DRAFT Rules
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PART XVII EMPLOYEE MISCLASSIFICATION WORKER CLASSIFICATION

17.1	CLASSIFICATION GUIDANCE AND CLARIFICATION

17.1.1	Statutory Reference: 8-70-115, C.R.S.

17.1.2	Factors to Consider. In determining whether a worker is an employee or independent contractor, the Deputy, Hearing Officer, or Panel considers the nine factors enumerated under § 8-70-115, C.R.S., as well as any other relevant factors, including but not limited to:
.1	The relationship between the company for whom services are performed and the worker.
.2	The totality of the circumstances of the relationship between the company for whom services are performed and the worker.
.3	The degree of direction and control exercised by the company over the worker performing the service, except the division will not consider direction and control exercised pursuant to the requirements of any state or federal statute or regulation.

17.1.3	Customarily Engaged in an Independent Trade, Occupation, Profession or Business. Whether a worker is customarily engaged in an independent trade, occupation, profession or business is dependent upon whether the worker engages in a business that is separate and distinct from the company for whom services are performed. Whether a worker could or does perform services for multiple businesses may be considered in the Division’s determination regarding the worker as an employee or an independent contractor, but it is not solely dispositive in that determination. 

In reaching its determination, the Division considers each working relationship individually. The Division does not rely on any single factor, but rather the totality of the circumstances and all relevant factors in accordance with applicable law. While these factors may represent consideration as to the status of the working relationship, the circumstances differ from case to case and additional factors not listed may be considered. No single set of factors is exclusive. When determining whether an employment relationship exists under the Colorado Employment Security Act, the Division considers factors, which may include but are not limited to: 

.1	The date the worker’s business started and whether the company required the worker to start the business in order to perform services for the company.
.2	If the worker markets his or her own business and the means used for marketing.
.3	If the worker has a business that is viable beyond the scope of the agreement between the worker and the company for whom the services are currently being performed, including whether: 
.1 The worker is economically independent from or is substantially dependent upon continued work with the company for whom services are performed.
.2 There is a permanent or continuous working relationship between the worker and the company, and any industry-specific conditions relevant to the permanency.  
.4	If the worker has a business investment such that there is a risk of suffering a loss on the project.
.5	If the company for whom services are performed provides tools to the worker, except as allowed by 8-70-115 (1)(c)(VI), while on the project.
.6	If the rate and method of payment is negotiated by the parties, is established by the worker, is established by the company for whom services are performed, or is established as part of a contract awarded through a bidding process.
.7	If the worker may employ or does employ others to complete the work.
.8 	If the worker carries his or her own liability insurance, as well as other types of insurance relevant to sustaining the worker’s business. 
.9	The number of hours per week that the worker performs services for the company.
.10	If the worker seeks other work for the worker’s own business in the same field as he or she performs for the company.
.11	If the worker has the ability to accept or reject work being offered. 
.12	If the service provided by the worker is an integral part of the company’s business.

17.1.4	Worker-Business Relationship. 
.1	The evidence and circumstances must demonstrate that the worker in question is an independent contractor. 
.2	A worker could still be determined to be in covered employment, even if the worker signs a contract or an agreement, if the facts of the relationship establish that an employment relationship exists.
.3	The existence of an agreement between the worker and the company for the workers’ compensation coverage is not determinative of the worker-business relationship for unemployment insurance purposes.

17.1.5	Burden of Proof. The company for whom services are performed has the burden of establishing, by a preponderance of the evidence, that a worker is, in fact, free from control and direction in the performance of the work and is customarily engaged in an independent trade, occupation, or profession related to that work. A written document may establish a rebuttable presumption of independent contractor status only if it includes the applicable factors set forth in § 8-70-115 (1)(c), C.R.S., and the disclosure set forth in § 8-70-115 (2), C.R.S. While an agreement that meets the requirements of § 8-70-115 (1) (c) may shift the burden of proof to the worker or the Division, such an agreement is not, in itself, conclusive of whether the worker is, in fact, an employee or an independent contractor.

17.1.6	Compliance Assistance. A business may request that the Division provide educational information as it relates to proper worker classification. A business has further opportunity to request a nonbinding advisory opinion in accordance with Regulation 17.2.

17.1.7. Industry-Specific Guidelines. The Division may adopt industry-specific guidance in collaboration with industry representatives to address unique factors and situations in that industry. When applicable, the Division considers such guidance, in addition to the applicable law and the regulations in this Part XVII when determining whether an individual is an employee or an independent contractor. 

17.2 NONBINDING ADVISORY OPINION 

17.2.1 Statutory Reference: 8-72-114 (4), C.R.S. 

17.2.2 Issuance of Advisory Opinion. An advisory opinion, described in 8-72-113114 (4)(a), C.R.S., shall be issued only if: 
.1 The employer completes and submits a request for a written advisory opinion using such filing methods as may be prescribed by the division; and 
.2 Upon submitting the request for a written advisory opinion, the employer must submit a nonrefundable fee of $100; and 
.3 In conjunction with the request, as solicited by the division, the employer must provide information and evidence as described in 8-70-115, C.R.S.

17.2.3 The Director shall not use an advisory opinion previously issued pursuant to section 8-72-114 (4), C.R.S. for the purposes of initiating an unemployment insurance audit.
17.117.3  MISCLASSIFICATION WORKER CLASSIFICATION INVESTIGATIONS AND FINES 

17.1.1 17.3.1  Statutory Reference: 8-72-114 (3), C.R.S. 

17.1.2 17.3.2  Written Order. Upon conclusion of a requested investigation of misclassification, the division shall issue a written order in conjunction with an audit report including any determination of the existence of an employment relationship. 

17.1.3 17.3.3  Appeal From Determination. Any employer who wishes to appeal a determination made under the provisions of this part XVII of the regulations shall file a notice of appeal with the division. A hearing may be obtained in accordance with 8-76- 113, C.R.S., and regulation 11.2. 

17.1.4 17.3.4  The Division, prior to committing department resources to a full audit under the provision of this article, shall take into consideration whether the purported acts of misclassification are inconsistent with section 8-70-115 (1) (b), C.R.S. 

17.1.5 17.3.5  Fine. As described in 8-72-114 (3)(Ee)(III), C.R.S., a fine may be imposed on an employer who misclassified an employee with willful disregard for the law. Such fine shall be imposed in the following manner: 
.1 For the first instance of such misclassification, an employer shall be fined a minimum of one hundred dollars or one hundred dollars for each day that an employee was misclassified, whichever is greater, but the fine shall not exceed five thousand dollars per misclassified employee. 
.2 For the second and any subsequent instance of such misclassification, an employer shall be fined a minimum of one thousand dollars or five hundred dollars for each day that an employee was misclassified, whichever is greater, but the fine shall not exceed twenty-five thousand dollars per misclassified employee.