When is a worker an independent contractor versus an employee?

On Behalf of | Feb 4, 2021 | Employment Law |

In today’s gig economy many people work as independent contractors rather than as employees. While being an independent contractor has its perks, such as flexibility in how the work is done and pay negotiations, independent contractors generally do not receive the benefits an employer offers to employees, such as health insurance, minimum wage, overtime pay and unemployment insurance. The following is a brief overview of who is considered an independent contractor under Colorado law.

What is an independent contractor?

Workers in Colorado are presumed to be employees unless they meet the elements defining an independent contractor. Independent contractors are free to decide how they will perform their work, both under contract and in fact. Independent contractors are also customarily engaged in the independent profession related to the work they are performing.

In addition, in the contract establishing the work the independent contractor is to do, it must be stated in bold, underlined type that the employer is not obligated to provide the independent contractor with unemployment insurance benefits, although the independent contractor could purchase such coverage on their own. It also needs to be stated in bold, underlined type that the independent contractor must pay self-employment taxes.

Why might an employer misclassify an employee?

Some employers will try to classify workers as independent contractors rather than employees to avoid having to pay benefits and offer other rights due to employees. However, under Colorado law, a worker is presumed to be an employee unless the employer has met its burden to prove otherwise. Generally, this is shown through a contract establishing the independent contractor relationship. If the employer meets their burden, then the worker bears the burden of proving otherwise if they contest their classification as an independent contractor.

Learn more about your rights as an employee

Ultimately, this post is for informational purposes only and does not contain legal advice. Those in Colorado who want more information on this topic may find our firm’s employment law webpage useful.