If your business has employees in the state of Colorado, you’ll need to make sure you adhere to Colorado’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in Colorado?

Colorado requires all employers who have at least one employee to obtain Workers’ Compensation Insurance. In Colorado, an “employee” is generally defined as someone who works part-time or full-time for an organization or individual and is not an independent contractor.

The Workers’ Compensation Act of Colorado (WCAC) defines all of the requirements for Workers’ Comp in Colorado, and the Division of Workers’ Compensation (DWC) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in Colorado?

Almost all workers are covered under Workers’ Compensation in Colorado. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance.

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Apprenticeships and internships
• Contract employees
• Full-time domestic workers
• Undocumented workers
• Minors

The following are categories of employees that are generally excluded from Workers’ Comp coverage:

• Independent contractors
• Domestic workers (non-full-time)
• Volunteers
• Casual or occasional workers
• Licensed real estate agents or brokers whose earnings are mainly from commissions

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in Colorado, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Medical expenses, including treatment, supplies, crutches or any other apparatus reasonably needed for recovery or treatment
• Expenses required to purchase, repair, or replace artificial members, glasses, hearing aids, braces, dentures, and other prosthetic devices

Temporary Total Disability Benefits

• If an injured employee is unable to return to work, he or she is eligible to receive Temporary Total Disability (TTD) benefits while recovering, which provides 66 and two-thirds percent of a worker’s average weekly wage pre-injury.
• The DWC establishes average weekly wage limits for calculating TTD benefits, which change every July 1st. For July 1, 2020 to June 30, 2021, the maximum average weekly wage was $1,074.22.
• TTD benefits are available until the injured employee is medically cleared to return to work or the employee returns to regular or modified employment.

Temporary Partial Disability Benefits

• An injured employee may be able to return to work while recovering in a partial or limited capacity. If the employee works fewer hours or receives lower wages during this time, he or she may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide 66 and two-thirds percent of the difference between a worker’s pre- and post-injury average weekly wage.
• The DWC establishes average weekly wage limits for calculating TPD benefits, which change every July 1st. For July 1, 2020 to June 30, 2021, the maximum average weekly wage was $1,074.22.
• TPD benefits are available until the injured employee is medically cleared to return to work or the injured worker’s wages return to a pre-injury level.

Permanent Partial Disability Benefits

• If an injured employee recovers from an injury but has a permanent partial impairment, he or she may be eligible for Permanent Partial Disability (PPD) benefits.
• The amount that is paid out for PPD benefits depends on a number of factors, including whether the impairment is “scheduled” or “unscheduled.”
• Scheduled impairments involve partial or total loss of use of the upper and lower extremities, spine, hearing, vision, or mental capacity. Benefit amounts are determined by multiplying the scheduled PPD rate by the number of weeks allowed by the schedule.
• Unscheduled impairments involve body parts that aren’t classified as “scheduled.” Benefit amounts are determined by the employee’s reduced earning capacity due to the impairment over a fixed compensation period of 400 weeks.
• The DWC establishes limits for PPD benefits, which change every July 1st. For July 1, 2020 to June 30, 2021, the maximum weekly benefit was $337.11 for scheduled impairment and $590.24 for unscheduled impairment.

Permanent Total Disability Benefits

• If an injured employee develops a permanent total disability precluding the possibility of earning any wages, he or she may be eligible for Permanent Total Disability (PTD) benefits.
• PTD benefits provide 66 and two-thirds percent of a worker’s average weekly wage pre-injury, payable for life.
• The DWC establishes average weekly wage limits for calculating PTD benefits, which change every July 1st. For July 1, 2020 to June 30, 2021, the maximum average weekly wage was $1,074.22.

Bodily Disfigurement

• If an injured employee is seriously or permanently disfigured, he or she may be eligible for additional compensation.
• Disfigurement benefits may be increased for extensive facial or body scars, burn scars, or stumps resulting from the loss of limbs.
• The DWC establishes limits for disfigurement benefits, which change every July 1st. For July 1, 2020 to June 30, 2021, the maximum award was $5,686.96 and up to $11,371.92 for extensive disfigurement.

Death Benefits

• Employers are required to pay up to $7,000 to cover funeral expenses.
• A worker’s surviving dependents may be eligible to receive 66 and two-thirds percent of the deceased employee’s average weekly wages, up to the maximum average weekly wage set by the DWC.

What are the penalties for breaking Colorado Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the WCAC can result in significant fines and even the closure of your business. In order to avoid any costly penalties, it’s important to consult the WCAC or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

General Violations

• Failure to comply with any part of the WCAC is punishable by a fine of up to $1,000 per day, per offense.

Failure to Purchase Coverage

• Failure to secure adequate Workers’ Compensation Insurance may result in the DWC ordering the offending employer to shut down operations until coverage is purchased, in addition to daily fines.
• A first offense fine can be up to $250 per day.
• Subsequent offenses can result in fines from $250 to $500 per day.

Unpaid Benefits

• Failure to pay the required Workers’ Compensation benefits may result in an interest charge of 8-10% per year on all unpaid amounts.
• Failure to comply with an order of increased compensation may result in the employer being required to pay an additional 50 percent of the compensation or $1,000, whichever is greater.

Failure to Admit or Contest Liability

• Employers are required to submit an injury report within 10 days of a work-related employee injury. Within 20 days of the initial injury report, an employer must also submit a report notifying the DWC as to whether the employer admits or contests liability for the employee’s injury.
• Failure to submit this report may result in penalties up to one day’s worth of the worker’s compensation benefits for every day that the report is delayed, up to 365 days.

How much does Workers’ Compensation Insurance cost in Colorado?

According to the National Academy of Social Insurance Workers’ Compensation Report (October 2019), the average employer cost for Workers’ Compensation in Colorado was $0.97 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in Colorado?

The claims process in Colorado begins with the employee. If an employee suffers a work-related injury or illness, he or she must report the condition to the employer within four days for an injury and within 30 days for an occupational disease. Any delays may result in a denial or reduction of a claim.

The employer must submit an injury report to the DWC and also let them know within 20 days if they will admit or contest liability for the claim. If a claim is admitted, the employer must begin paying benefits immediately. If a claim is denied, the employee can request a hearing, but this request must be made within 45 days.

Colorado Workers’ Compensation Insurance Resources

For more information on Colorado Workers’ Compensation laws and requirements, please visit the following resources:

• Colorado Division of Workers’ Compensation (DWC)
• Colorado Department of Labor and Employment