SF 1653

CCR--SF1653B - 87th Legislature (2011 - 2012)

Posted on 01/15/2013 08:29 p.m.

1.1CONFERENCE COMMITTEE REPORT ON S.F. No. 1653 1.2A bill for an act 1.3relating to labor and industry; clarifying employee classification of independent 1.4contractors; providing pilot project for contractor registration; providing for 1.5penalties;amending Minnesota Statutes 2010, sections 181.723, subdivisions 1.61, 3, 4, 7, 15, 16, by adding subdivisions; 289A.31, subdivision 5; 299F.011, 1.7by adding a subdivision; 326B.081, subdivision 3; 326B.809; Minnesota 1.8Statutes 2011 Supplement, section 181.723, subdivision 5; repealing Minnesota 1.9Statutes 2010, sections 181.723, subdivisions 6, 8, 9, 10, 11, 12, 14, 17; 290.92, 1.10subdivision 31; Minnesota Rules, parts 5202.0100; 5202.0110; 5202.0120; 1.115202.0130; 5202.0140; 5202.0150; 5202.0160. 1.12May 8, 2012 1.13The Honorable Michelle L. Fischbach 1.14President of the Senate 1.15The Honorable Kurt Zellers 1.16Speaker of the House of Representatives 1.17We, the undersigned conferees for S.F. No. 1653 report that we have agreed upon 1.18the items in dispute and recommend as follows: 1.19That the House recede from its amendments and that S.F. No. 1653 be further 1.20amended as follows: 1.21Delete everything after the enacting clause and insert: 1.22"ARTICLE 1 1.23LABOR AND INDUSTRY HOUSEKEEPING 1.24    Section 1. Minnesota Statutes 2010, section 178.01, is amended to read: 1.25178.01 PURPOSES. 1.26    The purposes of this chapter are: to open to young new text begin all new text end people regardless of race, 1.27sex, creed, color or national origin, the opportunity to obtain training and on-the-job 1.28learning that will equip them for profitable employment and citizenship; to establish as 1.29a means to this end, a program of voluntary apprenticeship under approved apprentice new text begin new text end 1.30 new text begin apprenticeship new text end agreements providing facilities for their training and guidance in the arts, 1.31skills, and crafts of industry and trade new text begin or occupation new text end , with concurrent, supplementary 2.1instruction in related subjects; to promote apprenticeship opportunities under conditions 2.2providing adequate training and on-the-job learning and reasonable earnings; to relate the 2.3supply of skilled workers to employment demands; to establish standards for apprentice 2.4training; to establish an Apprenticeship Board and apprenticeship committees to assist in 2.5effectuating the purposes of this chapter; to provide for a Division of Labor Standards 2.6and Apprenticeship within the Department of Labor and Industry; to provide for reports 2.7to the legislature regarding the status of apprentice training in the state; to establish a 2.8procedure for the determination of apprentice new text begin apprenticeship new text end agreement controversies; 2.9and to accomplish related ends. 2.10    Sec. 2. Minnesota Statutes 2010, section 178.03, subdivision 3, is amended to read: 2.11    Subd. 3. Duties and functions. The director, under the supervision of the 2.12commissioner, and with the advice and consultation of the Apprenticeship Board, is 2.13authorized: to administer the provisions of this chapter; to promote apprenticeship and 2.14other forms of on-the-job learning; to establish, in cooperation and consultation with the 2.15Apprenticeship Board and with the apprenticeship committees, conditions, training, and 2.16learning standards for the approval of apprenticeship programs and agreements, which 2.17conditions and standards shall in no case be lower than those (1) prescribed by this chapter, 2.18and (2) established under Code of Federal Regulations, title 29, part 29; to promote equal 2.19employment opportunity in apprenticeship and other on-the-job learning and to establish 2.20a Minnesota plan for equal employment opportunity in apprenticeship which shall be 2.21consistent with standards established under Code of Federal Regulations, title 29, part 30, 2.22as amended; to issue certificates of registration to sponsors of approved apprenticeship 2.23programs; to act as secretary of the Apprenticeship Board; to approve, if of the opinion 2.24that approval is for the best interest of the apprentice, any apprenticeship agreement which 2.25meets the standards established hereunder; to terminate any apprenticeship agreement in 2.26accordance with the provisions of such agreement; to keep a record of apprenticeship 2.27agreements and their disposition; to issue certificates of completion of apprenticeship; 2.28and to perform such other duties as the commissioner deems necessary to carry out the 2.29intent of this chapter; provided, that the administration and supervision of supplementary 2.30instruction in related subjects for apprentices; coordination of instruction on a concurrent 2.31basis with job experiences, and the selection and training of teachers and coordinators 2.32for such instruction shall be the function of state and local boards responsible for 2.33vocational education. The director shall have the authority to make wage determinations 2.34applicable to the graduated schedule of wages and journeyman new text begin journeyworker new text end wage rate 2.35for apprenticeship agreements, giving consideration to the existing wage rates prevailing 3.1throughout the state, except that no wage determination by the director shall alter an 3.2existing wage provision for apprentices or journeymen new text begin journeyworkers new text end that is contained in 3.3a bargaining agreement in effect between an employer and an organization of employees, 3.4nor shall the director make any determination for the beginning rate for an apprentice that 3.5is below the wage minimum established by federal or state law. 3.6    Sec. 3. Minnesota Statutes 2010, section 178.03, subdivision 4, is amended to read: 3.7    Subd. 4. Reciprocity approval. The director, if requested by a sponsoring entity, 3.8shall grant reciprocity approval to apprenticeship programs of employers and unions 3.9who jointly form a sponsoring entity on a multistate basis in other than the building 3.10construction industry if such programs are in conformity with this chapter and have been 3.11registered in compliance with Code of Federal Regulations, title 29, part 29, by a state 3.12apprenticeship council recognized by or registered with the Bureau of Apprenticeship 3.13and Training, United States Department of Labor, new text begin Office of Apprenticeship, new text end when such 3.14approval is necessary for federal purposes under Code of Federal Regulations, title 29, 3.15section 29.13(a) new text begin or 29.13(b)(7) new text end . 3.16    Sec. 4. Minnesota Statutes 2010, section 178.05, subdivision 1, is amended to read: 3.17    Subdivision 1. Establishment of committees. Apprenticeship committees may 3.18be established by the director to supervise the operation of apprenticeship programs. 3.19Establishment of a committee may be considered justified if either of the following 3.20conditions are met: 3.21(a) When the employers and employees in a trade new text begin or occupation new text end or trades new text begin or new text end 3.22 new text begin occupations new text end are parties to a collective bargaining agreement requiring joint participation 3.23in program operation; or 3.24(b) When five or more apprentices are enrolled under a program. 