Jump ahead to learn:
- Is Workers’ Compensation insurance required in Colorado?
- How does Colorado Workers’ Comp insurance work?
- What could Colorado Workers’ Comp coverage include?
- Workers’ Comp exemptions in Colorado: Who qualifies?
- How much is Workers Comp in Colorado?
- Workers’ Comp Colorado FAQ
- How ERGO NEXT helps protect Colorado business owners
Is Workers’ Compensation insurance required in Colorado?
Workers’ compensation insurance is required in Colorado for all employers with one or more employees — full-time, part-time, seasonal, temporary, or family members. And under Colorado law, the general presumption is that if someone is working for you, they are an employeeThere’s no minimum headcount, no payroll threshold, and no waiting period before coverage is required.
The state of Colorado will assume anyone working for you is an employee unless you can prove otherwise. Paying someone as a 1099 contractor doesn’t automatically make them a contractor. If you control when, where and how the work is done, the Colorado Division of Workers’ Compensation (CDLE) will likely treat that person as an employee — and if they’re injured, coverage obligations apply.
Construction work comes with even stricter rules. Anyone performing work on a construction site must either be covered by workers’ comp or file a formal Rejection of Coverage form with the CDLE — including sole proprietors, partners and corporate officers. There are no automatic exemptions for construction workers.
Colorado law requires all covered employers to post a notice at their work site informing employees that they’re covered and who their insurance carrier is. Proof of coverage may also be required by clients and contractors before they’ll work with you. ERGO NEXT lets you generate unlimited certificates of insurance (COI) at no extra cost, directly from your account.
For example, say you run a plumbing business in Denver. One of your employees wrenches their back while on the job, putting them out of work for months. Workers’ compensation could help pay for medical treatment and lost wages while your employee recovers — up to the policy limits.**
How does Workers’ Comp work in Colorado?
If a work-related injury or illness happens, Colorado workers’ comp provides a structured process for getting your employee the care and benefits they need — while helping to protect your business from most personal injury lawsuits related to that incident. The Colorado Division of Workers’ Compensation (CDLE) administers the system.
Here’s how the process works:
- Report the injury. Your employee must report the work-related injury or illness to you as soon as possible — Colorado law requires notification within 10 days. As the employer, you must file a First Report of Injury form with your insurance carrier within 10 days of learning about the injury.
- Get medical care. Direct your employee to an authorized treating physician. In Colorado, the employer or insurer generally has the right to select the treating physician for the first visit and subsequent authorized care. Emergency treatment is usually covered right away.
- The insurer reviews the claim. Your workers’ comp carrier reviews the claim and determines what benefits apply based on the nature and severity of the injury. Colorado is a no-fault state, so benefits can be paid regardless of who caused the accident.
- Benefits are paid. If the claim is accepted, the insurer coordinates payment for authorized medical treatment, as well as wage loss benefits starting after the three-day waiting period.
- The employee returns to work or receives ongoing benefits. Once your employee is medically cleared, they return to their role. If the injury results in permanent impairment or prevents the employee from returning to any type of work, ongoing permanent disability benefits may apply.
Colorado workers’ comp operates under an “exclusive remedy” rule: when an employee receives workers’ comp benefits, they generally waive the right to sue you for negligence related to that injury — an important legal shield for your business.
What could Colorado Workers’ Comp coverage include?
Workers’ comp can help pay for expenses related to work-related injuries or illnesses for your employees — and optionally for you as a business owner.
If one of your employees is injured on the job, a Colorado workers’ comp policy can help pay for:
- Emergency treatment and medical expenses.
- Lost wages (income benefits).
- Death and survivor benefits.
- Vocational retraining if employees can no longer do their job.
- Permanent injury or disability benefits.
Workers’ compensation doesn’t cover incidents that aren’t job-related, or situations involving intentional self-injury, employee misconduct, violations of company policy, or impairment from drugs or alcohol.
Colorado Workers’ Comp income benefits
Colorado workers’ comp income benefits depend on the nature and severity of the injury. There’s a three-day/shift waiting period before benefits begin — though if the disability lasts two or more weeks, those first three days are reimbursed retroactively. Here’s how each type works:
- Temporary total disability (TTD): Employee can’t perform any work while recovering; receives 66 2⁄3% of their average weekly wage up to a determined maximum. Benefits continue until the employee returns to work or reaches maximum medical improvement (MMI).
- Temporary partial disability (TPD): Employee returns to work at reduced wages; receives 66 2⁄3% of the difference between their pre-injury and current wages, subject to the TTD maximum.
- Permanent partial disability (PPD): Employee has a lasting impairment; benefits are based on an impairment rating assigned by the treating physician once MMI is reached, calculated using a scheduled number of weeks for each type of injury.
- Permanent total disability (PTD): Employee is permanently unable to perform any type of work; receives ongoing benefits at the TTD rate, potentially for life.
Workers’ Comp death benefits in Colorado
If a covered employee dies from a work-related injury or illness, Colorado workers’ comp provides the following death and survivor benefits to eligible dependents:
- Weekly death benefits equal to 66 2⁄3% of the deceased employee’s average weekly wage, up to the state maximum, paid to wholly dependent survivors.
- A surviving spouse receives benefits until remarriage; dependent children receive benefits until age 18 (or 21 if enrolled full-time as a student).
- Burial and funeral expenses are covered up to a certain amount determined by current law (updated annually).
Workers’ Comp exemptions in Colorado: Who qualifies?
Colorado’s workers’ comp exemptions are narrower than most states — and nearly all of them require formal action (i.e., filing with the state), not just meeting a definition. Here’s who may qualify:
- True independent contractors who control the performance of their own work and operate an independent business.
- Corporate officers and LLC members who own at least 10% of the company and actively control or manage its business affairs may elect to reject coverage for themselves.
- Sole proprietors and partners are not considered employees under Colorado law and aren’t required to carry coverage for themselves in most industries. However, if you’re a sole proprietor or partner working on a construction site, you must either be covered or formally file to reject coverage. There are no automatic exemptions in construction.
- Private domestic workers
- Casual farm and ranch laborers, or casual maintenance workers.
- Real estate brokers and agents.
- Motor carriers that lease vehicles to or from drivers under specific circumstances.
- Ski volunteers and other volunteers who don’t receive wages.
Important: Even if you qualify for an exemption, you’re still responsible for covering any other employees who don’t qualify. And if you’re exempt and you’re injured on the job, you’d pay all medical and income costs out of pocket — or use personal health insurance, which often excludes work-related injuries.
Learn more about workers’ comp exemptions.
How much is Workers Comp in Colorado?
Workers’ comp insurance costs in Colorado vary across industries and businesses. Some factors that influence what you’ll pay include:
- Your number of employees.
- The type of work your employees do and their assigned class codes.
- Your total payroll.
- Your insurance claims history and workplace safety record.
- The locations in Colorado where your employees work.
The best way to find out what coverage will cost for your specific business is to get a free quote from ERGO NEXT.
