the Auditor at your service
Timothy M. O’Brien, CPA, Auditor of Denver
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Workers in Denver contribute to the success of our businesses and communities. How a worker is classified can affect the protections they get. That is why it is important for everyone, including workers, employers, and the community, to understand employee misclassification.
Misclassification happens when a worker is treated as an independent contractor, even though the law says they should be an employee. This problem affects many industries, such as construction, janitorial services, home care, hospitality, restaurants, trucking and delivery, personal services, and gig or app-based work.
To determine whether someone is an employee or an independent contractor, we look at the actual working relationship. The key questions are: Does the person perform labor or services for the benefit of the business? Are they doing the primary work of the business and working under the control of the business?
We consider whether a business depends on the work being performed, profits from the work, decides when and where work is performed, controls how work is completed, decides wages, supervises workers, requires workplace policies or uniforms, or has the ability to discipline or terminate workers.
When a worker is misclassified as an independent contractor, it affects everyone
A simple way to think about the difference is this: independent contractors have customers, while employees have employers. How a worker is classified is important because employees have rights that independent contractors usually do not. Employees may get protections like minimum wage, overtime pay, paid sick leave, rest breaks, workers’ compensation, unemployment insurance, and protection from unfair wage deductions. If workers are classified incorrectly, they can lose these important protections.
Misclassification affects more than just workers. It creates an unfair marketplace for everyone. Employers who follow the law should not have to compete with businesses that avoid their responsibilities. It also reduces contributions to programs funded through payroll taxes, including Social Security, Medicare, and unemployment insurance.
When a worker is misclassified as an independent contractor, it affects everyone
Denver Labor has taken action to address misclassification and recover wages for workers. In one investigation involving GigSmart, a gig app platform for short-term jobs, my team determined that workers were misclassified as independent contractors. As a result, GigSmart voluntarily agreed to classify all Colorado gig workers on its platform as W-2 employees beginning in April 2025 and returned more than $22,000 in unpaid wages.
Now, these workers have protections like minimum wage, overtime, paid sick and safe leave, workers’ compensation, and unemployment insurance. If you want to learn more about employee misclassification, Denver Labor has an educational brochure on our website. If you think you might be misclassified as an independent contractor, please check out this resource and contact us if you have questions.
Download the brochure about employee misclassification:
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