There has been an increasing trend among businesses to organize their business model with the intention of having the people that they rely upon to serve their customers have the status of independent contractors rather than employees. There are several reasons for this structure, including avoiding responsibility for tax withholding and employer payroll taxes; as well as reducing workers compensation policy costs.
The status of a worker, as employee or independent contractor, for tax purposes is covered by a body of law that involves a long list of factors regarding things like the degree of control the employer has over the employee. However, for workers compensation policy coverage, Colorado law uses a more explicit statutory list of factors – all of which must be satisfied – to exclude a worker from being an employee.
Lastly, will using independent contractors impact your premises liability coverage? This is something for the small business owner to have clearly explained by his legal counsel before deciding to reorganize his business model.