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It is not well known, but a new law went into effect in July 2021 that requires employers to report independent contractors to the state for child support enforcement. While it changes the definition of employee for this purpose alone, it does not change the definition of employee for other wage and hour purposes.

Since July 1, 2021, the Colorado definition of a new hire “includes a self-employed or contracted employee for whom the employer is required to report compensation to the federal internal revenue service.” The State of Colorado further explains on its website that they must be reported if they have provided a Social Security number for tax purposes, but not if they provided a Federal tax ID (FEIN). As with other new hires, an employer still does not have to report anyone hired for less than 30 days or who has been previously employed within 60 consecutive days. 

There’s no need to panic. As before this law, all employers are required to report new employees to the Colorado State Directory of New Hires within 20 days of the first day of work. For those who missed this new rule, and because the State just recently updated its portal, there is a grace period for reporting past independent contractors. The State says:

“If you have outstanding new hire reports needing to be filed for self-employed or contract employees dating from the inception of House Bill 21-1220 in July 2021, those employees should still be reported, but no penalty will be imposed for late reporting of these individuals.”

Employers should start reporting new independent contractors going forward. To report independent contractors, an employer must report self-employed or contract employees online as you would any employee, providing:

• Full name, Social Security number, and address

• Contract start date

• Check the provided box to indicate if they are an independent contractor.

Additionally, employers should check with their payroll provider or accounting software; there may be a way to set up reporting in those systems.

Employers Council is available to help members navigate this law through online resources, consulting, and training. Contact the Member Experience team by email or call 800-884-1328.