Colorado Workers' Comp Exemption

A sole proprietor is not statutorily considered an "employee" of their own business, so they're excluded from mandatory coverage by default and may voluntarily carry coverage on themselves if they choose. The exception: a sole proprietor personally performing construction work on a construction site must either carry coverage or file an affirmative rejection using Form WC 45 — the default exclusion does not apply to construction-site work.

Two different regimes apply depending on structure. General partners follow the same rule as sole proprietors — excluded by default, with Form WC 45 required only if they're personally performing construction work on a construction site. LLC members, by contrast, fall under the same statute that governs corporate officers (C.R.S. §8-41-202) and must file an affirmative election to reject coverage (Form WC 43), meeting the same ownership and control test described below for officers.

Corporate officers are covered by default and may elect to reject coverage by filing Form WC 43 under C.R.S. §8-41-202, but only if they meet both parts of a test: they must own at least 10% of the corporation's stock (or 10% of the membership interest, for an LLC member), and they must control, supervise, or manage the business's affairs. The rejection must be voluntary and cannot be made a condition of holding the officer role. We found no verifiable cap on the number of officers who can reject coverage under this statute.

Two different forms apply depending on who's filing. Form WC 43, "Rejection of Coverage by Corporate Officers or Members of a Limited Liability Company," is used by officers and LLC members. Form WC 45, "Rejection of Coverage by Partners and Sole Proprietors Performing Construction Work on Construction Sites," is used by sole proprietors and partners specifically doing construction work. Both are filed with the Colorado Division of Workers' Compensation; written notice can also go to the insurer. No filing fee was found in the sources we checked. There is no confirmed fixed renewal or expiration term — the WC 43 form includes a rescission option, suggesting a rejection stands until affirmatively rescinded, but this isn't spelled out in statute, so treat it as a general pattern rather than a guaranteed rule.

Colorado draws a real legal distinction that's easy to blur: sole proprietors and general partners get a no-filing default exclusion simply because they don't meet the statutory definition of "employee," while officers and LLC members go through an entirely different affirmative-election, ownership-test regime under §8-41-202. Construction work flips the default for owners and partners specifically — normally excluded, they must file WC 45 if working on a construction site. Also worth flagging clearly: rejecting coverage under this statute means giving up any legal cause of action for your own on-the-job injury under the Workers' Compensation Act — that's the real tradeoff, not just a premium question.