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Colorado tax and labor law guide

Household employment requirements for families hiring a caregiver in Colorado

We understand that Colorado household taxes and payroll isn’t everyone’s specialty. That’s why we’ve combined all the state and federal tax and labor law information you’ll need! Check out the information below that HomePay is here to help with.

Checklist for Colorado household employers

We know you’re busy! Here’s a quick “to-do” list with links to extra details below.

Beginning of employment 

During employment 

Optional benefits for your employee

Ending employment

Beginning of employment 

Workers’ compensation

Household employers in Colorado are required to get coverage for workers’ compensation insurance if their employee works 40 or more hours or 5 days per week. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.

Employment posters 

Families in Colorado are required to notify their employee of their rights by sharing these posters.

During employment 

Minimum wage rates

  • Colorado state: $12.00/hour
  • Denver: $14.77/hour 

Note: Whenever more than one minimum wage rate applies, employers are required to pay the higher rate.

Colorado overtime requirements

  • Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek, 12 in a workday or 12 in a work shift.
  • Live-in employees are not required to be paid overtime. 
  • Overtime is not required to be paid when work is performed on a holiday. 

Colorado Public Health Emergency Leave

Families are required to provide up to 80 hours of paid leave to their employee if the governor of Colorado issues an emergency declaration. Employees can use their paid leave from the time the emergency declaration is made until up to 4 weeks after the declaration ends. 

Optional benefits for your employee 

Health insurance

Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.

Families with 2 or more employees have 3 options:

  1. Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
  2. Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
  3. Purchase a policy through SHOP (Small Business Health Options Program). 

Visit our health insurance page for more information about these options.  

Mileage reimbursements

The current federal mileage reimbursement rate is $0.56 per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.

Ending employment 

Managing unused PTO 

Colorado household employers do not need to pay their employees for unused sick time but they must pay out unused vacation time.

The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.

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