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Independent Contractor Test – SF 4483

Below is the proposed new test for independent contract workers. If passed, you could hit with hefty fines when found to be misclassifying an employee.

 

Subd 4) An individual is an independent contractor and not an employee of the person for whom the individual is providing or performing services in the course of the person’s trade, business, profession, or occupation only if the individual is operating as a business entity that meets all of the following requirements at the time the services were provided or performed:

 

(1) was established and maintained separately from and independently of the person for whom the services were provided or performed;

(2) owns, rents, or leases equipment, tools, vehicles, materials, supplies, office space, or other facilities that are used by the business entity to provide or perform building construction or improvement services;

(3) provides or performs, or offers to provide or perform, the same or similar building construction or improvement services for multiple persons or the general public;

(4) is in compliance with all of the following:

(i) holds a federal employer identification number if required by federal law;

(ii) holds a Minnesota tax identification number if required by Minnesota law;

(iii) has received and retained 1099 forms for income received for building construction or improvement services provided or performed, if required by Minnesota or federal law;

(iv) has filed business or self-employment income tax returns, including estimated tax filings, with the federal Internal Revenue Service and the Department of Revenue, as the business entity or as a self-employed individual reporting income earned, for providing or performing building construction or improvement services, if any, in the previous 12 months; and

(v) has completed and provided a W-9 federal income tax form to the person for whom he services were provided or performed if required by federal law;

(5) is in good standing as defined by section 5.26 and, if applicable, has a current certificate of good standing issued by the secretary of state pursuant to section 5.12;

(6) has a Minnesota unemployment insurance account if required by chapter 268;

(7) has obtained required workers’ compensation insurance coverage if required by chapter 176;

(8) holds current business licenses, registrations, and certifications if required by chapter 326B and sections 327.31 to 327.36;

(9) is operating under a written contract to provide or perform the specific services for

the person that:

(i) is signed and dated by both an authorized representative of the business entity and of the person for whom the services are being provided or performed;

(ii) is fully executed no later than 30 days after the date work commences;

(iii) identifies the specific services to be provided or performed under the contract;

(iv) provides for compensation from the person for the services provided or performed under the contract on a commission or per-job or competitive bid basis and not on any other basis; and

(v) the requirements of item (ii) shall not apply to change orders;

(10) submits invoices and receives payments for completion of the specific services provided or performed under the written proposal, contract, or change order in the name of the business entity. Payments made in cash do not meet this requirement;

(11) the terms of the written proposal, contract, or change order provide the business entity control over the means of providing or performing the specific services, and the business entity in fact controls the provision or performance of the specific services;

(12) incurs the main expenses and costs related to providing or performing the specific services under the written proposal, contract, or change order;

(13) is responsible for the completion of the specific services to be provided or performed under the written proposal, contract, or change order and is responsible, as provided under the written proposal, contract, or change order, for failure to complete the specific services; and

(14) may realize additional profit or suffer a loss, if costs and expenses to provide or perform the specific services under the written proposal, contract, or change order are less than or greater than the compensation provided under the written proposal, contract, or change order.

(b)(1) Any individual providing or performing the services as or for a business entity is an employee of the person who engaged the business entity and is not an employee of the business entity, unless the business entity meets all of the requirements under subdivision 4, paragraph (a).

(2) Any individual who is determined to be the person’s employee is acting as an agent of and in the interest of the person when engaging any other individual or business entity to provide or perform any portion of the services that the business entity was engaged by the person to provide or perform.

(3) Any individual engaged by an employee of the person, at any tier under the person, is also the person’s employee, unless the individual is providing or performing the services as or for a business entity that meets the requirements of subdivision 4, paragraph (a).

Paid Family Leave

All You Need to Know About the Minnesota Paid Family and Medical Leave Law

When does the program start?

Workers will be able to begin taking leave and receiving benefits on January 1, 2026. Workers and employers will begin contributing to the program on that same date.

Who does the law cover?

The law will cover nearly all employees in Minnesota, including both private sector and state and local government employees. It will cover employees regardless of employer size and include both full-time and part-time workers, with a limited exception excluding certain seasonal workers from coverage. Self-employed people will be able to voluntarily opt into coverage.

What kinds of leave does the law provide?

Minnesota’s law will provide through the Department of Employment and Economic Development and includes:

  • Medical leave to address workers’ own serious health conditions, including pregnancy.
  • Caregiving leave to allow workers to care for a loved one with a serious health condition.
  • Parental leave to provide workers the time to bond with a new child.
  • Safety leave for certain needs when workers or their loved ones experience sexual or domestic violence.
  • Deployment-related leave to deal with the impact of a loved one’s military deployment.

