Workers’ Compensation insurance is an insurance system that provides medical benefits and monetary compensation to assist employees who become injured or ill as a result of their jobs. The Workers’ Compensation Act of Colorado (WCAC) defines employer responsibilities for the state’s workers’ compensation program. Compliance with this act is monitored by the Division of Workers’ Compensation (DWC), part of the Colorado Department of Labor and Employment.
One of the purposes of the workers’ compensation system is to reduce the risk of litigation when work-related injuries and illnesses result in employee disability. Without workers’ compensation, cases could end up in the court system, further burdening an already overloaded system and potentially delaying important treatment and benefits for months, if not years.
Workers’ compensation provides benefits without a determination of fault or negligence so that injured employees can be treated and compensated promptly, and employers are not under threat of lawsuits.
Who is Subject to the WCAC?
Unless a specific exception is made, all employers in Colorado are required to carry workers’ compensation coverage. This includes:
- The state and every county, city and town government as well as irrigation, drainage, school and taxing districts;
- Any person, association, firm, corporation, personal representative, assignee, trustee or receiver that employs another in the same business or employment; and
- Institutions that participate in a bona fide cooperative education or student internship program sponsored for the purpose of providing on-the-job training.
Who is Excluded Under the WCAC?
The following are not subject to the WCAC:
- Licensed real estate brokers and licensed real estate sales agents who are excluded from the definition of employee;
- Any person or corporation operating a commercial vehicle and hired as an independent contractor only to perform for-hire transportation, including loading and unloading;
- Certain charitable, fraternal, religious and social employers that are elected or appointed to serve in an advisory capacity and receive an annual salary of $750 or less;
- Farmers and Ranchers who hire persons to perform casual maintenance, repair, remodeling, yardwork or similar work if these employers have no other employees subject to the WCAC;
- Persons that hire individuals for domestic work, repair, remodeling, or yardwork at the private home of the employer if:
- These employers have no other employees subject to the WCAC; and
- Job assignments are not within the course of the trade, business or profession of said employers.
- Common carriers by railroad;
- Lessors or sublessors of real property who lease real property for agricultural production or for conducting other type of business.
How Does an Employer Obtain Coverage?
Employers subject to the WCAC must obtain workers’ compensation coverage for their employees by either:
- Purchasing an insurance policy from a private insurance carrier licensed to do business in Colorado; or
- Securing the DWC’s approval to self-insurance (either as an individual employer or as part of a group of employers).
Employers cannot waive or be released from coverage obligations, unless they qualify for an exception under the WCAC or receive authorization from the DWC. Employers must also bear the full cost of providing workers’ compensation coverage and cannot require their employees to pay for any part it.
To qualify for a self-insurance license, an employer must:
- Regularly employ at least 300 individuals in Colorado (some exceptions are possible at the DWC’s discretion if other criteria are met);
- Submit its most recent certified financial statement as well as the certified financial statements for four previous consecutive years;
- Prove that it has been in business for at least five years (some exceptions are possible if the employer is backed up by a parent company with a business history of at least five years);
- Prove it has sufficient financial strength and liquidity to guarantee it will be able to meet all of its obligations under the WCAC;
- Obtain an insurance policy of specific excess insurance acceptable to the DWC;
- Deposit a security of at least $300,000 against its liability under the WCAC;
- Name the DWC as the beneficiary of the security; and
- Show that it has, within its own organization, ample facilities and competent personnel to handle all claims and administer all duties under the WCAC (the employer may hire a third-party administrator to provide these services).
What Other Requirements Must Employers Meet?
The WCAC requires every employer to display a notice indicating that the employer has workers’ compensation coverage, as required by law. The notice must identify the employer’s insurance carrier or state that the employer is self-insured.
The WCAC requires employers to keep a record of all employee injuries that result in fatalities, permanent physical impairment or more than three shifts or calendar days of lost time from work. Employers must also keep a record of occupational diseases that have been listed by the DWC.
Employers must immediately report to the DWC any accident in which three or more employees are injured. Other serious accidents (fatalities, permanent impairment, 3 days or more of lost time, certain occupational diseases) must be reported within 10 days.
Employers must also pay benefit payments in a timely manner with specifics outlined by the WCAC.
How Can I Learn More?
This article is summarized from Roper Insurance’s Workers’ Compensation Employer’s Packet. To receive a free copy of this packet, which includes additional workers’ compensation resources, including notices and forms specific to the state of Colorado, email our workers’ compensation specialists today or call Roper Insurance at 303-721-1145.