Position Statement No. 09-07
(Definition of "independent contractor")

I. Introduction

The Colorado Constitution authorizes the Independent Ethics Commission ("IEC"
or "Commission") to give advice and guidance on ethics issues arising under Article
XXIX of the Colorado Constitution and on any other standards of conduct and reporting
requirements as provided by law. The IEC issues this Position Statement to clarify the
meaning of the term "independent contractor" as that term is used in Section 2(1) of
Article XXIX of the Colorado Constitution ("Section 2(1)").

The Commission has received several inquiries asking who is covered under
Article XXIX as an "independent contractor." The Commission encourages requests for
advisory opinions if further clarification is needed.

II. Applicable Law

The gift ban contained in Article XXIX Section 3 applies to all "government
employees." Section 2(1) of Article XXIX defines "government employee" as "any
employee, including independent contractors, of the state executive branch, the state
legislative branch, a state agency, a public institution of higher education, or any local
government, except a member of the general assembly or a public officer."

The Commission has received several requests to clarify who is an "independent
contractor" subject to the gift ban. "Independent contractor" is defined neither in Article
XXIX nor in C.R.S. section 24-18.5-101 (2009). Similarly, there is no discussion of this
issue in the Review and Comment Hearing of Article XXIX or in the corresponding "Blue
Book."

Cases in Colorado discussing the definition of "independent contractor" do so in
the context of distinguishing an independent contractor from an employee. See, Norton
v. Gilman, 949 P. 2d 565 (Co. 1997). Accordingly and because Section (2)(1) of Article
XXIX defines a "government employee" to include both an employee and an
independent contractor, these cases are not helpful to the Commission.
As there is no helpful specific authority to the issue before the Commission, the
Commission will look to the intent of the drafters of Article XXIX.

III. Discussion

The State of Colorado and the local governments under the jurisdiction of the
IEC contract with a vast number of persons and entities . For example, the State and
local governments contract with third parties to provide services and/or expertise as
attorneys, engineers, custodians, bus drivers, sanitation workers, social service
providers, medical providers and for computer support. State and local governments
also contract out for services such as electricity, heating, telephone service, such as
any private business would.

Article XXIX was enacted to regulate ethics in government. Under Article XXIX,
a "government employee", as opposed to a private employee, is subject to the gift ban.
As a result, the drafters of Article XXIX did not intend for every private person who
contracts with the State, or every employee of every private company which has a
contract with the government, to be subject to Article XXIX.

However, the Commission believes that the drafters of Article XXIX intended to
cover those independent contractors who perform a function which might otherwise be
performed by a government employee, such as those covered under C.R.S. §§ 24-50-
503, 504. In Position Statement 08-01, the Commission stated that it "believes that the
voters of Colorado approved Amendment 41 in order to improve and promote honesty
and integrity in government and to assure the public that those in government are held
to standards that place the public interest above their private interests." See, page 3.
The IEC determines that this concern applies equally to independent contractors who
are doing work which might otherwise be done by state or local government employees.
To this end, C.R.S. section 24-5-501 et seq. addresses under what
circumstances a state agency may employ an independent contractor to perform
personal services, rather than hiring or utilizing a state employee. This statutory
scheme distinguishes between "purchased services" and "personal services." "Personal
services" are defined as "services acquired for the state's direct benefit in its
operations." C.R.S. § 24-50-502(2). In contrast, "purchased services" means "the
acquisition of services which directly benefit specified groups or individuals in the public
at large as defined by law, from public or private entities licensed, certified, or otherwise
authorized by statute to provide such services." C.R.S. §24-50-502(3).

Before a state agency may hire an independent contractor under a personal
services contract, it must meet certain criteria1, and specific elements must be
contained in any contract under that section. C.R.S. §24-50-503. In addition, pursuant
to statute, any personal services contracts entered into by the State are subject to a
separate conflict of interest provision. See C.R.S. §24-50-507.

The Commission therefore finds that independent contractors, who enter into
"personal services" contracts, as that term is defined by Colorado statute, including their
employees and members of their immediate families, are subject to the provisions of
Article XXIX, as if they were public employees and officials. This means while they are
under contract with the state or other government entity, they are subject to the gift ban
provisions of Article XXIX sections 3, and 4. The Commission recognizes that an
independent contractor may receive gifts from his or her own company, which would
generally be permissible, unless the gift is made by their employers to influence an
official act by the employee on a government contract.

The Commission determines, furthermore, that it is the employees covered under
the contracts that are covered, not the entity which retains them. A nonprofit
organization which has a contract with a public entity, for example, is not prohibited from
soliciting donations from individuals or foundations to further its charitable work. The
employees who manage that contract, however, may not accept gifts in violation of
Article XXIX. See, Position Statement 09-01 (Lobbyists), in which the Commission drew
a distinction between the professional lobbyist and the organization he or she
represented.

IV. Conclusion

The Independent Ethics Commission holds that an independent contractor within
the meaning of Article XXIX is someone who is the subject of a personal services
contract pursuant to C.R.S. §24-50-501 et seq. and is therefore covered under the laws
pertaining thereto.

The Independent Ethics Commission

Matt Smith, Chairperson
Roy V. Wood, Vice Chairperson
Dan Grossman, Commissioner
Sally H. Hopper, Commissioner
Larry R. Lasha, Commissioner

November 20, 2009

1 §24-50-504 requires that the state personnel director determine that the use of an independent contractor is appropriate. The criteria to be considered include whether the "services are not available within the state personnel system, cannot be performed satisfactorily by employees in the state personnel system, or are such of a highly specialized or technical nature that the necessary expert knowledge, experience and ability are not available through the state personnel system." Other criteria are also listed.