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What is employee misclassification?

Misclassifying employees as independent contractors is at the heart of many different wage and hour disputes. Not only does misclassification incorrectly exempt employees from minimum wage and overtime pay, but it also leaves employees without the support of workers’ compensation or retirement benefits.

This makes misclassification lawsuits a particularly serious threat to Colorado businesses when they arise. Fines, unpaid overtime and many other fees can damage a company’s bottom line. When are workers considered employees?

Which workers are employees under Colorado law?

Colorado law establishes a very strict definition for independent contractors, with most workers classified as employees. Some of the many factors that go into whether a worker is considered an employee include:

  • Whether the job is a key part of the business
  • How much employees are paid and how employers calculate that pay
  • Whether the work will occur during a fixed period of time
  • The amount of training provided by the employer
  • Whether the employer provides tools and equipment
  • Whether the employer defines the hours that the employee works
  • Whether the worker has an independent business card
  • Whether the worker carries their own liability insurance

It is important for employers to understand that an employment contract may not necessarily classify a worker as an independent contractor. Contracts for independent contractors must emphasize disclosures related to their independent contractor status, and it is generally up tot eh employer to establish that status.

Because of the wide variety of factors at play, misclassification lawsuits in Colorado can be particularly complex. If your business faces an employee misclassification claim, speak to an experienced attorney who can examine the details of your case and build a defense that protects your business and its continued success.