Colorado has amended its wage and hour laws to implement mandatory fines for the willful or repeated misclassification of employees as independent contractors. In addition to any other relief allowed, employers found willfully, or repeatedly misclassifying employees could be fined as follows: 

• $5,000 for a willful violation 

• $10,000 for a violation not remedied within 60 days after the division’s finding 

• $25,000 for a second or subsequent willful violation within 5 years; or 

• $50,000 for a second or subsequent willful violation not remedied within 60 days after the division’s finding. 

 For an individual to be protected by wage and hour laws, they must be classified as an “employee.” Independent contractors, or “gig workers” are not considered employees and are therefore not subject to minimum wage, overtime pay, or other legal requirements with respect to employees.  

When an employer hires an independent contractor, they avoid many employment and tax requirements that apply to the employer/employee relationship. For this reason, independent contractor relationships are highly scrutinized. Misclassification can result not only in fines, but in the employer being responsible for back wages, overtime, tax and insurance, employee benefits and employment law compliance.  

Employers should consult legal counsel before classifying workers—especially those hired to perform work similar to its current employees—as independent contractors.