Who will be eligible for benefits?

To be eligible, workers will need to have earned at least 5.3 percent of the state average annual wage in total over the base period—a designated 12-month period prior to the start of leave. Based on the current state average annual wage, workers would need to have earned about $3,684 in the base period to qualify.

Benefits are portable, meaning that income earned across all covered Minnesota employers in the base period counts toward the total. This means that someone who recently changed jobs could count income from their past job as well as their current job, while someone with two jobs could count income from both. In other words, workers keep their eligibility for the monetary benefits, even as they change employers, and could be eligible for monetary benefits as soon as they start with an employer if they were previously eligible.

How much time can workers take?

The legislation breaks benefits into two categories: 1) medical leave, including for pregnancy or recovery from childbirth, and 2) all other kinds of leave, that is parental leave, safety leave, caregiving leave, and deployment-related leave. Workers can receive up to 12 weeks of leave in each of the two categories per benefit year.

Workers who need leave from both categories can take up to 20 weeks total in a benefit year.

What family members can workers use leave to care for?

A family member will include a worker’s spouse or domestic partner, child, parent, sibling, grandchild, or grandparent, as well as many relationships by marriage. The definition of family will also include “an individual who has a relationship with the applicant that creates an expectation and reliance that the applicant care for the individual, whether or not the applicant and the individual reside together,” recognizing that many workers need to care for a loved one to whom they may not have a legal or biological relationship.

Will workers’ jobs be protected while they take leave?

Anyone who was hired at least 90 days prior to their leave, employees will have the right to get their job, or an equivalent job, back following covered leave, regardless of the size of their employer or how many hours they work per week.

Employees who receive health insurance through their employer will be entitled to keep their coverage while on leave.

Employers are prohibited from interfering with employees’ rights or retaliating against employees for using those rights.

How much money will workers receive when they take leave?

Wage replacement rates—the percentage of their own income that workers receive while on leave—will be progressive. Progressive wage replacement balances the need for lower-income workers to receive as high as possible a percentage of their own income while on leave with the need to keep program costs, which are ultimately borne at least in part by workers, affordable.

Workers will receive:

  • 90 percent of the portion of their weekly wages that is less than or equal to 50 percent of the state average weekly wage, plus:
  • 66 percent of the portion of their weekly wages that is more than 50 percent of the state average weekly wage but less than or equal to 100 percent of the statewide average weekly wage, plus:
  • 55 percent of the portion of their weekly wages that is more than 100 percent of the state average weekly wage:

Benefits will be capped at 100 percent of the state average weekly wage. For 2023, 50 percent of the state average would equal $668.50 per week, and 100 percent would be $1,377.00 per week.

How will the state pay for the program?

Initially, the program will be funded through substantial appropriations from the state’s general fund. This initial funding will jump-start the program’s insurance fund, making it possible for benefits to begin at the same time workers and employers begin paying in, without waiting for contributions to build up in the fund.

Going forward, the program will be funded with payroll premiums split evenly between employers and employees. When premiums begin on January 1, 2026, the rate will be 0.7 percent, meaning that employees and employers will each pay 0.35 percent on income up to the maximum income $162,000 (if implemented now in 2023). Rates will later be adjusted annually based on program usage. Employers with fewer than 30 employees will pay a reduced amount, which the fund will absorb; employees at small employers will pay the same amount as those at larger employers.

How will workers access benefits?

Like other state paid leave programs, Minnesota’s new law will create an insurance system. This means that, typically, when workers need benefits, they will apply to the state, which will process their claim and pay benefits out of the state insurance fund. Employers will not need to pay employees while they are on leave.

Employers can request special permission to provide benefits through a private plan.

Notice Requirements
Employers will be required to post a notice prepared by the State regarding paid FMLA benefits. Individual employees must also be issued written notices that contain certain information designated in the statute. These notices must issue at least 30 days from the beginning of the employee’s employment, or 30 days before premium collection begins, whichever is later.

 

Note – This was put together from the bills text and background , BAM Session Report, Center for American Progress, Arthur Chapman Law Firm, and other assorted news stories.

Calendar of Events

Calendar of Events for Newly Passed Legislation

The following is a timeline for newly passed legislation created by the Minnesota State Chamber of Commerce. Bolded items are the items directly impacting the construction industry.

