Short answer: Yes. Colorado requires every employer with one or more employees, full-time, part-time or family, to carry workers' compensation and keep it in force, according to the Colorado Division of Workers' Compensation. Uninsured employers can be fined up to $500 a day, shut down, and made to pay injury claims plus a 25% penalty.
One employee is enough
The Division's insurance coverage page says that if you have one or more employees working for you in Colorado, you must have workers' compensation insurance and maintain it at all times. That includes part-time employees and family members on payroll. The Division lists limited exceptions on its independent contractor and coverage exemption pages.
Owners and coverage rejection
Colorado lets certain corporate officers and LLC members reject coverage for themselves if they meet the ownership rules, and the Division keeps a public coverage rejection search. Rejection applies only to the owner who files it. Employees still need to be covered.
Independent contractors
Colorado's statute presumes a worker is an employee unless the business can show the person is free from control and customarily engaged in an independent trade. A written agreement helps but doesn't settle the question. If a contractor turns out to be an employee, your policy, or you directly, may owe the benefits.
Penalties for going uninsured
The Division says an uninsured employer:
- Can be fined up to $500 for every day without coverage
- Can be ordered to stop doing business
- Must pay an injured worker's claim itself, plus an additional penalty equal to 25% of the benefits
Where coverage comes from
Colorado employers buy from private insurers, from Pinnacol Assurance (the state-chartered carrier), or qualify to self-insure. The Division offers a carrier search and coverage verification tool to check a policy's status.
Bottom line
Put a Colorado policy in place before your first hire, and treat 1099 workers carefully. See our workers' compensation insurance overview.
Questions? Contact Alishahi Insurance or call (877) 711-4545. See insurance in Colorado.
Frequently asked questions
Is workers' comp required in Colorado with one employee?
Yes. Employers with one or more employees, including part-time and family members, must carry it.
What is the penalty for no workers' comp in Colorado?
Fines up to $500 per day, possible shutdown, and paying claims directly plus a 25% penalty.
Can Colorado business owners reject coverage?
Qualifying corporate officers and LLC members can reject coverage for themselves only; employees must still be covered.
Are independent contractors covered in Colorado?
Workers are presumed employees unless the business shows they are free from control and run an independent trade.
How do I verify a Colorado policy?
The Division of Workers' Compensation offers an online coverage verification tool.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.