2025 Colorado Workers’ Compensation Minimum Requirements
In **2025**, every Colorado employer with **one or more employees** must carry workers’ compensation insurance — non-compliance can cost up to **$500 per uninsured day**. The Colorado Division of Workers’ Compensation (CDLE) enforces this rule under state statute §8-40-101 et seq. Employers who misunderstand the threshold risk steep penalties and potential business suspension.
This updated 2025 guide explains who needs coverage, key exemptions, penalties, and the latest rule changes under the **2025 Medical Fee Schedule (Rule 18)** and **Utilization Standards (Rule 16)**.
1. Who Must Carry Workers’ Compensation Insurance in Colorado?
- Any employer with **one or more employees** — full-time, part-time, or family members — must have coverage. (CDLE)
- “Employee” is defined broadly. Anyone performing paid services is presumed an employee unless proven otherwise.
- Independent contractors without employees may be exempt — but employers must verify their independent status in writing.
- Construction contractors must ensure that all subcontractors carry coverage or be liable for them under joint employment rules.
2. Colorado Workers’ Comp Minimum & Exemption Thresholds (2025)
| Category | Requirement / Rule (2025) |
|---|---|
| Coverage threshold | 1+ paid employees triggers mandatory insurance coverage. |
| Penalty for non-coverage | Up to $500 per day uninsured, business closure orders possible. |
| Exempt categories | ▪ Domestic workers < 40 hrs/wk & < 5 days/wk ▪ Casual farm/maintenance labor earning ≤ $2,000/yr ▪ Real estate agents paid solely by commission ▪ Sole proprietors, partners, and corporate officers (by election) |
| Self-insurance eligibility | Company ≥ 5 yrs in operation and $100 million+ in assets or 300+ full-time CO employees. |
| Posting requirement | WC50 Notice must be displayed where employees can see it. |
3. 2025 Updates to Colorado Workers’ Comp Law
- Medical Fee Schedule (Rule 18) revised Jan 1 2025 — higher reimbursement limits, updated status indicators, and clearer billing codes.
- Utilization Standards (Rule 16) updated July 1 2025 — eliminates the requirement for in-person physician exam for initial visits if medically unnecessary.
- Permanent impairment benefit cap increased to $185,000 for injuries on or after Jan 1 2025 (up from $75,000).
- Upcoming 2028 reform: House Bill 25-1300 will adjust burden-of-proof rules for claims, urging early compliance preparation.
4. Case Examples & Cost Scenarios
Case 1 — Small Retail Shop
A Denver boutique employs 3 part-timers (total payroll $150,000). At an industry rate of 1.2%, their estimated premium ≈ $1,800/year.
Case 2 — Construction Contractor
A general contractor hires a subcontractor without coverage. The contractor becomes liable for the subcontractor’s employee injuries under Colorado law.
Case 3 — Uninsured Employer Penalty
An uninsured employer faces daily fines of $500 plus an additional **25% penalty** on any benefits paid to injured workers.
5. Employer Compliance Checklist (2025)
- Determine if you have any paid employees → if yes, you must have workers’ comp coverage.
- Buy a commercial policy or qualify for self-insurance with the CDLE.
- Post the WC50 notice visibly in your workplace.
- Report employee injuries to your insurer within 10 days of notice.
- Keep all claim records and payroll audits for at least 3 years.
- Verify subcontractor coverage annually, especially in construction or maintenance.
- Stay current with rule updates (Rule 16 & 18) effective throughout 2025.
Frequently Asked Questions
Do I need workers’ comp if I only have one employee?
Yes. In Colorado, having even one paid employee means you must carry workers’ compensation insurance. No small-business exception exists.
Who is exempt from coverage in Colorado?
Exemptions include domestic help working under 40 hours per week, casual farm labor under $2,000/year, commissioned real estate agents, and some corporate officers or LLC members who opt out.
What happens if I don’t have workers’ comp insurance?
The CDLE may fine you up to $500 per day and shut down your business. You could also owe the injured worker’s full benefits plus 25% extra.
Can a small business self-insure in Colorado?
Only large or financially secure employers (≥ $100 million in assets or ≥ 300 employees) may apply to self-insure with CDLE approval.
What changed in 2025 for Colorado workers’ compensation?
Major 2025 updates include higher medical fee rates, updated physician utilization rules, and an increased impairment benefit cap to $185,000.
Key Takeaways
- Colorado requires workers’ comp coverage for all employers with even one paid worker.
- Penalties for uninsured operations reach up to $500/day plus 25% claim surcharges.
- 2025 rule updates affect billing, utilization, and benefit caps — review with your carrier.
- Employers must display WC notices, report injuries quickly, and verify contractor coverage.
- Compliance protects both your business and your employees from unexpected liability.