Colorado Workers’ Compensation

USTAX BAY
Apr 28
2 min read

A Complete Guide for Employers

Written by US Tax Bay

At US Tax Bay, we help businesses nationwide meet state-specific compliance standards. If you're operating in Colorado, it’s crucial to understand workers’ compensation insurance requirements to protect your employees — and your business. Here’s everything you need to know about Colorado workers' compensation laws, exemptions, penalties, and coverage options.

Is Workers’ Compensation Required in Colorado?

Yes.

In Colorado, every business with one or more employees must carry workers’ compensation insurance. This applies whether employees are full-time, part-time, or seasonal.

The goal is to ensure that employees are protected if they suffer work-related injuries or illnesses.

Which Workers Can Be Excluded from Coverage?

Some types of workers are exempt from mandatory coverage, including:

Commission-based real estate agents and brokers
Independent contractors performing for-hire transportation services
Providers of residential host-home services or support
Railroad employees (covered under federal law instead)
Independent contractors
Inmates
Volunteers
Drivers under a lease agreement with a common carrier

Employers must correctly classify workers to avoid compliance issues and penalties.

How to Purchase Workers’ Compensation Insurance in Colorado

Employers can obtain workers' compensation insurance in two ways:

Through private insurance carriers
From a competitive state fund, especially if the business is considered high-risk and cannot find private coverage

US Tax Bay can help connect your business with the right carrier for your industry and risk profile.

Penalties for Not Having Workers’ Compensation Insurance

The Division of Workers' Compensation enforces strict penalties for businesses without proper coverage:

Cease and desist orders: Operations must stop until valid insurance is secured.
Fines:
- Up to $250 per day for each day without coverage
- Up to $500 per day for repeat or egregious violations

Ignoring compliance rules can quickly result in severe financial penalties and even the shutdown of business operations.

Death Benefits for Workers’ Families

In the event of a workplace fatality, Colorado law provides for:

Death benefits equal to 67% of the deceased worker’s average weekly wage
Spouses receive benefits for life or until remarriage
Children receive benefits until the age of 18 (or longer if disabled or still in school)
Up to $7,000 in lump-sum funeral expense benefits