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Colorado Independent Contractor Agreement Template

Colorado is the rare state where the formatting of a clause carries legal weight, and where it takes two separate disclosures, not one, to cover both acts.

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Introduction

An Independent Contractor Agreement is a contract between a business and a self-employed worker covering scope, payment, ownership of the work product, and how the engagement ends. Colorado does not require one, but it rewards a carefully drafted one more directly than most states, because C.R.S. 8-70-115(2) prescribes both the content and the typography of a clause and attaches a legal consequence to getting them right. A document signed by both parties, which may be the service contract or a separate document, creates a rebuttable presumption of an independent contractor relationship where it addresses the applicable nine factors in C.R.S. 8-70-115(1)(c) and carries a disclosure, set in type which is larger than the other provisions in the document or in bold-faced or underlined type, about unemployment insurance and income tax. The trap is that this covers unemployment insurance only. Workers' compensation runs on a parallel provision, C.R.S. 8-40-202(2)(b)(IV), which demands a differently worded disclosure and requires every signature to be duly notarized. One clause does not serve both acts. And the presumption shifts the burden of proof; it does not decide whether the worker is genuinely a contractor.

Key Things to Know

  1. 1

    Colorado presumes that service performed by one individual for another is employment. Under C.R.S. 8-70-115(1)(b) the hiring business rebuts that presumption only by showing both that the worker is free from control and direction in performing the service, under the contract and in fact, and that the worker is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

  2. 2

    C.R.S. 8-70-115(2) is the drafting provision. A document signed by both parties, which the statute says may be the contract for performance of service or a separate document, creates a rebuttable presumption of independent contractor status where it discloses that the contractor is not entitled to unemployment insurance benefits unless coverage is provided by the contractor or some other entity, and that the contractor must pay federal and state income tax on moneys paid under the contract.

  3. 3

    The formatting is part of the requirement, not a suggestion. The disclosure must appear in type which is larger than the other provisions in the document or in bold-faced or underlined type. Those are alternatives, so any one of the three satisfies the statute, but a disclosure buried in the same size and weight as the surrounding boilerplate does not.

  4. 4

    A second, separate clause is needed for workers' compensation, and most templates omit it. C.R.S. 8-40-202(2)(b)(IV) applies the same typography rule but requires the disclosure to reference workers' compensation benefits, and it adds a requirement with no counterpart in the unemployment statute: all signatures on the document must be duly notarized. One disclosure cannot satisfy both acts.

  5. 5

    The disclosure alone is not enough for either act. Regulation 17.1.5 of 7 CCR 1101-2 provides that a written document establishes the presumption only if it includes both the applicable factors listed in C.R.S. 8-70-115(1)(c) and the disclosure in C.R.S. 8-70-115(2). The Colorado Department of Labor and Employment states the same rule: only if both requirements are met will the presumption be created.

  6. 6

    The presumption shifts the burden of proof, it does not settle the classification. The state labor department is explicit that a compliant contract does not mean the worker would ultimately be determined to be an independent contractor, only that the burden of proof would be shifted. Regulation 17.1.5 adds that such an agreement is not, in itself, conclusive. Colorado also treats the employment definition as broader than the common-law master and servant relationship the IRS uses.

  7. 7

    Colorado runs three different tests that are not interchangeable: unemployment insurance under C.R.S. 8-70-115, workers' compensation under C.R.S. 8-40-202(2), and wage and hour under the employee definition at C.R.S. 8-4-101(5). The state labor department describes them as similar but not identical, which means a worker can come out a contractor under one act and an employee under another.

Key decisions before you file

Before you file a Independent Contractor Agreement in Colorado, a few decisions shape the document: which option to choose and what each one means. The Independent Contractor Agreement guide walks through them.

Open the Independent Contractor Agreement guide

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Colorado Independent Contractor Agreement

COLORADO FORMATTING NOTE, READ BEFORE YOU EXPORT OR PRINT. The two disclosures in Section 8 are the operative Colorado clauses. Each must appear, in the words of C.R.S. 8-70-115(2) and C.R.S. 8-40-202(2)(b)(IV), "in type which is larger than the other provisions in the document or in bold-faced or underlined type." The three options are alternatives, so any one of them satisfies the statute. If you reformat, re-key, or paste this document into a plain text email, confirm the emphasis survived. Colorado is one of the few states where the typography of a clause, not just its wording, carries legal consequences.

