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An independent contractor is not entitled to unemployment compensation benefits under Colorado law. When a company engages the service of independent contractors, the company does not need to pay the State of Colorado the unemployment compensation tax required for its employees.

The company does not pay a salary or hourly rate but rather a fixed or contract rate. The company cannot terminate the work during the contract period unless the individual violates the terms of the contract or fails to produce a result that meets the specifications of the contract.

Workers who must personally perform the services for which a business is paying are more likely employees. In contrast, independent contractors usually have the right to substitute other people's services for their own in fulfilling their contracts.

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed.

While an employee might have some freedom (like flexible hours), you have the right to manage and direct them. On the other hand, contractors are hired to do specific tasks needed by you or your business. These tasks are done without a permanent employment relationship.

An employee has no potential for suffering a monetary loss in connection with the work performed. An independent contractor can make a profit or suffer a loss in connection with the work performed. An employee works on the premises of the employer or on a route or location designated by the employer.