Workman's Comp Questions
Workman's Comp
Frequently Asked Questions

Is it possible for my business to obtain self-insurance for workers' compensation?

In Colorado, employers can choose to self-insure for workers’ compensation if they meet specific criteria related to financial stability and risk management. By obtaining a special permit from the Division of Workers’ Compensation, businesses can assume the responsibility of paying workers’ compensation obligations directly from their own earnings and assets. To qualify for self-insurance, companies must either employ 300 or more workers in Colorado on a regular basis or be a division/subsidiary of a parent company with at least $100,000,000 in assets.

How can I determine as an employer whether I need to carry workers' compensation insurance?

In Colorado, almost all employers, both public and private, are required to provide workers’ compensation coverage for their employees, with a few exceptions. If an employer has one or more full-time or part-time individuals working for them, they are obligated to have workers’ compensation insurance. According to the law, anyone hired to provide services in exchange for payment is considered an employee, including individuals appointed or elected for public sector positions, as well as those employed by private companies for compensation. However, there are specific exemptions to this definition.

Do all employers have a mandatory requirement to maintain workers' compensation insurance?

With the exception of specific work scenarios, such as certain agricultural laborers, casual or domestic workers, real estate brokers, sole proprietors, and partners, all employers are obligated to carry workers’ compensation insurance. It is important to note that directors or officers of a corporation are considered employees and must opt out of coverage through an insurance company.

Even if I have another insurance policy that provides similar coverage to workers' compensation, am I still obligated to carry workers' compensation insurance?

Certainly! According to state law, you are still obliged to maintain workers’ compensation insurance, even if you have another insurance policy that offers similar coverage. While some insurance policies may provide 24-hour medical coverage and wage replacement in case of accidents, these policies have limitations. They do not offer all the benefits provided under workers’ compensation and do not grant the employer the exclusive remedy provision. For more details, please reach out to the Colorado Division of Labor.

What is the process for acquiring workers' compensation insurance?

Typically, an independent contractor refers to an individual who enters into an agreement with another business to complete a specific project at an agreed-upon price. To be considered an independent contractor, two key factors must be met: (1) the contractor must have autonomy and independence in deciding how the work is performed, without being subjected to control or direction, and (2) the contractor must be involved in an independent trade, occupation, profession, or business that relates to the work being carried out. While a written agreement between the parties may contribute to establishing independence, the actual circumstances surrounding the work arrangement will ultimately determine the classification of a worker as an independent contractor. However, if an independent contractor employs workers, it becomes necessary to obtain workers’ compensation insurance for those employees.

Are partnership, corporation, or sole proprietorship entities obligated to carry workers' compensation insurance?

Is it mandatory for a sole proprietorship, partnership, or corporation without any employees other than the sole proprietor or partners to have workers’ compensation insurance? In the case of corporate officers and directors, they are regarded as employees and must possess a workers’ compensation insurance policy. However, it is possible to exclude corporate officers or directors from coverage under the policy. If you are a sole proprietor or partner and engaged in contracted work through a general contractor, either you or the general contractor will need to provide a workers’ compensation insurance policy.

What are my obligations regarding workers' compensation if I lease my employees?

If you lease employees from an employee leasing company, the responsibility for workers’ compensation insurance can be handled in two ways. Firstly, the leasing company can add your company as a separate endorsement to their existing policy. Alternatively, they may choose to purchase a separate policy specifically for each client employer. However, since you, as the client employer, are considered the employer under workers’ compensation law, it is crucial to always maintain a current workers’ compensation policy from an insurance carrier. Additionally, as the employer, you are accountable for reporting any work-related injuries to the Labor Commission. It is important to note that payroll-only companies are not employee leasing companies and, therefore, do not provide workers’ compensation insurance. It is never safe to assume that someone else is taking care of your workers’ compensation insurance, so it is essential to ensure you have appropriate coverage in place.

What obligations does an employer have regarding workers' compensation?

