If your Colorado LLC has any employees, yes, it needs workers compensation, and the members themselves are covered by default. In Colorado an LLC member is treated as a covered employee unless that member owns at least 10 percent of the company and files a written rejection of coverage; you do not have to do anything to be covered, but you can opt out if you qualify.
Who this is for: Colorado LLC owners, whether a single-member LLC with no staff, a multi-member LLC, or an LLC running a payroll of employees.
The short version
- Any employee means a policy is required (C.R.S. 8-44-101), from your first worker, with no headcount minimum.
- Members are covered by default. Colorado treats an LLC member as an employee who is included in coverage automatically.
- You can reject if you own at least 10 percent. A member with a 10 percent or greater interest may file a written rejection to leave themselves off (C.R.S. 8-41-202).
- Rejecting yourself does not drop your staff. A rejection only removes the member; the LLC must still cover every other employee.
- Employees always get covered from day one once the LLC has any worker.
How Colorado treats LLC members
This is the part owners get backward. Colorado does not leave members out by default the way some states do; it treats an LLC member as a covered employee from the start. If a member wants off the policy, owns at least 10 percent of the membership interest, and also controls, supervises, or manages the business affairs of the LLC, that member can sign and file a written rejection of coverage, which stays in effect for as long as the LLC's policy is in force. A member who owns less than 10 percent cannot reject and stays covered. Because coverage is the default, a member who does nothing is protected, which is usually what a hands-on owner wants.
What applies to your LLC
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees | No | No employees means no required policy; a sole member is covered only if you choose to carry one |
| Two members, no other staff | Usually no | With no employees no policy is required; if you buy one, both members are covered unless each owns at least 10 percent and rejects |
| Members plus any employees | Yes | Employees covered from day one; members covered by default, may reject at 10 percent or more |
| A member who owns under 10 percent | Covered, cannot reject | Only a 10 percent or greater owner may file a rejection |
Covered by default, or rejecting out
Because the rule makes members employees by default, the first thing to check is each member's ownership share. A member who owns at least 10 percent and does not want to be on the policy files a written rejection with the carrier, and it continues in effect while the policy does; there is no separate state exemption registry beyond that filing. A member who owns less than 10 percent cannot reject and remains covered. The limited liability in an LLC shields your personal assets from many business debts, but it does not by itself answer an injured employee, which is exactly what comp is built to handle.
A Boulder example
Illustrative, not a quote. A two-member cleaning LLC in Boulder, owned 60/40, hires its first regular employee. That hire makes a policy mandatory, and the new worker is covered from day one. Both members are covered by default; each owns more than 10 percent, so either could file a written rejection. The member who cleans alongside the crew keeps her coverage, while the member who only handles the books files a rejection to save premium. When a property manager asks for proof of coverage before a contract, the LLC produces a certificate the same day. See our workers comp for cleaning businesses page.
Real questions Colorado owners ask
Does my Colorado LLC need workers comp?
If the LLC has any employees, yes, from your first worker. The members themselves are covered by default, and a member can only opt out by filing a written rejection if they own at least 10 percent of the company.
Are LLC members covered by default in Colorado?
Yes. Colorado treats an LLC member as a covered employee automatically. That is the opposite of states that leave owners out by default; here you are in unless you qualify to reject and do so.
How does an LLC member opt out in Colorado?
By filing a written rejection of coverage, which requires owning at least 10 percent of the membership interest and also controlling, supervising, or managing the business affairs of the LLC. The rejection stays in effect for as long as the LLC's policy is in force.
Can a member who owns less than 10 percent opt out?
No. Only a member with a 10 percent or greater interest may reject coverage. A member below that share stays covered as an employee and cannot file a rejection.
My LLC has two members and no staff. Do we need a policy?
Usually not by state law, because there is no employee yet. If you do carry a policy, both members are covered unless each owns at least 10 percent and files a rejection to opt out.
Does my single-member LLC need workers comp in Colorado?
Not by state law if you have no employees. Many single-member LLCs still buy a policy when a client or general contractor requires proof of coverage, and the sole member is then covered unless they reject.
Do I have to cover employees even if the members reject?
Yes. A member's rejection only removes that member. Any non-owner employee must be covered from their first day once the LLC has a worker, and rejecting yourself does not change that.
Why Colorado owners choose Morrow
- We shop the right market for you. In Colorado you buy workers' comp on the open market, where private insurers compete with the state-chartered fund, Pinnacol Assurance, which by law cannot turn away a Colorado employer, so we can shop your rate across carriers and still have Pinnacol as a guaranteed backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Colorado guides
Every Colorado business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Colorado (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- Colorado cleaning business workers comp
This guide is general information, not legal advice. Colorado rules and penalty amounts can change, so verify current requirements with the Colorado Division of Workers' Compensation or a licensed advisor before you rely on them. Last updated: July 2026.