Business Owners Struggle With Colorado's Independent Contractor System

Date: September 10, 2015

NFIB seeks clear interpretation and enforcement of the criteria.

Colorado
business owners continue to be frustrated by the state’s system of determining
who is an independent contractor and who is not.

“Confusion
is the No. 1 problem here in Colorado with the way the department is currently
running the system,” says Roger Hays, president and CEO of Premier Employer
Services in Centennial, Colorado.

Under the
current system, the Colorado Department of Labor and Employment has nine
criteria for what defines an independent contractor, but it leaves the
interpretation and enforcement of the criteria up to various auditors, who may
interpret them differently.

“We feel
that this has been taken to the extreme, where auditors are more or less left
to their own devices to interpret what the guidelines say,” says NFIB Colorado
State Director Tony Gagliardi.

While one
employer may be found in compliance with the rules, another employer using the
same process can be fined by an auditor for misclassification.

And the
confusion remains even after last year when the Colorado Supreme Court
established that a “totality of circumstances” test should be used to determine
the status of an independent contractor.

“Most
employers do not violate the independent contractor rules intentionally,” says
Hays. “It’s usually done by accident. For small employers who don’t have a lot
of extra revenue to hire teams and attorneys to defend them, that’s a very
difficult thing.” 

NFIB is
looking to work with the Department of Labor to come to an agreement about a
clear classification for independent contractors. “We need to get some
uniformity, some predictability in public policy,” says Gagliardi. “We want
definitive guidelines as to what constitutes an independent contractor.”

Clear
guidelines would not only help business owners and contractors, they would save
the state money by reducing the number of appeals the current system is
creating.

But if an
agreement with the Department of Labor can’t be reached, the next step would be
to propose a bill. 
 

“I really
think the Legislature needs to step in,” says Hays. “I think it would help NFIB
and their members and other business owners…at least that way we all know what
the rules are, and we’re all on the same page.”


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