Independent Contractors and the Colorado Workers' Compensation Act-part Ii
| Publication year | 1993 |
| Pages | 1281 |
1993, June, Pg. 1281. Independent Contractors and The Colorado Workers' Compensation Act-Part II
This is Part II of a two-part article discussing the analysis under workers' compensation law for determining liability for independent contractors. Part I, which was published in the March issue of The Colorado Lawyer, focused on distinguishing actual employees from independent contractors under common law criteria.
This Part II was originally intended to discuss completion of the analysis using the principle of statutory employment. However, subsequent to the publication of Part I, the Governor signed into law Senate Bill ("S.B.") 93-132, effective April 12, 1993. S.B. 93-132 changes the analysis for distinguishing actual or statutory employees from independent contractors under workers' compensation law. This article discusses this new legislation and its ramifications.
S.B. 93-132 amends the definition of "employee" in CRS § 8-40-202 by specifying criteria for distinguishing an independent contractor from an actual employee. The new legislation borrows substantially the same criteria found in the Colorado Employment Security Act.(fn1)
The new criteria are expressly intended to supersede the common law criteria discussed in Part I of this article. In fact, S.B. 93-132 amends the legislative declaration to the Workers' Compensation Act to establish such intent. Section 1 of S.B. 93-132 adds a new subsection to the legislative declaration that states, in pertinent part:
[T]he test for determining whether an individual is an employee for the purposes of the "Workers' Compensation Act of Colorado" is based on the criteria found in section 8-70-115. It is the intent of the General Assembly that when determining whether an individual is an employee only the factors specified in section 8-40-202(2) and any case law which has construed the provisions of section 8-70-115 are to be considered. It is further the intent of the General Assembly that the provisions set forth in section 8-40-202(2) supersede the common law.(fn2)
As the following discussion will show, the new statutory criteria are essentially a distillation of the common law criteria.
The criteria for determining who is an independent contractor will be codified at a new subsection (2) to CRS § 8-40-202. Subsection (2) will state, in pertinent part:
Notwithstanding any other provision of this section, any individual who performs services for pay for another shall be deemed to be an employee, irrespective of whether the common-law relationship of master and servant exists, unless such individual is free from control and direction in the performance of the service, both under the contract for performance of service and in fact, and such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.(fn3) [Emphasis added.]
The language defining the two fundamental criteria, freedom from control and independent engagement in an independent trade or business, is identical to the correlative language in the unemployment insurance tax section at CRS § 8-70-115. However, in contrast to CRS § 8-70-115, the presumption of employment is limited in a later section of S.B. 93-132 which provides that
[n]othing in this section shall be construed to remove the claimant's burden of proving the existence of an employer-employee relationship for purposes of receiving benefits pursuant to [the Workers' Compensation Act].(fn4)
Accordingly, under workers' compensation law as amended by S.B. 93-132, if the issue of whether an individual is an employee or an independent contractor is raised in the context of a workers' compensation benefits hearing, the burden
If a business seeks to prove that an individual is an independent contractor rather than an employee, S.B. 93-132 provides:
To prove that an individual is engaged in an independent trade, occupation, profession, or business and is free from control and direction in the performance of the service, the individual and the person for whom services are performed may show by a preponderance of the evidence that the conditions set forth in paragraph (a) of this subsection (2) have been satisfied. The parties may also prove independence through a written document.(fn5) [Emphasis added.]
The word "and" has been emphasized for the purpose of this discussion to indicate that under circumstances such as an agency compliance investigation, evidence of the nature of the work relationship may be required from both parties to the work relationship.
The key criteria---freedom from control and independent engagement in a trade, occupation, profession or business---are obviously similar to the common law criteria discussed in Part I, generally referenced under the denominations "right of control" test and the "relative nature of the work" test. However, because S.B. 93-132 expressly provides that the new statutory criteria supersede the common law and that case law construing CRS § 8-70-115 is the only source of interpretation for these criteria, it is useful to review the treatment of this subject in some representative cases.
For instance, in Allen Co., Inc. v. Industrial Commission,(fn6) the Colorado Supreme Court directly quoted an earlier opinion regarding freedom from control, stating:
The question of control and direction ... is not a matter of degree. Undoubtedly, it relates to general control. It is not satisfied by some "detail" in which the individual may be free to exercise his own judgment. The power to terminate a contract for personal service at any time without liability is an important factor in arriving at a conclusion as to whether the individual is free of control and direction "because the right immediately to discharge involves the right of...
To continue reading
Request your trial