3.25    Sec. 5. Minnesota Statutes 2010, section 178.05, subdivision 2, is amended to read: 3.26    Subd. 2. Members. (a) The total number of members on a committee may range 3.27from four to twelve. 3.28(b) In joint participation there shall be equal representation of employers and 3.29employees. 3.30(c) Members shall be selected by the group or groups they represent subject to 3.31approval by the director. 4.1(d) A committee may have as one of its employee representatives, an active 4.2apprentice of record, provided that the apprentice has completed a minimum of 6,000 4.3hours of an apprenticeship term or has entered the fourth year of the term. 4.4    Sec. 6. Minnesota Statutes 2010, section 178.06, is amended to read: 4.5178.06 APPRENTICE. 4.6The term "apprentice," as used herein, means a person at least 16 years of age who 4.7has entered into a written agreement, hereinafter called an apprentice new text begin apprenticeship new text end 4.8agreement, with a committee, an employer, an association of employers, or an organization 4.9of employees, which apprentice agreement provides for new text begin learning consistent with this new text end 4.10 new text begin chapter and Code of Federal Regulations, title 29, section 29.5(b)(1) and (b)(2) new text end : 4.11(1) a time-based approach involving not less than 2,000 hours or one year 4.12of reasonably continuous employment for such person and for participation in an 4.13approved program of on-the-job learning through employment and through concurrent, 4.14supplementary education in related subjects; 4.15(2) a competency-based approach involving successful demonstration of acquired 4.16skills and knowledge by an apprentice plus on-the-job learning; or 4.17(3) a hybrid approach involving the completion of a specified minimum number of 4.18hours plus the successful demonstration of competency. 4.19    Whenever a minimum age exceeding 16 years is prescribed by federal or state law 4.20to apply to workers in certain hazardous occupations, the minimum age so prescribed 4.21shall be applicable to apprentices. 4.22    Sec. 7. Minnesota Statutes 2010, section 178.07, is amended to read: 4.23178.07 APPRENTICE new text begin APPRENTICESHIP new text end AGREEMENTS. 4.24Every apprentice new text begin apprenticeship new text end agreement entered into under this chapter shall 4.25contain: 4.26(1) the names of the contracting parties; 4.27(2) the date of birth, and information as to the race and sex of the apprentice; 4.28(3) a statement of the trade, craft, new text begin occupation, new text end or business which the apprentice is to 4.29be taught, and the time at which the apprenticeship will begin and end; 4.30(4) a statement showing the number of hours to be spent by the apprentice in work 4.31and the number of hours to be spent in concurrent, supplementary instruction in related 4.32subjects, which instruction shall be not less than 144 hours during each year of the 4.33apprenticeship term. The maximum number of hours of work per week not including time 4.34spent in related and supplemental instruction for any apprentice shall not exceed either 5.1the number prescribed by law or the customary regular number of hours per week for the 5.2employees of the company by which the apprentice is employed. An apprentice may 5.3be allowed to work overtime provided that the overtime work does not conflict with 5.4supplementary instruction course attendance. All time in excess of the number of hours of 5.5work per week as specified in the apprenticeship agreement shall be considered overtime. 5.6For overtime, the apprentice's rate of pay shall be increased by the same percentage as the 5.7journeyman's new text begin journeyworker's new text end rate of pay for overtime is increased in the same industry or 5.8establishment; 5.9(5) a statement setting forth a schedule of the processes in the trade new text begin , occupation, new text end 5.10or industry divisions in which the apprentice is to be taught and the approximate time to 5.11be spent at each process; 5.12(6) a statement of the graduated scale of wages to be paid the apprentice and whether 5.13the required school time shall be compensated; 5.14(7) a statement providing for a period of probation of not more than 500 hours of 5.15employment and instruction extending over not more than four months, during which time 5.16the apprentice new text begin apprenticeship new text end agreement shall be terminated by the director upon written 5.17request of either party, and providing that after such probationary period the apprentice new text begin new text end 5.18 new text begin apprenticeship new text end agreement may be terminated by the director by mutual agreement of all 5.19parties thereto, or terminated by the director for good and sufficient reason; 5.20(8) a provision that controversies or differences concerning the terms of the 5.21apprentice new text begin apprenticeship new text end agreement which cannot be resolved by the parties thereto, or 5.22which are not covered by a collective bargaining agreement, may be submitted to the 5.23director for determination as provided for in section 178.09; 5.24(9) a provision that an employer who is unable to fulfill an obligation under the 5.25apprentice new text begin apprenticeship new text end agreement may, with the approval of the director, transfer such 5.26contract to any other employer, provided that the apprentice consents and that such other 5.27employer agrees to assume the obligations of the apprentice new text begin apprenticeship new text end agreement; and 5.28(10) such additional terms and conditions as may be prescribed or approved by the 5.29director not inconsistent with the provisions of this chapter. 5.30    Sec. 8. Minnesota Statutes 2010, section 178.08, is amended to read: 5.31178.08 DIRECTOR TO APPROVE APPRENTICE new text begin APPRENTICESHIP new text end 5.32AGREEMENTS. 5.33Every apprentice new text begin apprenticeship new text end agreement is subject to approval by the director 5.34and shall be signed by the committee, the employer, an association of employers, or 5.35an organization of employees, and by the apprentice, and if the apprentice is a minor, 6.1by a parent or legal guardian. When a minor enters into an apprentice new text begin apprenticeship new text end 6.2agreement under this chapter for a period of learning extending into majority the 6.3apprentice new text begin apprenticeship new text end agreement shall likewise be binding for such a period as may be 6.4covered during the apprentice's majority. 6.5    Sec. 9. Minnesota Statutes 2010, section 178.09, subdivision 1, is amended to read: 6.6    Subdivision 1. Complaint. Upon the complaint of any interested person or upon 6.7the director's own initiative the director may investigate to determine if there has been a 6.8violation of the terms of an apprentice new text begin apprenticeship new text end agreement made under this chapter. 6.9The director may conduct such proceedings as are necessary for that investigation and 6.10determination. All such proceedings shall be on a fair and impartial basis and shall be 6.11conducted according to rules promulgated under section 178.041. 