1. Parties

This Independent Contractor Agreement (the "Agreement") is entered into as of ________________, [YEAR] (the "Effective Date") by and between:

[COMPANY NAME], a [TYPE OF ENTITY] organized and existing under the laws of [STATE], with its principal place of business at [COMPANY ADDRESS] ("Company"); and

[CONTRACTOR NAME], an individual residing at [CONTRACTOR ADDRESS] ("Contractor").

Company and Contractor may be referred to individually as a "Party" and collectively as the "Parties."

2. Services

Contractor shall perform the following services (the "Services"): [DESCRIPTION OF SERVICES].

Deliverables. Contractor shall deliver: [LIST OF DELIVERABLES].

Means and manner. Contractor shall determine the means, manner, methods, and sequence of performing the Services. Company may specify the results to be achieved and the deadlines for achieving them, but does not direct how the Services are performed.

Place of performance. Contractor shall perform the Services at ______ (Contractor's own premises, remotely, or another agreed location), and is not required to perform the Services at any premises of Company except where the nature of the Services requires it.

3. Independent Contractor Status

Relationship. Contractor is an independent contractor and not an employee, agent, partner, or joint venturer of Company. Nothing in this Agreement creates an employment relationship.

Contractor representations. Contractor represents that Contractor: (a) is customarily engaged in an independent trade, occupation, profession, or business related to the Services; (b) offers services to the general public and is free to accept work from other clients; (c) maintains Contractor's own place of business, tools, and equipment as appropriate to the Services; and (d) bears the opportunity for profit and the risk of loss on the Services.

Colorado statutory terms (C.R.S. 8-70-115(1)(c)). The disclosures in Section 8 do not stand on their own. Under 7 CCR 1101-2, Reg. 17.1.5, a written document establishes the rebuttable presumption of independent contractor status "only if it includes the applicable factors set forth in section 8-70-115 (1)(c), C.R.S., and the disclosure set forth in section 8-70-115 (2), C.R.S." The nine statutory factors are drafted below as things Company does not do. Under C.R.S. 8-70-115(1)(d), the document need address only those factors that are appropriate to the parties' situation, so strike any that do not fit and do not leave a term in place that the parties will not actually follow. Company does not:

  1. Require Contractor to work exclusively for Company, except that Contractor may choose to work exclusively for Company for the finite period of [PERIOD OR "not applicable"];
  2. Establish a quality standard for Contractor, except that Company may provide plans and specifications regarding the work, and may not oversee the actual work or instruct Contractor as to how the work will be performed;
  3. Pay a salary or hourly rate, but rather a fixed or contract rate;
  4. Terminate the work during the contract period, unless Contractor violates the terms of this Agreement or fails to produce a result that meets the specifications of this Agreement;
  5. Provide more than minimal training for Contractor;
  6. Provide tools or benefits to Contractor, except that materials and equipment may be supplied;
  7. Dictate the time of performance, except that a completion schedule and a range of mutually agreeable work hours may be established;
  8. Pay Contractor personally, but rather makes checks payable to the trade or business name of Contractor, which is [TRADE OR BUSINESS NAME]; and
  9. Combine its business operations in any way with Contractor's business, but instead maintains those operations as separate and distinct.

Not exclusive. This Agreement is non-exclusive. Contractor may perform services for others during the Term.

4. Fees and Payment

Fee structure. Company shall pay Contractor a fixed fee of $, the milestone amounts set out in Schedule A, or the contract rate of $ per ______. Note that item 3 of Section 3 is drafted to a fixed or contract rate rather than a salary or hourly rate, so choose a fee structure consistent with it.

Rate and method of compensation. Compensation is calculated and paid as follows: [RATE AND METHOD]. Payments are made payable to the trade or business name identified in Section 3.

Payment date. Company shall pay Contractor on or before ______ (a date, or the mechanism for determining it).

5. Term and Termination

Term. This Agreement begins on the Effective Date and continues until ______ or completion of the Services, unless terminated earlier under this Section.

Termination. Company may terminate this Agreement during the contract period only if Contractor violates the terms of this Agreement or fails to produce a result that meets the specifications of this Agreement, consistent with item 4 of Section 3. Contractor may terminate on [NUMBER] days written notice to Company.

Effect of termination. On termination, Company shall pay Contractor for all Services performed through the effective date of termination. Contractor shall deliver all work in progress for which Contractor has been paid. Sections 6, 7, 8, and 10 survive termination.

