We recently assisted a client with a State of Colorado workers compensation issue.
The company is a cleaning services company that was paying each of their workers as independent contractors for over 3 years. Each contractor was cleaning businesses and homes on demand. They were using cleaning supplies provided by the company. They were working on a company schedule. The only difference is the contractors were using their own vehicles to get to each job. At the end of the day the employer had failed to meet the independent contractor definitions set forth by the Internal Revenue Service and the State of Colorado. The IRS and State had determined all workers were employees. The client finally came to us when they received a notice from the State of Colorado attempting to assess a very large fine.
Since the employer was treating each employee as a contractor, they failed to carry the appropriate workers compensation coverage. Therefore, the workers compensation division assessed a penalty of $15,000.
Upon receipt of the letter assessing the penalty and offering an appeal, we immediately gave the following advice to our client:
– We demanded the client go out and obtain workers compensation insurance
– We made sure they were paying each worker as an employee and not an independent contractor
– We also inquired to see if there were any claims made during the period of non-coverage
Due to the fact there weren’t any claims made, the State was a little easier to work with. We provided a statement of coverage, proved the employer was now treating every worker as an employee, as well as proved the company had zero claims during the time of non-coverage. When the hearing (face to face) was completed the State of Colorado waved over 90% of the penalty assessed. We ended up settling for $1,500 at days end.
If you know of anyone experiencing penalty and fee assessments from The State of Colorado please do not hesitate to contact us. We would be happy to take a quick peek at their case to determine next steps and how we can mitigate the situation.