6.12    Sec. 10. Minnesota Statutes 2010, section 178.09, subdivision 2, is amended to read: 6.13    Subd. 2. Determination; appeal. The determination of the director shall be filed 6.14with the commissioner and written notice shall be served on all parties affected by it. 6.15Any person aggrieved by any determination or action of the director may appeal to the 6.16commissioner. If no appeal is filed with the commissioner within ten days of the date 6.17of service, the director's determination shall become the order of the commissioner. If 6.18an appeal is filed, the commissioner shall appoint and convene a hearing board to be 6.19composed of three members of the council new text begin Apprenticeship Board appointed under new text end 6.20 new text begin section 178.02 new text end , one member being a representative of an employer organization, one 6.21representative being a member of an employee organization, and one member representing 6.22the general public. The board shall hold a hearing on the appeal after due notice to the 6.23interested parties and shall submit to the commissioner findings of fact and a recommended 6.24decision accompanied by a memorandum of the reasons for it. Within 30 days after 6.25submission, the commissioner may adopt the recommended decision of the board, or 6.26disregard the recommended decision of the board and prepare a decision based on the 6.27findings of fact and accompanied by a memorandum of reasons for that decision. Written 6.28notice of the commissioner's determination and order shall be served on all parties affected 6.29by it. Any person aggrieved or affected by any determination or order of the commissioner 6.30may appeal from it to the district court having jurisdiction at any time within 30 days after 6.31the date of the order by service of a written notice of appeal on the commissioner. Upon 6.32service of the notice of appeal, the commissioner shall file with the court administrator 6.33of the district court to which the appeal is taken a certified copy of the order appealed 6.34from, together with findings of fact on which it is based. The person serving a notice of 7.1appeal shall, within five days after its service, file it, with proof of service, with the court 7.2administrator of the court to which the appeal is taken. The district court shall then have 7.3jurisdiction over the appeal and it shall be entered in the records of the district court and 7.4tried de novo according to the applicable rules. Any person aggrieved or affected by any 7.5determination, order, or decision of the district court may appeal as in other civil cases. 7.6    Sec. 11. Minnesota Statutes 2010, section 326B.092, subdivision 2, is amended to read: 7.7    Subd. 2. Licenses not requiring examination administered by commissioner. If 7.8the applicant for a license is not required to pass an examination in order to obtain the 7.9license, or is required to pass an examination that is not administered by the commissioner, 7.10then the license fee must accompany the application for the license. If the application is 7.11for a license issued under sections 326B.802 to 326B.885 and is not an application for 7.12license renewal, then the contractor recovery fund fee required under section 326B.89, 7.13subdivision 3, is due after the department has determined that the applicant meets the 7.14qualifications for licensing and before the license is issued. 7.15    Sec. 12. Minnesota Statutes 2010, section 326B.092, subdivision 7, is amended to read: 7.16    Subd. 7. License fees and license renewal fees. (a) The license fee for each license 7.17except a renewed license shall be the base license fee plus any applicable board fee, as 7.18set forth in this subdivision. The license renewal fee for each renewed license is the 7.19base license fee plus any applicable board fee, continuing education fee, and contractor 7.20recovery fund fee and additional assessment, as set forth in this subdivision. 7.21(b) For purposes of this section, "license duration" means the number of years for 7.22which the license is issued except that: 7.23(1) if the initial license is not issued for a whole number of years, the license duration 7.24shall be rounded up to the next whole number; and 7.25(2) if the department receives an application for license renewal after the renewal 7.26deadline, license duration means the number of years for which the renewed license would 7.27have been issued if the renewal application had been submitted on time and all other 7.28requirements for renewal had been met. 7.29(c) The base license fee shall depend on whether the license is classified as an entry 7.30level, master, journeyman, or business license, and on the license duration. The base 7.31license fee shall be: 7.32 License Classification License Duration 7.33 1 Year 2 Years 3 Years 7.34 Entry level $10 $20 $30 8.1 Journeyman $20 $40 $60 8.2 Master $40 $80 $120 8.3 Business $90 $180 $270 8.4(d) If there is a continuing education requirement for renewal of the license, then 8.5a continuing education fee must be included in the renewal license fee. The continuing 8.6education fee for all license classifications shall be: $10 if the renewal license duration is 8.7one year; $20 if the renewal license duration is two years; and $30 if the renewal license 8.8duration is three years. 8.9(e) If the license is issued under sections 326B.31 to 326B.59 or 326B.90 to 8.10326B.93 , then a board fee must be included in the license fee and the renewal license fee. 8.11The board fee for all license classifications shall be: $4 if the license duration is one year; 8.12$8 if the license duration is two years; and $12 if the license duration is three years. 8.13(f) If the application is for the renewal of a license issued under sections 326B.802 8.14to 326B.885, then the contractor recovery fund fee required under section 326B.89, 8.15subdivision 3, and any additional assessment required under section 326B.89, subdivision 8.1616, must be included in the license renewal fee. 8.17    Sec. 13. Minnesota Statutes 2011 Supplement, section 326B.0981, subdivision 4, 8.18is amended to read: 8.19    Subd. 4. Internet continuing education. (a) The design and delivery of an Internet 8.20continuing education course must be approved by the International Distance Education 8.21Certification Center (IDECC) new text begin or the International Association for Continuing Education new text end 8.22 new text begin and Training (IACET) new text end before the course is submitted for the commissioner's approval. 8.23The IDECC approval must accompany the course submitted. 