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Home Business Employment Contract Independent Contractor Colorado

Colorado Independent Contractor Agreement

Published July 27, 2023 | Legally reviewed by Brooke Davis

A Colorado independent contractor agreement is an essential document for employers to clarify the terms of a contractor’s work.

Understanding Colorado’s laws regarding independent contractors is crucial, as misclassifying them as employees can lead to significant financial and resource implications.

  • Worker Classification: ABC Test
  • Tax Structure: Flat Income
  • Definition: § 8-70-115(c)
  • At-Will Employment: Yes (with exceptions)

Table of Contents
  • Understanding Worker Classifications
  • Rights and Responsibilities
  • Sample

Understanding Worker Classifications

Worker Classification Test

Colorado uses prongs A and C of the ABC Test to determine whether the state legally classifies your worker as an independent contractor or an employee for tax and labor rights purposes [1] .

Prong A asks whether the worker is free from direction and control in the performance of their service. This freedom should be evident in (1) their performance contract, (2) in fact, and (3) the fact that the worker, when not providing a service for you, does independent work related to that service.

Prong C asks you to prove that the worker is typically occupied in independent work and in control of the performance of their service. To do this, you may provide evidence supporting Prong A and a written document.

If you can meet both prongs of Colorado’s test, your worker qualifies as an independent contractor. Otherwise, Colorado will classify them as an employee.

Employee vs. Independent Contractor

Colorado defines employees and independent contractors differently.

Employee: According to Colorado labor law, the state defers to the definition laid out in the Federal Unemployment Tax Act (FUTA), which defines an employee as any of the following workers:

  • A corporation officer
  • Those who can be defined as an employee under common law rules
  • A person who performs paid services for another person (1) as a driver who distributes food products, beverages other than milk, or laundry services; or (2) as a full-time sales representative

Independent Contractor: An independent contractor is a paid worker who does not meet the criteria of an employee under Colorado labor laws.

Rights and Responsibilities

Individuals, including independent contractors, are presumed to be in covered employment until proven otherwise. A strong independent contractor agreement can help prove their classification.

Independent contractors in Colorado do not have the following rights:

  • Workers’ compensation
  • Overtime
  • Minimum wage requirements
  • Unemployment benefits

State Taxes

Colorado’s Department of Revenue follows the IRS standard for classification. Independent contractors earning more than $400 in a year have self-employment tax obligations of 15.3 percent.

Filing for Unemployment 

Independent contractors in Colorado generally cannot file for unemployment benefits unless the contractor or another entity provides the compensation coverage.

Sample

Below, you can download a Colorado independent contractor agreement in PDF and Word format:

Colorado Independent Contractor Agreement screenshot

Download PDF
Download MS Word

Legal Templates uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial guidelines to learn more about how we keep our content accurate, reliable and trustworthy.

  1. CO Rev Stat § 8-70-115 (2016). https://law.justia.com/codes/colorado/2016/title-8/labor-iii-employment-security/article-70/section-8-70-115

Colorado Independent Contractor Agreement

Create your Colorado Independent Contractor Agreement here!

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