Employers have several responsibilities when it comes to workers’ compensation. Firstly, they are required to prominently display notices, which can be obtained free of charge from the Labor Commission, indicating their compliance with the rules and regulations related to providing compensation to employees and their dependents. These notices should include the name of the insurance carrier, a contact phone number, and instructions on reporting an industrial claim.

In terms of reporting industrial accidents, workers have a window of up to 180 days to report an injury or work-related illness to their employer. Once the injury or illness is reported, the employer has seven days to submit the “Employer’s First Report of Injury or Illness” to the Labor Commission. Additionally, a copy of the report should be provided to the workers’ compensation insurance carrier and the injured worker.

Is it necessary for the employer to file a first report of injury for minor injuries that only necessitate first aid?

Does the employer have an obligation to file a report for any employee who has received treatment from a physician, regardless of the severity of the injury? Additionally, once a physician has provided treatment to an employee with an industrial injury, is the doctor required to submit a Physician’s Report?

What should I do if I have doubts about the validity of a claim or possess evidence suggesting that the injury did not occur in the workplace?

If you have concerns about the legitimacy of a claim, it is advisable to get in touch with your insurance carrier and provide them with detailed information explaining why you believe the claim is invalid. You can either attach a letter to the Employers’ Report or submit it separately to your insurance carrier. However, it is important to note that despite any dispute, you are still required to submit the “Employer’s First Report of Injury.” All reported injuries or illnesses should be filed with both the insurance company and the Labor Commission. It is essential to understand that reporting an injury through the Employers’ Report (form 122) does not imply an admission of liability.

Is it permissible to charge my employees for workers' compensation coverage?

No, it is not allowed to bill employees for their workers’ compensation coverage. If an employer deducts workers’ compensation costs from an employee’s wages, they could potentially face a wage claim. Providing workers’ compensation benefits is the responsibility of the employer, and it is their obligation to ensure coverage for their employees.

As an employer operating outside the state, do I require additional coverage for each state?

Typically, when you hire employees and they experience an industrial accident or illness outside of your state of operation, they would be covered under your existing workers’ compensation policy. However, to ascertain whether additional coverage is required for other states, it is advisable to reach out to the Labor Commission. They can provide information regarding any reciprocity agreements with the state in which you are conducting business. If a reciprocity agreement is in place, the Labor Commission may issue an extraterritorial certificate, extending coverage for that specific state. Conversely, if there is no reciprocity agreement with the outside state, it becomes the employer’s responsibility to obtain workers’ compensation coverage specifically for that state.

What factors are considered in determining workers' compensation insurance premium rates?

The determination of workers’ compensation insurance premium rates is carried out on an individual basis for each employer. However, employers are grouped by occupation classification to establish basic rates. The Department of Insurance, with the authority granted by statute, typically designates the National Council of Compensation Insurance (NCCI) as the entity responsible for setting the basic rates annually. The basic rate is a specific dollar amount per hundred dollars of payroll, reflecting the general hazards associated with the particular business. Each employer’s basic rate is then adjusted to account for their specific injury history. As a result, the actual rate for each employer may differ from the basic rate.

What determines the timing for an employee to return to work?

An employee can typically return to work once a physician determines they have reached a stage of medical stability. Alternatively, if a light duty position is available, the employee may be allowed to return to work in that capacity. The initiation of a light duty program can be facilitated by the physician, the employee themselves, or you as the employer. There are several advantages to implementing a light duty program, including:

  1. Cost reduction for your workers’ compensation insurance carrier, resulting in reduced costs for you.
  2. Retention of experienced and proven employees, saving time and resources that would otherwise be spent on recruiting and training new employees.
  3. Reduction in medical and legal expenses. Research has shown that getting injured workers back to work promptly leads to faster rehabilitation and decreases the likelihood of them seeking legal assistance or additional medical treatment.
  4. Maintaining communication and contact with the injured worker.
  5. Decreasing overall recovery time.

It is important to note that if you, as the employer, do not offer a light duty or modified position to an injured worker, the worker will continue to receive temporary total compensation until they reach a state of medical stability.