6. Ownership of Work Product

Assignment. Upon full payment of all amounts due, Contractor assigns to Company all right, title, and interest in the deliverables created specifically for Company under this Agreement, including all copyright and other intellectual property rights in them.

Contractor materials. Contractor retains all right, title, and interest in any tools, methods, templates, know-how, and other materials that Contractor owned before the Effective Date or develops independently of this Agreement. To the extent any such materials are incorporated into a deliverable, Contractor grants Company a non-exclusive, perpetual, royalty-free license to use them as part of that deliverable.

7. Confidentiality

Contractor may receive information of Company that is marked confidential or that a reasonable person would understand to be confidential ("Confidential Information"). Contractor shall not use Confidential Information except to perform this Agreement and shall not disclose it to any third party without Company's prior written consent.

Confidential Information does not include information that is or becomes public through no fault of Contractor, was known to Contractor without restriction before disclosure, is independently developed without use of Company's Confidential Information, or is rightfully received from a third party without restriction.

8. Taxes, Benefits, and Insurance

Taxes. Contractor is responsible for all federal, state, and local taxes on amounts paid under this Agreement. Company will not withhold income tax, Social Security, or Medicare contributions, and will report payments on IRS Form 1099-NEC where required.

No benefits. Contractor is not eligible for and waives any claim to employee benefits provided by Company, including health insurance, retirement contributions, and paid leave, except where such coverage is required by law.

COLORADO DISCLOSURE 1 OF 2, UNEMPLOYMENT INSURANCE (C.R.S. 8-70-115(2)). Set the paragraph below in type larger than the other provisions of this Agreement, or in bold-faced or underlined type:

CONTRACTOR IS NOT ENTITLED TO UNEMPLOYMENT INSURANCE BENEFITS UNLESS UNEMPLOYMENT COMPENSATION COVERAGE IS PROVIDED BY CONTRACTOR OR SOME OTHER ENTITY. CONTRACTOR IS OBLIGATED TO PAY FEDERAL AND STATE INCOME TAX ON ANY MONEYS PAID PURSUANT TO THIS CONTRACT RELATIONSHIP.

COLORADO DISCLOSURE 2 OF 2, WORKERS' COMPENSATION (C.R.S. 8-40-202(2)(b)(IV)). Disclosure 1 does not do this job. The workers' compensation statute requires its own disclosure, referring to workers' compensation benefits rather than unemployment insurance benefits, and it additionally requires that all signatures on the document be duly notarized. Set the paragraph below in the same emphasized type:

CONTRACTOR IS NOT ENTITLED TO WORKERS' COMPENSATION BENEFITS. CONTRACTOR IS OBLIGATED TO PAY FEDERAL AND STATE INCOME TAX ON ANY MONEYS EARNED PURSUANT TO THIS CONTRACT RELATIONSHIP.

What these two clauses do, and what they do not do. Where the applicable factors in Section 3 and the matching disclosure are both present in a document signed by both parties, Colorado law creates a rebuttable presumption of an independent contractor relationship. The effect is to move the burden of proof, not to decide the classification. The Colorado Department of Labor and Employment puts it this way: "this does not mean the worker would ultimately be determined to be an independent contractor, only that the burden of proof would be shifted." Reg. 17.1.5 is to the same effect, providing that such an agreement "is not, in itself, conclusive of whether the worker is, in fact, an employee or an independent contractor." The parties acknowledge that how the relationship actually operates controls the outcome.

9. Indemnification

Each Party shall indemnify the other against third-party claims arising from the indemnifying Party's breach of this Agreement, negligence, or willful misconduct.

10. General

Governing law. This Agreement is governed by the laws of the State of Colorado, without regard to its conflict of laws rules.

Entire agreement. This Agreement, together with its Schedules, is the entire agreement between the Parties on its subject matter and supersedes all prior discussions.

Amendment. This Agreement may be amended only in a writing signed by both Parties.

Assignment. Neither Party may assign this Agreement without the other Party's prior written consent.

Severability. If any provision is held unenforceable, the remainder of this Agreement remains in effect.

