Summary:
We call on the Colorado General Assembly to amend § 8-41-202 of the Workers’ Compensation Act to allow passive partners or LLC members who own less than 10% of a business and perform no services for payment from the partnership to opt out of workers’ compensation insurance coverage through the Rejection of Coverage process.

 
Why This Matters:
Under current Colorado law, anyone who owns less than 10% of a business is automatically treated as an employee for insurance purposes — even if they:

Do no work for the business,
Receive no guaranteed payment, and
Are purely passive equity partners.

This results in:

Unnecessary insurance costs,
Unfair penalties,
Misclassification of capital holders as employees, and
Barriers to partnership-based business models
 
The Simple Fix:
Amend § 8-41-202 to permit exemption for sub-10% partners if they meet both of the following conditions:

They perform no operational services for the business.
They receive no guaranteed payments or wages.

This change:

Maintains protections for true workers,
Respects the legal distinction between labor and investment, and
Encourages responsible, decentralized business formation.
 
What We Ask the Legislature To Do:
Amend the statute to include the following clarification:

“A partner or member owning less than 10% of the business may reject coverage if they perform no labor for the business and receive no guaranteed payment for services rendered.”
 
Sign and Support:
Protect voluntary investment.
Support true partnership.
Fix the 10% flaw.