Is it mandatory for the employer to offer light duty positions?

No, providing light duty is not a compulsory requirement for employers. However, as mentioned earlier, offering light duty can bring numerous benefits to both the employer and the employee.

If I assign an employee to light duty, am I obligated to pay them the same rate of pay?

No, there is no requirement to pay the employee the same rate of pay while on light duty. However, the insurance company would typically cover 66 2/3 percent of the difference between the employee’s previous earnings at the time of the injury and their current earnings while on light duty.

Are there additional benefits to which the injured worker is entitled?

The injured worker may be eligible for a permanent partial impairment rating if they have sustained a permanent impairment as a result of a work-related injury. This rating is determined by a doctor and applies if the employee is able to return to work. In cases where the employee has suffered a permanent disability that completely prevents them from returning to any form of work, they may be considered for permanent total disability compensation. Statutory conditions for permanent and total disability include the loss of two limbs (e.g., legs or arms), loss of eyes, or a combination thereof. Any other injury resulting in a permanent impairment may potentially qualify as a permanent total disability if the injured worker cannot return to work.

Additionally, the insurance carrier or self-insured employer is responsible for covering the costs of necessary artificial means, appliances, and prostheses required for the employee’s treatment. If broken appliances such as eyeglasses are essential for medical treatment, they may also be replaced.

In the unfortunate event of an employee’s death resulting from a work-related injury or illness, death benefits are provided by the insurance carrier or self-insured employer to the spouse and/or dependents. Additionally, there is an allowance to cover burial costs.

Is it possible for the employer or insurance carrier to specify the treatment facility for employees in the event of industrial accidents?

Is it within the rights of the insurance carrier or employer to designate a preferred medical provider for initial treatment and hospital care in the case of an injured worker? If a preferred provider is designated, the injured worker must initially seek medical treatment from that provider.

Is it necessary for me to grant my employees time off to attend therapy or doctor appointments once they have been cleared for full duty?

Providing paid time off is not mandatory once a worker has reached Maximum Medical Improvement (MMI) and has been released to full duty.

If an on-the-job injury is caused by the use of illegal drugs or alcohol, is the employer still held responsible?

For specific company policy, please consult your legal counsel. In cases where the major contributing cause of an injury is determined to be the employee’s use of illegal substances, intentional abuse of drugs beyond prescribed therapeutic amounts, or intoxication from alcohol with a blood alcohol concentration of .08 grams or higher as indicated by a chemical test, no disability compensation (wage replacement) will be awarded except in the event of death. However, the medical costs related to the injury will still be covered.

What strategies can an employer implement to control or reduce workers' compensation costs?

Active employer involvement is key to achieving this goal. Here are several steps employers can take:

  1. Implement a comprehensive safety program: By prioritizing workplace safety and involving employees in identifying potential hazards and risky practices, employers can prevent injuries and reduce related costs.
  2. Maintain regular communication with injured employees: Staying in touch with employees who are on workers’ compensation claims shows care and concern, and it has been shown to reduce disability claims significantly. Regular check-ins demonstrate support and help foster a smooth return to work.
  3. Conduct thorough accident investigations: After an incident, focus on identifying the root causes and implementing changes to prevent similar accidents in the future. Avoid assigning blame and instead aim for positive change.
  4. Establish an early-return-to-work program: Work closely with the designated physician to ensure they understand the job requirements and essential functions. This facilitates the prompt return of employees to suitable work, reducing costs associated with prolonged absences and replacement staff. Detailed job descriptions can also aid compliance with the Americans with Disabilities Act.
  5. Review quarterly workers’ compensation claims: Obtain loss statements from your insurance carrier and carefully analyze all claims paid during the quarter. If any discrepancies or disputes arise, promptly communicate with your insurance carrier for resolution.

For more comprehensive guidance, refer to the Employer’s Guide provided by the Colorado Department of Labor & Employment’s Division of Workers’ Compensation.

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