Understanding Colorado workers' compensation laws

Workers' compensation insurance provides lost wages and medical benefits to workers who are injured on the job. Your business is responsible for paying for the coverage, and you can purchase it from a commercial provider (approved businesses may self-insure). 

Workers in Colorado cannot sue their employer for a work-related injury or illness.

Colorado workers' compensation law

Colorado, like all states, has a workers' compensation law.

It states if you have a business with one or more employees, you must carry workers' compensation insurance.

Anyone you have hired to perform services for you, whether they are full-time or part-time, is considered an employee and must be covered.

The state has additional insurance requirements for the construction industry. Failure to carry workers' compensation insurance may result in fines.

Exemptions from Colorado workers' compensation law

While the law is strict on whom you must cover, it does offer exemptions. Those include:

  • Casual maintenance or repair workers who earn less than $2,000 per calendar year
  • Private domestic workers not working full-time
  • Private domestic maintenance or repair workers not working full-time
  • Real estate agents who are paid by commission
  • Real estate brokers who are paid by commission
  • Independent contractors (with no employees)
  • Drivers working with a contract carrier

In addition, a corporate officer of a corporation or a member of a Limited Liability Company, or LLC, may choose to exclude themselves from coverage.

Sole proprietors may purchase workers' compensation for themselves but are not required to do so.

What does Colorado workers' compensation insurance cover?

Overall Colorado workers' compensation covers:

  • Work-related injury legal fees (employer only)
  • Lost wages
  • Permanent disability benefits
  • Death benefits
  • Ongoing care

Typical injuries covered by Colorado workers' compensation include:

  • Asbestos exposure
  • Anxiety disorder (general)
  • Post-traumatic stress disorder (PTSD)
  • Chronic obstructive pulmonary disease (COPD)
  • Broken bones
  • Fractures
  • Head injuries
  • Hernias
  • Carpal tunnel
  • Bulging discs
  • Torn rotator cuffs
  • Torn meniscus
  • Head injuries
  • Strokes
  • Cancer

What is not covered by Colorado workers' compensation laws not cover?

Not all injuries are covered by workers' compensation insurance. Injuries not covered include those that happen when:

  • An injury occurs during horseplay at work
  • There is a purposeful self-injury
  • The employee is hurt during a voluntary athletic or social event (not part of work duties)

If an employee was intoxicated on the job, the injured worker can be penalized and receive only partial benefits. They are, however, still entitled to all reasonable, necessary, and related medical care.

Combined benefits cap

Colorado laws place a limit on how much an employee can receive in combined temporary disability benefits and permanent partial disability benefits. The cap changes each year.

As of July 1, 2022, the maximum is $113,372.35 for a whole person impairment rating of 19 percent or less. For a whole person impairment rating above 19 percent, it is $226,741.83.

How much does workers' compensation cost in Colorado?

Colorado has one of the lower rates for workers' compensation insurance, according to WorkCompLab. Your premium is based on three factors: total payroll, industry classification code, and experience modifier. 

Every industry and employer are different, however, as are annual payroll and other factors, so there is no one figure for every company. If your company has a low accident and claim history though, your experience modifier (e-mod) and premium may be lower.

What are the timelines for filing a workers' comp claim in Colorado?

Timelines for filing claims are strict in Colorado. There are seven steps:

  1. Seek immediate medical care for the injured employee from the nearest hospital for emergencies.
  2. Within 10 days of receiving notice of an injury by an employee, you must file a claim with your insurer.
  3. At the same time, you must supply a provider list or Letter to Injured Worker to the injured employee.
  4. Within up to three years of the work-related illness or injury, the employee files a claim with the Division of Workers' Compensation, or else the claim will be closed.
  5. Within 20 days from the employee's filing with the DWC, file a General Admission if you accept liability or a Notice of Contest if you deny liability. Within 45 days of your denial, the employee may apply for an expedited (60 days) or standard hearing (120 days).
  6. The employee reaches maximum medical improvement (MMI).
  7. You file a final admission (FA) within 30 days of the MMI date. If the employee disagrees with anything in your FA, the employee has 30 days to object. If the employee disagrees with anything in your FA, the employee can request an independent medical examination or file for a hearing.

If the employee does nothing or doesn't follow up during any point in the process within two years, the claim may be closed.

How to buy Colorado workers' compensation

You can get workers' compensation insurance in two ways. Colorado businesses can buy:

  • Commercial insurance from an insurance company
  • Self-insurance (individual and pooled)

The Colorado Department of Labor and Employment says that “employers who wish to become self-insured must have an exemplary financial position and provide the following:

  • Excess insurance coverage
  • Security, such as a surety bond
  • Claims adjusting either internally or through the use of a third-party administrator

All workers' compensation insurance in Colorado is sold by private insurance carriers; there is no state fund. While there are more than 500 licensed insurance companies that can provide coverage, only Pinnacol Assurance is required to provide workers' compensation coverage for any Colorado employer.

If you are looking for peace of mind, choose the workers' comp partner who's been helping employers for over 100 years.

Pinnacol not only provides your business, no matter the size, with reliable coverage but also free:

  • Injured worker support
  • Return to work programs
  • Safety services

Get a quote online or connect with an agent partner to see if Pinnacol is right for you.

Start quote today

Key Takeaways

How does workers’ comp work?
(and other FAQs)

How does workers' comp work?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
How much does workers' comp cost?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
How should I respond to an injury at work?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
More workers' compensation FAQs