8.24(b) An Internet continuing education course must: 8.25(1) specify the minimum computer system requirements; 8.26(2) provide encryption that ensures that all personal information, including the 8.27student's name, address, and credit card number, cannot be read as it passes across the 8.28Internet; 8.29(3) include technology to guarantee seat time; 8.30(4) include a high level of interactivity; 8.31(5) include graphics that reinforce the content; 8.32(6) include the ability for the student to contact an instructor or course sponsor 8.33within a reasonable amount of time; 8.34(7) include the ability for the student to get technical support within a reasonable 8.35amount of time; 9.1(8) include a statement that the student's information will not be sold or distributed 9.2to any third party without prior written consent of the student. Taking the course does not 9.3constitute consent; 9.4(9) be available 24 hours a day, seven days a week, excluding minimal downtime 9.5for updating and administration, except that this provision does not apply to live courses 9.6taught by an actual instructor and delivered over the Internet; 9.7(10) provide viewing access to the online course at all times to the commissioner, 9.8excluding minimal downtime for updating and administration; 9.9(11) include a process to authenticate the student's identity; 9.10(12) inform the student and the commissioner how long after its purchase a course 9.11will be accessible; 9.12(13) inform the student that license education credit will not be awarded for taking 9.13the course after it loses its status as an approved course; 9.14(14) provide clear instructions on how to navigate through the course; 9.15(15) provide automatic bookmarking at any point in the course; 9.16(16) provide questions after each unit or chapter that must be answered before the 9.17student can proceed to the next unit or chapter; 9.18(17) include a reinforcement response when a quiz question is answered correctly; 9.19(18) include a response when a quiz question is answered incorrectly; 9.20(19) include a final examination in which the student must correctly answer 70 9.21percent of the questions; 9.22(20) allow the student to go back and review any unit at any time, except during the 9.23final examination; 9.24(21) provide a course evaluation at the end of the course. At a minimum, the 9.25evaluation must ask the student to report any difficulties caused by the online education 9.26delivery method; 9.27(22) provide a completion certificate when the course and exam have been completed 9.28and the provider has verified the completion. Electronic certificates are sufficient and shall 9.29include the name of the provider, date and location of the course, educational program 9.30identification that was provided by the department, hours of instruction or continuing 9.31education hours, and licensee's or attendee's name and license, certification, or registration 9.32number or the last four digits of the licensee's or attendee's Social Security number; and 9.33(23) allow the commissioner the ability to electronically review the class to 9.34determine if credit can be approved. 10.1(c) The final examination must be either an encrypted online examination or a 10.2paper examination that is monitored by a proctor who certifies that the student took the 10.3examination. 10.4    Sec. 14. Minnesota Statutes 2010, section 326B.103, subdivision 3, is amended to read: 10.5    Subd. 3. Agricultural building. "Agricultural building" means a structure new text begin that is: new text end 10.6 new text begin (1) new text end on agricultural land as defined in new text begin determined by the governing assessor for the new text end 10.7 new text begin municipality or county under new text end section 273.13, subdivision 23, new text begin ; new text end 10.8 new text begin (2) new text end designed, constructed, and used to house farm implements, livestock, or 10.9agricultural produce or products new text begin under section 273.13, subdivision 23; and new text end 10.10 new text begin (3) new text end used by the owner, lessee, and sublessee of the building and members of their 10.11immediate families, their employees, and persons engaged in the pickup or delivery of 10.12agricultural produce or products. 10.13    Sec. 15. Minnesota Statutes 2011 Supplement, section 326B.46, subdivision 1a, 10.14is amended to read: 10.15    Subd. 1a. Exemptions from licensing. (a) An individual without a contractor 10.16license may do plumbing work on the individual's residence in accordance with 10.17subdivision 1, paragraph (a). 10.18(b) An individual who is an employee working on the maintenance and repair of 10.19plumbing equipment, apparatus, or facilities owned or leased by the individual's employer 10.20and which is within the limits of property owned or leased, and operated or maintained by 10.21the individual's employer, shall not be required to maintain a contractor license as long 10.22as the employer has on file with the commissioner a current certificate of responsible 10.23individual. The responsible individual must be a master plumber or, in an area of the 10.24state that is not a city or town with a population of more than 5,000 according to the 10.25last federal census, a restricted master plumber. The certificate must be signed by the 10.26responsible individual and must state that the person signing the certificate is responsible 10.27for ensuring that the maintenance and repair work performed by the employer's employees 10.28complies with sections 326B.41 to 326B.49, all rules adopted under those sections and 10.29sections 326B.50 to 326B.59, and all orders issued under section 326B.082. The employer 10.30must pay a filing fee to file a certificate of responsible individual with the commissioner. 10.31The certificate shall expire two years from the date of filing. In order to maintain a 10.32current certificate of responsible individual, the employer must resubmit a certificate of 10.33responsible individual, with a filing fee, no later than two years from the date of the 10.34previous submittal. The filing of the certificate of responsible individual does not exempt 11.1any employee of the employer from the requirements of this chapter regarding individual 11.2licensing as a plumber or registration as a plumber's apprentice new text begin an unlicensed individual new text end . 11.3(c) If a contractor employs a licensed plumber, the licensed plumber does not need a 11.4separate contractor license to perform plumbing work on behalf of the employer within 11.5the scope of the licensed plumber's license. 11.6(d) A person may perform and offer to perform building sewer or water service 11.7installation without a contractor's license if the person is in compliance with the bond and 11.8insurance requirements of subdivision 2. 11.9    Sec. 16. Minnesota Statutes 2011 Supplement, section 326B.49, subdivision 1, is 11.10amended to read: 11.11    Subdivision 1. Application, examination, and license fees. (a) Applications for 11.12master and journeyman plumber's licenses shall be made to the commissioner, with 11.13all fees required by section 326B.092. Unless the applicant is entitled to a renewal, 11.14the applicant shall be licensed by the commissioner only after passing a satisfactory 11.15examination developed and administered by the commissioner, based upon rules adopted 11.16by the Plumbing Board, showing fitness. 11.17(b) All initial journeyman plumber's licenses shall be effective for more than one 11.18calendar year and shall expire on December 31 of the year after the year in which the 11.19application is made. All master plumber's licenses shall expire on December 31 of each 11.20even-numbered year after issuance or renewal. The commissioner shall in a manner 11.21determined by the commissioner, without the need for any rulemaking under chapter 14, 11.22phase in the renewal of master and journeyman plumber's licenses from one year to two 11.23years. By June 30, 2011, all renewed master and journeyman plumber's licenses shall be 11.24two-year licenses. 