Instawork to pay $400K in back unemployment insurance payments under settlement with AG Weiser, state labor department

Nov. 24, 2025 (DENVER) — Attorney General Phil Weiser and the Colorado Department of Labor and Employment announced today that they have reached a settlement agreement with Instawork, an app-based staffing agency, and an affiliate company after a state investigation found they violated the Colorado False Claims Act and the Colorado Employment Security Act by misclassifying employees as independent contractors and failing to pay required unemployment insurance premiums.

Under the settlement terms, if accepted by the court, Instawork will cease offering independent contractor shifts in Colorado and treat all workers as employees. Instawork will pay $400,000, reflecting the amount of unpaid unemployment premiums and double damages. The action is the first settlement under the Colorado False Claims Act enacted in 2022 (opens new tab) to guard against individuals and companies that defraud state government programs.

“As Coloradans navigate the increasingly complex landscape of app-based work, it’s important for companies operating in that space to properly classify workers and pay any required taxes and other costs—like unemployment insurance—on their behalf,” said Attorney General Weiser. “In this case, Instawork misclassified employees, submitted incorrect reports to the state, and failed to pay what they owed. With this settlement, our office’s first under the Colorado False Claims Act, we are holding the company accountable and ensuring that they treat workers fairly moving forward.”

“Worker misclassification not only provides an unfair competitive advantage to bad acting employers, but wrongfully treats hardworking Coloradans who are playing by the rules,” said Philip Spesshardt, Unemployment Insurance Division Director at CDLE. “We appreciate our partnership and collaboration with the Attorney General’s Office to hold responsible parties accountable.”

Instawork began operating as an app-based staffing agency in Colorado in August of 2020. The company offers workers, whom they call “pros,” the opportunity to pick up hourly shifts in jobs traditionally performed by employees. Jobs range from warehouse and manufacturing work to bartending, food service, and other hospitality jobs with clients they call “partners.” More than 69,000 workers in the Denver area use the app to find hourly work.

These partners post shift opportunities for pros with information about where, when, what type of work, and how much they will earn. Wages are negotiated by Instawork and partners, not directly with pros. Instawork vets a pro’s skills and other qualifications, assesses a pro’s performance, imposes work requirements, and sometimes sends supervisors—called “captains”—to worksites.

Instawork offered pros “1099 shifts” and “W2 shifts,” but only began offering the latter after some partner companies expressed concerns about worker misclassification. This led company leaders to create an affiliate called Advantage Workforce Solutions, LLC, or AWS in 2021. Partner companies decided how shifts were classified, not Instawork or AWS.

Despite lacking the flexibility, autonomy, or independence of contractors, Instawork still classified them that way. An audit conducted between 2022 and 2024 by the state Department of Labor and Employment determined that Instawork owed over $134,000, and since the audit was completed, the company racked up more than $82,000 in additional underpayments.

Read the full settlement (PDF).

###

Media Contact:
Lawrence Pacheco
Chief Communications Officer
(720) 508-6553 office
lawrence.pacheco@coag.gov