Counterparts and signatures. This Agreement may be executed in counterparts. Where Disclosure 2 of Section 8 is used, an electronic signature alone is not sufficient: C.R.S. 8-40-202(2)(b)(IV) requires that all signatures on the document be duly notarized. Execute those copies in ink before a notary, or use a remote online notarization platform that produces a notarial certificate. The unemployment insurance disclosure in C.R.S. 8-70-115(2) carries no notarization requirement of its own, so a document used only for that purpose needs signatures from both parties and nothing more.

Signatures

Company: ______________________________ Date: ____________

Print name and title: ______________________________

Contractor: ______________________________ Date: ____________

Print name: ______________________________

Notarial acknowledgment (required where Disclosure 2 is used).

State of Colorado, County of ______________________

The foregoing instrument was acknowledged before me this ______ day of ______________, [YEAR], by [NAME OF SIGNER].

Notary Public: ______________________________ My commission expires: ____________

Repeat the acknowledgment for each signer. This Colorado edition is general information, not legal advice; attorney review is available.

Colorado Requirements for Independent Contractor Agreement

Colorado Unemployment Insurance Disclosure and Type Size (C.R.S. 8-70-115(2))

To obtain the rebuttable presumption of independent contractor status for unemployment insurance, the signed document must contain a disclosure, in type which is larger than the other provisions in the document or in bold-faced or underlined type, that the contractor is not entitled to unemployment insurance benefits unless coverage is provided by the contractor or some other entity, and is obligated to pay federal and state income tax on moneys paid under the contract relationship.

Colorado Nine-Factor Written Document Signed by Both Parties (C.R.S. 8-70-115(1)(c) and (1)(d))

The disclosure works only alongside the statutory factors. The same document must address the applicable factors in C.R.S. 8-70-115(1)(c), which are framed as things the hiring party does not do, and must be signed by both parties. Under C.R.S. 8-70-115(1)(d) only the factors appropriate to the parties' situation need be covered. Regulation 17.1.5 of 7 CCR 1101-2 confirms that both the factors and the disclosure are required.

Colorado Workers' Compensation Disclosure Is a Second, Separate Clause (C.R.S. 8-40-202(2)(b)(IV))

The workers' compensation presumption is governed by its own provision and needs its own clause. The disclosure must state that the contractor is not entitled to workers' compensation benefits and is obligated to pay federal and state income tax on moneys earned under the contract relationship, in type larger than the other provisions or in bold-faced or underlined type. The unemployment insurance clause does not satisfy this requirement.

Colorado Notarization of All Signatures for the Workers' Compensation Route (C.R.S. 8-40-202(2)(b)(IV))

Where the parties rely on the workers' compensation provision, all signatures on the document must be duly notarized. There is no equivalent requirement in the unemployment insurance statute. Because of this, an electronically signed agreement alone will not support the workers' compensation presumption, so plan for in-person or remote online notarization of every signer.

Colorado Two-Prong Test and Burden on the Hiring Business (C.R.S. 8-70-115(1)(b))

Service performed by an individual for another is deemed employment, whether or not the common-law relationship of master and servant exists, unless the business shows that the worker is free from control and direction in performing the service, both under the contract and in fact, and is customarily engaged in an independent trade, occupation, profession, or business related to the service. Control exercised because a state or federal statute or regulation requires it is not counted.

Colorado Wage and Hour Uses a Different Employee Definition (C.R.S. 8-4-101(5))

Wage, overtime, and paid leave questions are decided under the Colorado Wage Act definition of employee at C.R.S. 8-4-101(5), which weighs the degree of control and the degree to which the work is the primary work of the employer. The state labor department describes the unemployment insurance, workers' compensation, and wage and hour definitions as similar but not identical, so do not treat one favorable outcome as settling the others.

Colorado Nonprofit Youth Sports Coach Agreements Are Conclusive (C.R.S. 8-40-202(2)(e))

A written agreement between a nonprofit youth sports organization and a coach is conclusive evidence of an independent contractor relationship for workers' compensation purposes, rather than merely rebuttable, where it carries a disclosure in bold-faced, underlined, or large type, in a conspicuous location, acknowledged by the parties, covering contractor status, the absence of workers' compensation benefits, and the income tax obligation. It is not conclusive in a civil action brought by a third party.

Colorado Misclassification Penalties and State Contracting Bar (C.R.S. 8-72-114)

On a finding of misclassification the director shall order payment of back premiums owed plus interest. Where the employer acted with willful disregard of the law, the director may impose a fine of up to $5,000 per misclassified employee for a first offense and up to $25,000 per misclassified employee for a second or subsequent offense, and on a repeat offense may prohibit the employer from contracting with the state, or receiving state contract funds, for up to two years.