11.25(c) Applications for contractor licenses shall be made to the commissioner, with all 11.26fees required by section 326B.092. All contractor licenses shall expire on December 31 of 11.27each odd-numbered year after issuance or renewal. 11.28(d) For purposes of calculating license fees and renewal license fees required under 11.29section 326B.092: 11.30(1) the following licenses shall be considered business licenses: plumbing contractor 11.31and restricted plumbing contractor; 11.32(2) the following licenses shall be considered master licenses: master plumber and 11.33restricted master plumber; 11.34(3) the following licenses shall be considered journeyman licenses: journeyman 11.35plumber and restricted journeyman plumber; and 12.1(4) the registration of a plumber's apprentice new text begin an unlicensed individual new text end under section 12.2326B.47, subdivision 3 , shall be considered an entry level license. 12.3(e) For each filing of a certificate of responsible individual by an employer, the 12.4fee is $100. 12.5(f) The commissioner shall charge each person giving bond under section 326B.46, 12.6subdivision 2, paragraph (b), a biennial bond filing fee of $100, unless the person is a 12.7licensed contractor. 12.8    Sec. 17. new text begin REPEALER. new text end 12.9 new text begin Minnesota Rules, parts 1300.0230, subpart 4; 1301.1201; 1302.0600; 3801.3640; new text end 12.10 new text begin 3801.3650; 3801.3660; 3801.3670; 3801.3680; 3801.3690; 3801.3700; 3801.3710; new text end 12.11 new text begin 3801.3720; 3801.3730; 3801.3740; 3801.3760; 3801.3790; and 3801.3800, new text end new text begin are repealed. new text end 12.12ARTICLE 2 12.13EMPLOYEE CLASSIFICATION OF INDEPENDENT CONTRACTORS 12.14    Section 1. Minnesota Statutes 2010, section 181.723, subdivision 1, is amended to read: 12.15    Subdivision 1. Definitions. The definitions in this subdivision apply to this section. 12.16    (a) "Person" means any individual, limited liability corporation new text begin company, limited new text end 12.17 new text begin liability partnership new text end , corporation, partnership, incorporated or unincorporated association, 12.18sole proprietorship, joint stock company, or any other legal or commercial entity. 12.19    (b) "Department" means the Department of Labor and Industry. 12.20    (c) "Commissioner" means the commissioner of labor and industry or a duly 12.21designated representative of the commissioner who is either an employee of the 12.22Department of Labor and Industry or person working under contract with the Department 12.23of Labor and Industry. 12.24    (d) "Individual" means a human being. 12.25    (e) "Day" means calendar day unless otherwise provided. 12.26    (f) "Knowingly" means knew or could have known with the exercise of reasonable 12.27diligence. 12.28    (g) "Document" or "documents" includes papers; books; records; memoranda; data; 12.29contracts; drawings; graphs; charts; photographs; digital, video, and audio recordings; 12.30records; accounts; files; statements; letters; e-mails; invoices; bills; notes; and calendars 12.31maintained in any form or manner. 12.32 new text begin (h) "Business entity" means a person other than an individual or a sole proprietor. new text end 12.33    Sec. 2. Minnesota Statutes 2010, section 181.723, subdivision 4, is amended to read: 13.1    Subd. 4. Independent contractor. new text begin (a) new text end An individual is an independent contractor 13.2and not an employee of the person for whom the individual is performing services in the 13.3course of the person's trade, business, profession, or occupation only if (1) the individual 13.4holds a current independent contractor exemption certificate issued by the commissioner; 13.5and (2) the individual is performing services for the person under the independent 13.6contractor exemption certificate as provided in subdivision 6. The requirements in clauses 13.7(1) and (2) must be met in order to qualify as an independent contractor and not as an 13.8employee of the person for whom the individual is performing services in the course of 13.9the person's trade, business, profession, or occupation. new text begin the individual is registered with the new text end 13.10 new text begin Department of Labor and Industry, if required under subdivision 4a, and the individual: new text end 13.11 new text begin (1) maintains a separate business with the individual's own office, equipment, new text end 13.12 new text begin materials, and other facilities; new text end 13.13 new text begin (2)(i) holds or has applied for a federal employer identification number or (ii) has new text end 13.14 new text begin filed business or self-employment income tax returns with the federal Internal Revenue new text end 13.15 new text begin Service if the individual has performed services in the previous year; new text end 13.16 new text begin (3) is operating under contract to perform the specific services for the person new text end 13.17 new text begin for specific amounts of money and under which the individual controls the means of new text end 13.18 new text begin performing the services; new text end 13.19 new text begin (4) is incurring the main expenses related to the services that the individual is new text end 13.20 new text begin performing for the person under the contract; new text end 13.21 new text begin (5) is responsible for the satisfactory completion of the services that the individual new text end 13.22 new text begin has contracted to perform for the person and is liable for a failure to complete the services; new text end 13.23 new text begin (6) receives compensation from the person for the services performed under the new text end 13.24 new text begin contract on a commission or per-job or competitive bid basis and not on any other basis; new text end 13.25 new text begin (7) may realize a profit or suffer a loss under the contract to perform services for new text end 13.26 new text begin the person; new text end 13.27 new text begin (8) has continuing or recurring business liabilities or obligations; and new text end 13.28 new text begin (9) the success or failure of the individual's business depends on the relationship of new text end 13.29 new text begin business receipts to expenditures. new text end 13.30 new text begin (b) If an individual is an owner or partial owner of a business entity, the individual is new text end 13.31 new text begin an employee of the person for whom the individual is performing services in the course new text end 13.32 new text begin of the person's trade, business, profession, or occupation, and is not an employee of the new text end 13.33 new text begin business entity in which the individual has an ownership interest, unless: new text end 13.34 new text begin (1) the business entity meets the nine factors in paragraph (a); new text end 13.35 new text begin (2) invoices are submitted