| Workers' Compensation
Employers
Frequently Asked Questions:
- As an employer, how do
I know whether I have to carry workers’ compensation insurance?
All public and private employers in Colorado, with limited
exceptions, must provide workers' compensation coverage for their
employees if one or more full or part-time persons are employed. A
person hired to perform services for pay is presumed by law to be an
employee. This includes all persons elected or appointed to public
sector service and all persons appointed or hired by private
employers for remuneration. There are a few exemptions to this
definition.
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- How do I obtain
insurance?
Workers' compensation insurance may be purchased from one of over
two hundred private insurance companies authorized to conduct
business in the State of Colorado. Coverage may be purchased from
any authorized insurance company. For a full listing of
insurance companies in Colorado please
click here. Given the
expense of workers’ compensation insurance and its potential impact
on the lives of employees, a business should review its workers’
compensation coverage options before selecting an insurer.
Tips:
- Start shopping 2-3 months before the current policy expires.
Insurers generally take a month or more to evaluate a business=
loss history and return a quote.
- Solicit quotes from several insurers that represent the
range of rates in the total market. An agent may be consulted to
get a representative sample.
- Make sure employees are properly classified by the
underwriter.
Ask the agent about the quality and timeliness of service
provided by a prospective insurer before switching to a new
insurer.
- Check with other employers in the community about their
experiences with their insurers.
- Discuss with the agent, broker or insurer what alternative
plans may be available (i.e., self-funding, deductible options,
premium credits, etc.).
- Be aware that past loss experience will have a direct
correlation to future premiums.
- Address any questions regarding insurance practices of
individual insurance companies to the Department of Regulatory
Agencies, Division of Insurance.
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- Am I exempt from
carrying workers’ compensation coverage if I’m an independent
contractor?
Generally, an independent contractor is a person who contracts to
complete a specific project for another business for a set price.
The independent contractor must be: (1) free from control and
direction over the means and method of performing work; and (2)
customarily engaged in an independent trade, occupation, profession
or business related to the work being performed. While a business
and an independent contractor may help establish independence in a
written document, the actual facts will determine whether a
particular worker qualifies as an independent contractor. If the
independent contractor has employees, workers' compensation
insurance for the employees must be obtained.
A person hired to perform services for pay is presumed by law to be an employee
unless they meet the definition of an independent contractor or qualify under a
specific exemption provided by workers’ compensation laws. A person who works as
an independent contractor and can prove that the person meets the legal
definition of independent contractor is not an employee and is not entitled to
workers’ compensation benefits unless the person buys a separate policy. If a business hires an individual as an independent contractor, the independent
contractor must be:
- Free from the business’ control and direction over how the
service is performed; and
- Customarily engaged in an independent trade, occupation,
profession, or business related to the service being performed.
These are the two key principles of independent contracting.
A written contract may be helpful in proving independent contractor status and
is always helpful in defining the work relationship. However, the actual facts
of the work relationship are the most important evidence. If the actual facts
differ from what the written contract says, the facts will control. A list of
important criteria about written contracts is provided in the section:
What is
the value of written contracts with independent contractors?It is important to remember that if a contractor is hired who has employees, the
business must verify that the contractor has workers’ compensation insurance for
those employees. A business may verify insurance coverage by requesting a
certificate of insurance from the contractor’s insurance company. Notification
of any policy changes may also be requested of the insurer. If the contractor
does not have workers’ compensation insurance for its employees throughout the
duration of the work being done for the business, the business that hired the
contractor can be held responsible for the workers’ compensation insurance for
the contractor’s employees. If the business provides coverage for the
contractor’s employees because the contractor failed to do so, the business can
recover the cost of the premium from the contractor. To view statutory
regulations regarding independent contractors, please see
8-40-202(2)(b)(I).
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- Can my business be self-insured for workers’ compensation?
Colorado workers' compensation statutes allow employers,
meeting strict financial and loss control standards, to self-insure
this risk. Authorized by special permit, such workers' compensation
obligations are paid directly from the earnings and assets of the
employer. Permits to self-insure individual companies are obtained
through the Division of Workers' Compensation. Employers applying
for self-insurance must regularly employ 300 or more employees in
Colorado or be a division or subsidiary of a parent company that has
a minimum of $100,000,000 in assets.
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