Colorado's Workers' Compensation Insurance Law

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Who needs workers’ comp insurance in Colorado?

Workers’ comp insurance in Colorado is required for all employees of public or private businesses. Generally, any person who performs work or services is presumed to be an employee.

There are a few exceptions when establishing whether workers’ compensation is mandatory in Colorado for your business. A sole proprietor or any general working partner, corporate officer, or member of a limited liability company (LLC) might not be bound to carry this insurance under certain circumstances.

Exemptions for workers’ compensation requirements in Colorado:

  • Some maintenance or repair work for a business when the cost is less than $2,000 per calendar year
  • Domestic work for a private homeowner if the job is fewer than 40 hours per week or fewer than five days per week
  • Commission-based real estate agents and brokers
  • Independent contractors performing for-hire transportation services
  • Drivers who are under lease agreements if the carrier offers the drivers workers’ compensation insurance
  • Volunteers for ski area operators
  • Providers of residential host-home services or support
  • Railroad employees who are covered under federal law
  • Independent contractors

 

Is workers’ comp required for part-time employees?

Part-time employees must be provided with workers’ compensation. This is true whether an employee is paid a salary or an hourly wage. However, an independent contractor could be exempt, as long as the person is correctly classified as such under Colorado law. An independent contractor is someone who:

  • Works outside the business’s control and direction over how the services are performed
  • Is engaged in a profession, trade, occupation, or business of the service being performed

For additional information about what is required for independent contractor status, visit the Colorado Department of Labor and Employment Division of Workers’ Compensation Employer’s Guide.

 

Do you need workers’ compensation if you are self-employed?

If you are self-employed, you do not need workers’ compensation. Colorado requirements do not indicate that sole proprietors or business partners need to have workers’ compensation insurance because they are not considered to be employees. A sole proprietor does have the option to elect for self-coverage, which could provide coverage for lost wages and other important benefits if a work-related accident or injury occurs.

 

What are the penalties for not having Colorado workers’ comp insurance?

The penalties for not carrying workers’ compensation insurance in Colorado could include steep fines. If a business is determined to be lacking proper coverage, the director of the Division of Workers’ Compensation may issue a cease and desist order against the business, which would require it to stop all operations until it obtains proper insurance.

Failure to carry workers’ compensation insurance could also result in fines, which could be up to $250 for each day the employer did not maintain insurance coverage. If there are multiple violations, that fine could go as high as $500 per day.

If there is a workers’ compensation settlement before the penalty, the benefits would be increased by 50 percent if the employer failed to maintain insurance.

 

How much does workers’ compensation insurance cost in Colorado?

Colorado workers’ compensation insurance costs are based on the relative hazards associated with a particular occupation. The average cost per $100 in employee wages is $1.02 in Colorado.

 

How does workers’ comp work in Colorado?

Workers’ compensation insurance benefits both the employer and the employee. Its purpose is to provide employees with necessary medical treatment and wage replacement if an individual is injured on the job. It also serves as an exclusive remedy, which means that employers are assured of predictability with respect to costs for work-related injuries or illnesses.

You can purchase workers’ compensation insurance from an authorized commercial insurance company in Colorado. Insureon provides an easy online application to compare policies from multiple carriers and licensed agents with expertise in insurance for Colorado businesses.

Self-insurance for employers with at least 300 employees or $100 million in assets is also an option for larger businesses. Public sector employers and professional associations may join a group or pool for workers’ compensation insurance through a program administered by the Division of Insurance in the Department of Regulatory Agencies.

The Division of Workers’ Compensation enforces compliance with workers’ compensation Colorado requirements, provides information to both employers and employees, assists in the resolution of related issues, and administers self-insurance programs.

 

Workers’ compensation death benefits in Colorado

The dependents of a person who has died as a result of injuries sustained at work can receive workers’ compensation death benefits. Colorado classifies dependents as:

  • A spouse who lived with the worker at the time of the worker’s death
  • Children under 18, or under 21 if they are full-time students
  • If there is no spouse or dependent child, then parents, adult children, or grandchildren could qualify as partial dependents. In that situation, the family member must prove there was a financial dependency on the deceased worker.

For death benefits to apply, a worker must have died as a result of a work-related injury or illness. If the cause of death is unrelated, it might be possible for the family members to collect unpaid permanent disability benefits.

The amount of workers’ compensation death benefits in Colorado is determined by approximately 67 percent of the worker’s average weekly wages, up to a legal maximum that changes each year. That amount is the total awarded to all dependents combined.

A spouse receives death benefits either for life or until he or she is remarried, at which point that person’s share would be divided among remaining dependents. Children would receive benefits until age 18 (or 21 for full-time students), and partial dependents would receive benefits for a maximum of six years.

  • If a worker was under 21 at the time of death, the parents would receive a $15,000 lump sum instead of weekly benefits.
  • The workers’ compensation insurer would also pay up to $7,000 for burial expenses for a deceased worker.

 

Workers’ comp settlements in Colorado

An injured worker will usually be offered a workers’ compensation settlement. If accepted, the worker will receive a lump sum payment and avoid the uncertainty of a workers’ comp hearing. With a settlement, the employee also forfeits the right to additional disability benefits.

Occasionally, the insurer will agree to a limited settlement that would allow for the worker to maintain the right to future medical expenses. A structured settlement is an option that would allow the worker to receive payments as installments over a period of time, so the payments would be issued monthly or yearly.

If the worker is owed permanent disability benefits, it could be paid as a lump sum. However, if that happens, the insurance company would pay the present value of the benefits, which is discounted by 4 percent each year. Colorado also maintains a cap for how much a lump sum can be, and that amount changes each year.

Usually, a worker will wait to settle a workers’ compensation claim until she or he has reached maximum medical improvement (MMI), which means that the condition is stable and will not require additional medical treatment.

 

Statutes of limitations for workers’ compensation claims in Colorado

An injured employee should file a workers’ compensation claim as soon as possible. The claim can only be filed for up to two years following the diagnosis of injury or illness. However, if the employee misses at least three days of work, the employer is required to file a report of injury, and the statute of limitations deadline is established.

If an employee is injured on the job, he or she is required to report the injury to the employer in writing within four working days. This written notice should either go to the employee’s direct supervisor or the human resources department.

If the injury is an ongoing issue (like carpal tunnel syndrome) and not the result of a specific incident, the statute of limitations begins when the employee knew or should have known that there was a medical condition caused by employment.

The dependents of a worker who died as a result of work-related illness or injury have two years to file a claim petition for death benefits.

 

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Workers' comp insurance: Further reading

See workers' comp laws where you live