Colorado uses a two-prong test to classify gig workers as employees or independent contractors, focusing on freedom from control and engagement in an independent trade. Misclassification carries steep penalties, including fines up to $25,000 per willful violation under 2026 updates.​
Classification Test
Workers qualify as independent contractors if free from employer control in performing services (both by contract and fact) and customarily engaged in an independent trade, occupation, profession, or business related to the work. This broader state standard exceeds federal tests, emphasizing economic independence over common-law factors like behavioral or financial control.​
Gig Economy Impact
Gig platforms like rideshare or delivery services must evaluate these criteria to avoid reclassifying drivers or couriers as employees entitled to minimum wage, overtime, unemployment insurance, and paid leave. No specific gig exemptions exist, unlike California’s ABC test, leaving Colorado platforms vulnerable to audits and lawsuits.​
Compliance Penalties
Willful misclassification incurs $5,000 fines per worker for first offenses, escalating to $25,000 with repeat violations and potential two-year state contract bans. Employers should audit contracts, payroll, and practices, especially for seasonal or app-based roles.
SOURCES
[1](https://bellpolicy.org/colorado-gig-economy/)
[2](https://www.postercompliance.com/blog/labor-law-compliance-for-gig-workers-what-employers-need-to-know/)
[3](https://amtrustfinancial.com/blog/small-business/employment-classification-impact-on-gig-economy)
[4](https://cdle.colorado.gov/employers/audits/ensure-proper-worker-classification)
[5](https://hrcertpreppros.com/blog/colorado-employment-law-changes-2026/)