Colorado Occupational Exclusions That Depend on the Written Contract (C.R.S. 8-70-136 and 8-70-140.7)

Several Colorado exclusions from employment are themselves conditioned on the paperwork. Licensed real estate brokers, direct sellers, and newspaper distributors are excluded under C.R.S. 8-70-136 only where pay is tied to sales or output and a written contract provides the person is not treated as an employee for federal tax purposes. Land professionals under C.R.S. 8-70-140.7 need a contract designating independent contractor status.

Frequently Asked Questions

Colorado attaches a legal consequence to how the document is drafted and formatted. Under C.R.S. 8-70-115(2), a document signed by both parties that addresses the applicable nine statutory factors and carries a prescribed disclosure, set in larger, bold-faced, or underlined type, creates a rebuttable presumption of an independent contractor relationship for unemployment insurance purposes. Few states put the typography of a clause into the statute.

Two statements. First, that the independent contractor is not entitled to unemployment insurance benefits unless unemployment compensation coverage is provided by the contractor or some other entity. Second, that the contractor is obligated to pay federal and state income tax on any moneys paid under the contract relationship. C.R.S. 8-70-115(2) also fixes the format: the disclosure must be in type which is larger than the other provisions in the document or in bold-faced or underlined type.

No, and this is the most commonly missed point. C.R.S. 8-70-115(2) requires a disclosure about unemployment insurance benefits. The workers' compensation provision, C.R.S. 8-40-202(2)(b)(IV), requires its own disclosure referring to workers' compensation benefits. A business that wants the benefit of both presumptions needs both clauses in the document. A single blended sentence is not what either statute asks for.

Not to be a valid contract, and not for the unemployment insurance presumption under C.R.S. 8-70-115(2), which needs only the signatures of both parties. Notarization matters for the workers' compensation route: C.R.S. 8-40-202(2)(b)(IV) provides that all signatures on the document must be duly notarized. If you are relying on that clause, an electronic signature by itself will not carry it.

No. The effect is a shift in the burden of proof, not a determination of status. The state labor department states that a qualifying contract does not mean the worker would ultimately be determined to be an independent contractor, only that the burden of proof would be shifted. Regulation 17.1.5 of 7 CCR 1101-2 adds that such an agreement is not, in itself, conclusive. The facts of how the work is actually performed still decide the question, and attorney review is an option where the stakes are significant.

The safe answer is that no presumption arises and the business keeps the burden of proving both statutory prongs. There is a reported decision, Varsity Tutors v. Industrial Claim Appeals Office, 2017 COA 104, indicating that a failure to use large or bold-faced type is not automatically fatal where the required information is otherwise emphasized, assessed under a totality of the circumstances. Relying on that means litigating the point, so it is far cheaper to format the clause the way the statute describes.

Yes. C.R.S. 8-70-115(2) says in terms that the written document may be the contract for performance of service or a separate document, and C.R.S. 8-40-202(2)(b)(IV) says the same for workers' compensation. Either way it has to be signed by both parties, and for the workers' compensation version every signature must be notarized. Keeping the disclosure inside the signed agreement is usually simpler than tracking a second piece of paper.

No. Wage and hour questions run on a different employee definition at C.R.S. 8-4-101(5), which looks at the degree of control and the degree to which the work is the primary work of the employer. The state labor department describes the unemployment insurance, workers' compensation, and wage and hour definitions as similar but not identical. The disclosure clauses do nothing for the wage and hour analysis.

For unemployment insurance, C.R.S. 8-72-114 requires the director to order payment of back premiums owed plus interest on a finding of misclassification, with no need to show willfulness. Where an employer acted with willful disregard of the law, the director may add a fine of up to $5,000 per misclassified employee for a first offense and up to $25,000 per misclassified employee for a second or subsequent one, and on a repeat violation may bar the employer from state contracting for up to two years.

Some are. The Colorado Employment Security Act excludes several occupations from employment altogether, including members of a limited liability company, sole proprietors and partners under C.R.S. 8-70-140.8, insurance agents paid solely by commission under C.R.S. 8-70-139, and licensed real estate brokers, direct sellers, and newspaper distributors under C.R.S. 8-70-136, though that last group needs a written contract stating the person is not treated as an employee for federal tax purposes.