New Colorado Law Increases Penalties for Misclassification of Independent Contractors

On June 2nd 2009, Colorado Governor, Bill Ritter, signed H.B. 1310 into law.  Besides being ordered to pay back taxes and interest, should an employer be found to have willfully misclassified employees, the law imposes a $5,000 fine for each misclassification in first time offences, and $25,000 fines for each subsequent willful misclassification, plus a two year ban on receiving State contracts. 

It is more essential than ever that companies using independent contractors are certain that they are correctly classified according to both State and Federal Guidelines.  This trend of State governments imposing and enforcing higher penalties for the breach of existing laws is likely to continue as they scramble to balance their budgets in a struggling economy. 

It is far cheaper and easier to proactively institute a comprehensive independent contractor compliance program, than it is to handle the aftermath of a failed Federal or State audit.

Related posts:

  1. Recommendation to Standardize the Definition of an Employee
  2. A Unified Independent Contractor Classification Test for Workers’ Compensation and State Unemployment Insurance?
  3. Revenue Proposal 2010 – Contractors must provide a Certified Tax ID, or have tax withheld

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