in the name of the business entity; new text end 13.36 new text begin (3) the business entity is registered with the secretary of state, if required; and new text end 14.1 new text begin (4) the business entity is registered with the Department of Labor and Industry, new text end 14.2 new text begin if required under subdivision 4a. new text end 14.3    Sec. 3. Minnesota Statutes 2010, section 181.723, is amended by adding a subdivision 14.4to read: 14.5     new text begin Subd. 4a. new text end new text begin Registration pilot project. new text end new text begin (a) The commissioner shall implement a pilot new text end 14.6 new text begin project, effective July 1, 2012, for the registration of persons who perform public or new text end 14.7 new text begin private sector commercial or residential building construction or improvement services new text end 14.8 new text begin as described in subdivision 2. The purpose of the pilot project is to evaluate whether the new text end 14.9 new text begin information obtained through registration assists the Department of Labor and Industry, new text end 14.10 new text begin the Department of Employment and Economic Development, and the Department of new text end 14.11 new text begin Revenue to enforce laws related to misclassification of employees. The commissioner new text end 14.12 new text begin shall issue a report to the legislature no later than January 1, 2014, on recommendations new text end 14.13 new text begin for amendments to the registration program, including reasonable registration fees to be new text end 14.14 new text begin used to aid in enforcing misclassification laws. The commissioner must not charge a fee new text end 14.15 new text begin for registration under the pilot project, but may take the enforcement action specified in new text end 14.16 new text begin subdivision 8a. The pilot project shall expire on June 30, 2014, unless extended by the new text end 14.17 new text begin legislature. new text end 14.18 new text begin (b) Except as provided in paragraph (c), any person who performs construction new text end 14.19 new text begin services in the state on or after September 15, 2012, must register with the commissioner new text end 14.20 new text begin as provided in subdivision 5 before performing construction services for another person. new text end 14.21 new text begin The requirements for registration under this subdivision are not a substitute for, and do new text end 14.22 new text begin not relieve a person from complying with, any other law requiring that the person be new text end 14.23 new text begin licensed, registered, or certified. new text end 14.24 new text begin (c) The registration requirements in this subdivision do not apply to: new text end 14.25 new text begin (1) a person who, at the time the person is performing the construction services, new text end 14.26 new text begin holds a current license, certificate, or registration under chapter 299M or 326B; new text end 14.27 new text begin (2) a person who holds a current independent contractor exemption certificate new text end 14.28 new text begin issued under this section that is in effect on September 15, 2012, except that the person new text end 14.29 new text begin must register under this section no later than the date the exemption certificate expires, is new text end 14.30 new text begin revoked, or is canceled; new text end 14.31 new text begin (3) a person who has given a bond to the state under section 326B.197 or 326B.46; new text end 14.32 new text begin (4) an employee of the person performing the construction services, if the person new text end 14.33 new text begin was in compliance with laws related to employment of the individual at the time the new text end 14.34 new text begin construction services were performed; new text end 15.1 new text begin (5) an architect or professional engineer engaging in professional practice as defined new text end 15.2 new text begin in section 326.02, subdivisions 2 and 3; new text end 15.3 new text begin (6) a school district or technical college governed under chapter 136F; new text end 15.4 new text begin (7) a person providing construction services on a volunteer basis, including but not new text end 15.5 new text begin limited to Habitat for Humanity and Builders Outreach Foundation, and their individual new text end 15.6 new text begin volunteers when engaged in activities on their behalf; or new text end 15.7 new text begin (8) a person exempt from licensing under section 326B.805, subdivision 6, clause (5). new text end 15.8    Sec. 4. Minnesota Statutes 2011 Supplement, section 181.723, subdivision 5, is 15.9amended to read: 15.10    Subd. 5. new text begin Registration new text end application. To obtain an independent contractor exemption 15.11certificate, the individual must submit new text begin (a) Persons required to register under subdivision 4a new text end 15.12 new text begin must submit electronically new text end , in the manner prescribed by the commissioner, a complete 15.13application and the certificate fee required under subdivision 14 new text begin according to paragraphs new text end 15.14 new text begin (b) to (d) new text end . 15.15    (a) new text begin (b) new text end A complete application must include all of the following information new text begin about new text end 15.16 new text begin any individual who is registering as an individual or a sole proprietor, or who owns 25 new text end 15.17 new text begin percent or more of a business entity being registered new text end : 15.18    (1) the individual's full new text begin legal new text end name new text begin and title at applicant's business new text end ; 15.19    (2) the individual's residence new text begin business new text end address and telephone number; 15.20    (3) the individual's business name, address, and telephone number; new text begin percentage of the new text end 15.21 new text begin applicant's business owned by the individual; and new text end 15.22    (4) the services for which the individual is seeking an independent contractor 15.23exemption certificate; 15.24    (5) new text begin (4) new text end the individual's Social Security number; new text begin . new text end 15.25    (6) the individual's or the individual's business federal employer identification 15.26number, if a number has been issued to the individual or the individual's business; 15.27    (7) any information or documentation that the commissioner requires by rule that 15.28will assist the department in determining whether to grant or deny the individual's 15.29application; and 15.30    (8) the individual's sworn statement that the individual meets all of the following 15.31conditions: 15.32    (i) maintains a separate business with the individual's own office, equipment, 15.33materials, and other facilities; 15.34    (ii) holds or has applied for a federal employer identification number or has filed 15.35business or self-employment income tax returns with the federal Internal Revenue Service 16.1if the person has performed services in the previous year for which the individual is 16.2seeking the independent contractor exemption certificate; 16.3    (iii) operates under contracts to perform specific services for specific amounts of 16.4money and under which the individual controls the means of performing the services; 16.5    (iv) incurs the main expenses related to the service that the individual performs 16.6under contract; 16.7    (v) is responsible for the satisfactory completion of services that the individual 16.8contracts to perform and is liable for a failure to complete the service; 16.9    (vi) receives compensation for service performed under a contract on a commission 16.10or per-job or competitive bid basis and not on any other basis; 16.11    (vii) may realize a profit or suffer a loss under contracts to perform service; 16.12    (viii) has continuing or recurring business liabilities or obligations; and 16.13    (ix) the success or failure of the individual's business depends on the relationship of 16.14business receipts to expenditures. 