Unscrupulous employers sometimes label their workers “independent contractors” to avoid paying things like unemployment insurance, workers’ compensation and employment taxes.
By a vote of 118-11, the House approved legislation intended to curb the practice.
Sponsored by Rep. Tim Sanders (R-Blaine) and Sen. John Pederson (R-St. Cloud),
SF1653* is intended to solve a problem that has dogged the state for years. When employers misclassify their workers as contractors, they deny them basic benefits and protections afforded to regular employees. The state currently has no effective system for identifying employers who engage in this activity.
The bill would clarify who can be legally considered an “independent contractor.” It would further instruct the Department of Labor and Industry to implement a pilot project to register anyone performing construction services in the state who is not already licensed or registered under another section of law. This program would replace the current Independent Contractor Exemption Certificate. There would be no registration fee.
Sanders called employee misclassification a “widely acknowledged problem,” and said the bill proposes a consensus approach supported by many stakeholders.
Rep. Torrey Westrom (R-Elbow Lake) successfully offered two amendments: an exemption for “handymen” and a requirement that individuals be notified that penalties would be waived if they register within 30 days of a penalty order.
The bill now returns to the Senate for concurrence.
A 2007 report by the Office of the Legislative Auditor found that one out of every seven employers had misclassified one or more workers in 2005. That was a conservative estimate, the report stated, because it doesn’t account for employers who pay cash “under the table” or who don’t register with the unemployment system.
The report found that the practice of misclassification was highest in industries like real estate and construction, particularly the areas of roofing, drywall and residential remodeling.
- Nick Busse
08:18 - Gavel.
CONFERENCE COMMITTEE REPORTS.
08:33 - Conference Committee Report on HF2555 (Kiffmeyer) Sunset review changes implemented; agency requirements changed; posting required for felony or gross misdemeanor and malpractice settlements or judgments; regulated practitioner information required; fund transfer prohibited; financial audit required; fees set; Combative Sports Commission abolished and duties transferred, Combative Sports Advisory Council established; Minnesota Board of Medical Practice review required; health-related licensing board provisions changed; and money appropriated.
15:39 - Conference Committee Report on HF8 (Gottwalt) Healthy Minnesota contribution program established, plan required to redesign service delivery for lower-income MinnesotaCare enrollees, Minnesota Comprehensive Health Association required to offer a high-deductible basic plan, and commissioner of human services required to seek federal waivers.
CALENDAR FOR THE DAY.
1:26:28 - SF1679 (Barrett) Advisory council provisions modified.
1:29:13 - SF1653 (Sanders) Independent contractors provisions modifications; fire sprinkler installation requirement in single-family detached homes prohibition.
The House recessed.
Runs 1 hours, 34 minutes.
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