Being labeled an “Independent Contractor” (1099 worker) sounds like freedom, but for many Colorado workers, it is a trap.
Unscrupulous employers often misclassify their staff as contractors to avoid paying payroll taxes, unemployment insurance, and overtime wages. This is not just “shrewd business”—it is illegal under the Colorado Misclassification of Employees as Independent Contractors Act.
At Baird Quinn LLC, our Denver employment lawyers fight to expose these sham contractor relationships and recover the wages and benefits you are owed.
What is the Misclassification Act?
Definition: The Misclassification of Employees as Independent Contractors Act (C.R.S. § 8-72-114) allows the Colorado Department of Labor to investigate and penalize employers who falsely label workers to avoid their legal obligations.
The Presumption of Employment: Under Colorado law, you are presumed to be an employee unless your employer can prove you are free from control and customarily engaged in your own independent business.
Are You an Employee or a Contractor? (The Test)
Your job title doesn’t matter. A written contract saying “I am a contractor” doesn’t matter. What matters is the reality of your working relationship.
The Colorado Department of Labor uses a “factors test” (based on C.R.S. § 8-70-115) to determine your true status.
Red Flags of Misclassification
You are likely an employee (and entitled to benefits) if:
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Control: The company dictates how, when, and where you work.
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Tools: The company provides your laptop, software, tools, or vehicle.
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Training: You were trained by the company on how to perform the job.
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Exclusivity: You are not allowed to work for other clients or competitors.
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Pay: You are paid a salary or hourly wage rather than a flat project fee.
If the company controls your daily work but pays you on a 1099, you are likely being misclassified.
Penalties for Employers Who Break the Law
The Colorado legislature has imposed stiff penalties to punish this behavior. Employers found to have “willful disregard” for the law face:
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Up to $5,000 fine per misclassified employee for the first offense.
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Up to $25,000 fine per misclassified employee for subsequent violations.
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Ban on State Contracts: The company may be barred from doing business with the State of Colorado for up to two years.
What Can You Recover?
If you have been misclassified, you have missed out on critical protections. Our lawyers can help you file a civil claim or agency complaint to recover:
- Unpaid Overtime: 1099 workers don’t get overtime. Misclassified employees do.
- Unemployment Benefits: If you were fired, you may be eligible for back unemployment benefits.
- Workers’ Compensation: Coverage for on-the-job injuries.
- Tax Relief: Shifting the employer’s share of FICA/Social Security taxes back to them.
Don’t Let Them Cheat You Out of Benefits
Misclassification is wage theft in disguise. If you believe your rights are being violated, do not face your employer alone.
Contact the team at Baird Quinn LLC. We have deep experience navigating Colorado’s complex labor laws, and we can evaluate your “Independent Contractor” agreement and determine if it holds up under scrutiny.
Frequently Asked Questions: 1099 Misclassification in Colorado
Can I sue if I signed a contract saying I was an independent contractor?
Yes. In Colorado, you cannot waive your legal right to be an employee simply by signing a piece of paper. Courts and the Department of Labor look at the “economic reality” of your job—specifically how much control the company has over you—rather than the title used in a written agreement.
Who pays the fine for worker misclassification in Colorado?
The employer is responsible for paying statutory fines to the State of Colorado, which can range from $5,000 to $25,000 per violation. However, the misclassified worker can separately pursue a civil claim to recover their own damages, such as unpaid overtime, back pay, and lost benefits.
How do I report employee misclassification in Colorado?
You can file a formal complaint with the Colorado Department of Labor and Employment (CDLE). Because these claims involve complex legal tests regarding behavioral and financial control, it is often best to consult with a misclassification lawyer to ensure your evidence is properly documented and your potential damages are fully calculated.
What benefits do I lose if I am misclassified as a contractor?
Misclassified workers are often denied access to the minimum wage, overtime pay (time-and-a-half), unemployment insurance eligibility, and workers’ compensation coverage. They also often miss out on employer-sponsored health insurance, 401(k) contributions, and paid time off (PTO).
Is there a “presumption of employment” in Colorado?
Yes. Under the Colorado Misclassification of Employees as Independent Contractors Act, an individual performing labor or services for another is presumed to be an employee. The burden of proof is on the employer to demonstrate that the worker is actually an independent contractor.