16.15    (b) Individuals who are applying for or renewing a residential building contractor or 16.16residential remodeler license under sections 326B.197, 326B.802, 326B.805, 326B.81, 16.17326B.815, 326B.821 to 326B.86, 326B.87 to , and , and any rules 16.18promulgated pursuant thereto, may simultaneously apply for or renew an independent 16.19contractor exemption certificate. The commissioner shall create an application form 16.20that allows for the simultaneous application for both a residential building contractor 16.21or residential remodeler license and an independent contractor exemption certificate. 16.22If individuals simultaneously apply for or renew a residential building contractor or 16.23residential remodeler license and an independent contractor exemption certificate using 16.24the form created by the commissioner, individuals shall only be required to provide, in 16.25addition to the information required by section and rules promulgated pursuant 16.26thereto, the sworn statement required by paragraph (a), clause (8), and any additional 16.27information required by this subdivision that is not also required by section and 16.28any rules promulgated thereto. An independent contractor exemption certificate that is in 16.29effect before March 1, 2009, shall remain in effect until March 1, 2013, unless revoked by 16.30the commissioner or canceled by the individual. 16.31    (c) Within 30 days of receiving a complete application and the certificate fee, the 16.32commissioner must either grant or deny the application. The commissioner may deny 16.33an application for an independent contractor exemption certificate if the individual has 16.34not submitted a complete application and certificate fee or if the individual does not 16.35meet all of the conditions for holding the independent contractor exemption certificate. 16.36The commissioner may revoke an independent contractor exemption certificate if the 17.1commissioner determines that the individual no longer meets all of the conditions for 17.2holding the independent contractor exemption certificate, commits any of the actions 17.3set out in subdivision 7, or fails to cooperate with a department investigation into the 17.4continued validity of the individual's certificate. Once issued, an independent contractor 17.5exemption certificate remains in effect for four years unless: 17.6    (1) revoked by the commissioner; or 17.7    (2) canceled by the individual. 17.8    (d) If the department denies an individual's original or renewal application for 17.9an independent contractor exemption certificate or revokes an independent contractor 17.10exemption certificate, the commissioner shall issue to the individual an order denying or 17.11revoking the certificate. The commissioner may issue an administrative penalty order to 17.12an individual or person who commits any of the actions set out in subdivision 7. The 17.13commissioner may file and enforce the unpaid portion of a penalty as a judgment in 17.14district court without further notice or additional proceedings. 17.15    (e) An individual or person to whom the commissioner issues an order under 17.16paragraph (d) shall have 30 days after service of the order to request a hearing. The 17.17request for hearing must be in writing and must be served on or faxed to the commissioner 17.18at the address or facsimile number specified in the order by the 30th day after service of 17.19the order. If the individual does not request a hearing or if the individual's request for a 17.20hearing is not served on or faxed to the commissioner by the 30th day after service of the 17.21order, the order shall become a final order of the commissioner and will not be subject to 17.22review by any court or agency. The date on which a request for hearing is served by mail 17.23shall be the postmark date on the envelope in which the request for hearing is mailed. If 17.24the individual serves or faxes a timely request for hearing, the hearing shall be a contested 17.25case hearing and shall be held in accordance with chapter 14. 17.26 new text begin (c) A complete application must also include the following information: new text end 17.27 new text begin (1) the applicant's legal name; assumed name filed with the secretary of state, if any; new text end 17.28 new text begin designated business address; physical address; telephone number; and e-mail address; new text end 17.29 new text begin (2) the applicant's Minnesota tax identification number, if one is required or has new text end 17.30 new text begin been issued; new text end 17.31 new text begin (3) the applicant's federal employer identification number, if one is required or new text end 17.32 new text begin has been issued; new text end 17.33 new text begin (4) evidence of the active status of the applicant's business filings with the secretary new text end 17.34 new text begin of state, if one is required or has been issued; new text end 17.35 new text begin (5) whether the applicant has any employees at the time the application is filed; new text end 18.1 new text begin (6) the names of all other persons with an ownership interest in the business entity new text end 18.2 new text begin who are not identified in paragraph (b), and the percentage of the interest owned by each new text end 18.3 new text begin person, except that the names of shareholders with less than ten percent ownership in a new text end 18.4 new text begin publicly traded corporation need not be provided; new text end 18.5 new text begin (7) information documenting compliance with workers' compensation and new text end 18.6 new text begin unemployment insurance laws; new text end 18.7 new text begin (8) a certification that the person signing the application has: reviewed it; determined new text end 18.8 new text begin that the information provided is true and accurate; and determined that the person signing new text end 18.9 new text begin is authorized to sign and file the application as an agent of the applicant. The name of the new text end 18.10 new text begin person signing, entered on an electronic application, shall constitute a valid signature of new text end 18.11 new text begin the agent on behalf of the applicant; and new text end 18.12 new text begin (9) a signed authorization for the Department of Labor and Industry to verify the new