurance company within 10 days, regardless of the severity of the injury. You do this by completing the Employer’s First Report of Injury form. Completing this form doesn’t imply that you agree with the facts. It’s just an account that your employee is filing a claim. If an employee passes on, you must inform your insurer immediately.

Designating Medical Providers

In non-emergency incidences, you need to provide the ill or injured worker a list of designated medical providers. The designated list must:

  • Be provided right after you’ve been informed of the injury.

  • Be in written form and must be presented to the worker in seven businesses days after the report of the incidence.

  • Have four corporate providers and/or physicians who are within the 30-mile radius of your location who are willing and capable of treating the injured worker (exceptions may apply in rural areas, and you can use telemedicine).

  • Include your insurance company’s contact information.

If there is no designated physician, the injured employee can opt for a medical provider of their choice.

How to Get Workers’ Compensation Insurance for Your Business

Larger businesses can self-insure. To be eligible for self-insurance, you must have assets worth at least $100 million or a minimum of 300 employees. Professional associations and public sector employers can join a pool or group for workers’ comp insurance through a Division of Insurance-administered program.

Additionally, you can purchase a workers’ comp policy tailored for your precise needs through a reputable insurance agent. At Spotlight Insurance Agency, we will help find a customized and affordable workers’ compensation policy that will protect both you and your workers. Contact us today to learn more.