Colorado Independent Contractor Agreement

Protect your business, classify workers correctly, and reduce misclassification risk in Colorado — in plain English.

What Is an Independent Contractor Agreement in Colorado?

A Colorado Independent Contractor Agreement is a written contract that defines a business-to-business relationship where the contractor controls how work is performed, operates an independent trade, and is not treated as an employee under Colorado law.

Under C.R.S. § 8-70-115, Colorado presumes a worker is an employee unless the business can prove otherwise.

A properly drafted independent contractor agreement helps:

• Establish the independent contractor relationship
• Shift the burden of proof away from the business
• Reduce risk during CDLE audits, unemployment claims, or disputes

Independent Contractor vs Employee Under Colorado Law

Colorado uses a control + independent business test, informed by parts of the ABC framework, to determine worker classification.

To qualify as an independent contractor, the worker must be:

✅ 1. Free from control and direction

• The business cannot supervise how the work is performed
• The contractor controls methods, tools, and execution
• The agreement and real-world behavior must match

✅ 2. Customarily engaged in an independent trade or business

• The contractor offers services to others
• Operates under a business or trade name
• Bears financial risk and opportunity

If either element fails, Colorado will treat the worker as an employee — regardless of what the contract says.

Why Independent Contractor Agreements Matter in Colorado

Without a compliant agreement, Colorado businesses risk:

• ❌ Back payroll taxes
• ❌ Unemployment insurance liability
• ❌ Workers’ compensation exposure
• ❌ Wage & hour claims
• ❌ Penalties for misclassification

Colorado law presumes employment first. Your agreement is one of the few tools that helps rebut that presumption.

When to Use a Colorado Independent Contractor Agreement

✅ Hiring freelancers or consultants

✅ Paying 1099 contractors

✅ Outsourcing development, marketing, design, or operations

✅ Working with project-based or short-term specialists

✅ Protecting IP created by non-employees

✅ Avoiding unemployment or wage audits

If you control schedules, pay hourly wages, provide tools, or supervise daily work — you likely need an Employment Agreement instead.

✔ Related: If you’re hiring a W-2 employee, review your Employment Agreement.

Required Clauses to Create an Independent Contractor Presumption in Colorado

To shift the burden of proof under Colorado law, your agreement must include all of the following — and your behavior must match.

✔ Non-Exclusivity

Contractor may work for others (except for a limited, agreed period if chosen by the contractor).

✔ No Supervision or Control

You may define outcomes, not methods.

✔ Fixed or Contract-Based Pay

No salary or hourly wages.

✔ Limited Termination Rights

Termination only for breach or failure to meet contract specifications — not at will.

✔ Minimal Training

No onboarding or employee-style training.

✔ Contractor Provides Tools & Equipment

Except general materials.

✔ Flexible Work Hours

Deadlines allowed; dictated schedules are not.

✔ Payment to Contractor’s Business

Paid to a trade or business name, not personally.

✔ Separate Business Operations

No operational integration.

Mandatory Colorado Disclosure (Often Missed)

Colorado requires a bold, prominent disclosure stating that:

• The contractor is not entitled to unemployment benefits
• The contractor is responsible for federal and state income taxes

Failing to include this disclosure can invalidate the presumption — even if the rest of the contract looks correct.

Does a Colorado Independent Contractor Agreement Need to Be Notarized?

Yes — under the Colorado Workers’ Compensation Act, independent contractor agreements must be notarized to be effective for workers’ compensation purposes.

Most template sites do not flag this clearly.

Independent Contractor Rights (and What They Don’t Get)

Independent contractors in Colorado generally do not receive:

• Minimum wage protections
• Overtime
• Workers’ compensation
• Unemployment benefits

They are responsible for:

• Self-employment taxes
• Their own insurance
• Business expenses

Common Colorado Independent Contractor Mistakes

• ❌ Paying hourly wages
• ❌ Requiring fixed schedules
• ❌ Providing equipment and tools
• ❌ Supervising daily work
• ❌ Using employee-style onboarding
• ❌ Missing required disclosures
• ❌ No IP ownership language

A signed agreement will not save you if your behavior contradicts it.

Independent Contractor Agreement vs Employment Agreement (Colorado)

Not sure which applies? This is one of the most common classification mistakes Colorado businesses make.

Checklist: What to Include in a Colorado ICA

• ✔ Scope of work & deliverables
• ✔ Payment terms (fixed / milestone-based)
• ✔ IP ownership & assignment
• ✔ Confidentiality
• ✔ Non-exclusivity
• ✔ Tax responsibility disclosure
• ✔ Governing law (Colorado)
• ✔ Dispute resolution
• ✔ Notarized signatures

Build Your Colorado Independent Contractor Agreement

SMVRT Legal’s Colorado Independent Contractor Agreement template is built specifically for:

• Colorado misclassification rules
• CDLE audit risk
• Proper burden-shifting language
• IP ownership protection
• Real-world enforceability

FAQs

Final Thought (Authority Close)

Colorado aggressively enforces worker classification. A generic contractor agreement — or one copied from another state — can expose your business to significant liability.

A Colorado-specific Independent Contractor Agreement, drafted and used correctly, is one of the most effective tools for reducing that risk.