CDLE Holds Public Meeting Before Embarking on Statewide Study

On April 13, the Colorado Department of Labor and Employment (CDLE) held a public meeting on misclassification of employees as independent contractors. The meeting was held to elicit comments for a statewide study.

In June 2009, Colorado enacted a law allowing anyone to file a complaint alleging that an employer is misclassifying its employees as independent contractors. The law, codified as C.R.S. § 8-72-114, allows CDLE to impose hefty fines for “willful” misclassifications. It also allows employers to request an opinion from the CDLE on whether an individual should be classified as an independent contractor or employee.

The law directs the CDLE to conduct a statewide study on employee misclassification to determine which state entities are affected; the amount of state revenue lost by misclassifications; the pervasiveness of misclassifications and which industries are particularly affected; whether there should be a single definition of the employment relationship and how it should be defined; and any other pertinent issues. Last week’s meeting was the first step in that process.
Several individuals testified about the effects of employee misclassification. Some asked for clarification of the complaint process, noting that many independent contractors were hesitant to bring complaints for fear of losing their jobs. Others wondered what kind of evidence was necessary to support a claim. The CDLE answered that any individual could file a complaint, not just the independent contractor. Complaints should include a description of the work and evidence that the individual is “employed” as defined by the law.
One commenter asked how the CDLE construes “willful,” given that the law fails to define it. The CDLE representative said it is a high standard. Specifically, the CDLE finds “willful” conduct where it previously educated an employer, but the employer continued to misclassify its employees. The CDLE may consider statutorily defining “willful” after the public has had a chance to comment.
Thus far, it appears that the industries most affected are mining, construction, finance and insurance, administrative support, waste management, transportation, and warehousing. Of the 31 complaints the CDLE has investigated, 29 revealed misclassifications. Only a single advisory opinion has been requested since the law went into effect nearly two years ago.
We anticipate that the CDLE will continue to focus on employee misclassification. Contact us with questions about your classifications. If you would like to provide written comments to the CDLE, you can do so through April 27, 2011.