 

JULY 1, 2023

  • Noncompete agreements banned
  • Lactating employees, pregnancy accommodations, unpaid leave updates and small business exemptions removed
  • Human Rights Act updated with new definitions of sexual orientation and gender identity
  • Recreational marijuana legal
  • New and increased OSHA penalties, classification of citation data; authority to inspect employer exclusion
  • Ergonomics Grant program;
  • New ergonomics reporting requirements
  • Motor vehicle sales tax increases

AUGUST 1, 2023

  • Restrictions on employer-sponsored meetings and communications (captive audience)
  • Stricter construction worker wage protections
  • Fees increase for groundwater appropriation permits

OCTOBER 1, 2023

  • Sales tax increases for housing 
  • 1% metro area sales tax for transit and housing

JANUARY 1, 2024

  • Sick and safe time mandated
  • Ban established on asking about pay history 
  • Tab fee increases
  • Gas tax indexed to inflation

JULY 1, 2024

  • New 50 cent per-delivery on retail deliveries over $100

OCTOBER 1, 2024

  • Minnesota OSHA fines/penalties indexed to inflation

JANUARY 1, 2025

  • Minnesota Secure Choice Plan – retirement savings program
  • PFAS ban in 11 products

JANUARY 1, 2026

  • New Paid Family and Medical Leave mandate 
  • New reporting requirements for all PFAS products

 

 

 

Energy Codes

Energy Codes (A Letter from Minnesota Business Groups)

This is from Minnesota Business Groups addressing the possible changes to commercial energy code.

 

February 21, 2023

House File 772

Dear Chair Nelson and Members of the House Labor and Industry Committee,

Our organizations represent tens of thousands of employers, builders, housing providers, homebuyers, and workplaces across the state of Minnesota. Safe, affordable, and reliable energy is critical for our businesses, workers, customers, residents, and occupants.

We write to express our opposition to House File 772 in its current form. HF 772 1st Engrossment directs the Minnesota Department of Labor to achieve a carbon neutral energy standard for new commercial buildings within 13 years. The department must adopt each newly published edition of ASHRAE 90.1 until the requirement is reached.

House File 772 1st Engrossment also radically alters the purpose of the residential and commercial energy codes for existing and new properties. It opens the door to controversial and impractical rulemaking that is at odds with the needs and best interests of Minnesotans.

Rulemaking is an inappropriate tool for making such momentous changes to the living and working conditions of every person in this state. This authority could lead to the prohibition of fossil fuel combustion equipment for space heating, hot water, cooking, and other appliances. This is precisely what’s occurring in New York state following the enactment of nearly identical legislation last year.

While our businesses strive to be more efficient every day, the bill as written presents serious challenges for the builders, owners, operators, residents, and occupants of new and existing residential and commercial buildings in our state.

Please let us take this opportunity to outline the challenges with the bill.

Cost. This bill imposes significant new costs on residential and commercial buildings, including onsite generation for commercial buildings, early adoption of new and unproven building systems and appliances, and adherence to an ever-changing energy code. It also makes Minnesotans far more dependent on the electric grid as their primary source of energy for heating, cooling, cooking, and other basic functions of life and business.

Electricity is an expensive energy source in our region: nearly twice the cost of propane and roughly three times as expensive as natural gas on a fuel neutral basis according to the U.S. Energy 1 Information Administration.

Energy generating infrastructure, for which this bill increases demand, is also expensive. And as demand increases, reliability will decrease without sufficient supply. Minnesota is part of the Midcontinent Independent System Operator (MISO) system, which is already experiencing capacity shortfalls on the electric grid during periods of peak demand.

Further, the bill allows for modification of the energy code at irregular intervals, putting existing and new buildings on an expensive track toward an uncertain future.

Weather. Minnesota experiences extreme swings in temperature throughout the winter and over the course of the year. Last month, we started one week at -10 degrees and reached 20 degrees two days later. Large swings in temperature tax the best of systems.

As the efficiency mandate ratchets up and as building system options are prohibited through the code, we will likely see a corresponding decline in the construction of new commercial buildings absent significant improvement in building systems technology that can withstand Minnesota’s climate.

Technology Limitations. The bill sets Minnesota down a short path toward reliance on carbon neutral energy for new commercial buildings. The term “carbon-neutral energy sources” suggests the types of heating, cooling, cooking and other key systems would be significantly limited in new commercial buildings.

Alternatives to conventional energy consuming infrastructure, such as heating systems, often come with a much longer payback period that makes construction or ownership infeasible. Perhaps the cost of such technology will improve in the future, but HF 772 makes no contingency if it does not.

The bill contains no off ramp to ensure reliability is preserved for residential and commercial properties or any assurance that a cost-benefit test will be applied to the newly permissible and expansive list of possible energy code amendments.