text end 18.13 new text begin information provided on or with the application. new text end 18.14 new text begin (d) A registered person must notify the commissioner within 15 days after there is a new text end 18.15 new text begin change in any of the information on the application as approved. This notification must new text end 18.16 new text begin be provided electronically in the manner prescribed by the commissioner. However, if new text end 18.17 new text begin the business entity structure, legal form of the business entity, or business ownership has new text end 18.18 new text begin changed, the person must submit a new registration application and registration fee, if new text end 18.19 new text begin any, for the new business entity. new text end 18.20 new text begin (e) The registered person must remain registered while providing construction new text end 18.21 new text begin services for another person. The provisions of sections 326B.091 and 326B.094 to new text end 18.22 new text begin 326B.097 apply to this section. new text end 18.23    Sec. 5. Minnesota Statutes 2010, section 181.723, is amended by adding a subdivision 18.24to read: 18.25     new text begin Subd. 5a. new text end new text begin Web site. new text end new text begin (a) The commissioner shall develop and maintain a Web site new text end 18.26 new text begin on which applicants for registration can submit a registration application. The Web site new text end 18.27 new text begin shall be designed to receive and process registration applications and promptly issue new text end 18.28 new text begin registration certificates electronically to successful applicants. new text end 18.29 new text begin (b) The commissioner shall maintain the certificates of registration on the new text end 18.30 new text begin department's official public Web site, which shall include the following information: new text end 18.31 new text begin (1) the registered person's legal business name, including any assumed name, as new text end 18.32 new text begin filed with the secretary of state; new text end 18.33 new text begin (2) the person's business address designated on the application; and new text end 18.34 new text begin (3) the effective date of the registration and the expiration date. new text end 19.1    Sec. 6. Minnesota Statutes 2010, section 181.723, subdivision 7, is amended to read: 19.2    Subd. 7. Prohibited activities. new text begin (a) The prohibited activities in this subdivision are new text end 19.3 new text begin in addition to those prohibited in sections 326B.081 to 326B.085. new text end 19.4    (a) new text begin (b) new text end An individual shall not: 19.5    (1) perform work as an independent contractor who meets the qualifications under 19.6subdivision 6 without first obtaining from the department an independent contractor 19.7exemption certificate; 19.8    (2) perform work as an independent contractor when the department has denied or 19.9revoked the individual's independent contractor exemption certificate; 19.10    (3) transfer to another individual or allow another individual to use the individual's 19.11independent contractor exemption certificate; 19.12    (4) alter or falsify an independent contractor exemption certificate; 19.13    (5) misrepresent the individual's status as an independent contractor; or 19.14    (6) make a false material statement, representation, or certification; omit material 19.15information; or alter, conceal, or fail to file a document required by this section or any 19.16rule promulgated by the commissioner under rulemaking authority set out in this section. new text begin new text end 19.17 new text begin hold himself or herself out as an independent contractor unless the individual meets the new text end 19.18 new text begin requirements of subdivision 4. new text end 19.19    (b) new text begin (c) new text end A person new text begin who provides construction services in the course of the person's new text end 19.20 new text begin trade, business, occupation, or profession new text end shall not: 19.21    (1) require an individual through coercion, misrepresentation, or fraudulent means to 19.22adopt independent contractor status new text begin or form a business entity new text end ; 19.23    (2) knowingly misrepresent that an individual who has not been issued new text begin or misclassify new text end 19.24 new text begin an individual as new text end an independent contractor exemption certificate or is not performing 19.25services for the person under an independent contractor exemption certificate is an 19.26independent contractor; or 19.27    (3) new text begin contract with or perform construction services for another person without first new text end 19.28 new text begin being registered if required by subdivision 4a; new text end 19.29 new text begin (4) new text end make a false material statement, representation, or certification; omit material 19.30information; or alter, conceal, or fail to file a document required by this section or any 19.31rule promulgated by the commissioner under rulemaking authority set out in this section. new text begin new text end 19.32 new text begin contract with or pay another person to perform construction services if the other person new text end 19.33 new text begin is not registered if required by subdivision 4a. All payments to an unregistered person new text end 19.34 new text begin for construction services on a single project site shall be considered a single violation. It new text end 19.35 new text begin is not a violation of this clause: new text end 20.1 new text begin (i) for a person to contract with or pay an unregistered person if the unregistered new text end 20.2 new text begin person was registered at the time the contract for construction services was entered into; or new text end 20.3 new text begin (ii) for a homeowner or business to contract with or pay an unregistered person if new text end 20.4 new text begin the homeowner or business is not in the trade, business, profession, or occupation of new text end 20.5 new text begin performing building construction or improvement services; or new text end 20.6 new text begin (5) be penalized for violations of this subdivision that are committed by another new text end 20.7 new text begin person. This clause applies only to violations of this paragraph. new text end 20.8    (c) A person for whom an individual is performing services must obtain a copy of the 20.9individual's independent contractor exemption certificate before services may commence. 20.10A copy of the independent contractor exemption certificate must be retained for five years 20.11from the date of receipt by the person for whom an individual is performing services. 20.12    Sec. 7. Minnesota Statutes 2010, section 181.723, is amended by adding a subdivision 20.13to read: 20.14     new text begin Subd. 8a. new text end new text begin Enforcement; remedies; and penalties. new text end new text begin Notwithstanding the maximum new text end 20.15 new text begin penalty amount in section 326B.082, subdivisions 7 and 12, the maximum penalty for new text end 20.16 new text begin failure to register is $2,000, but the commissioner shall forgive the penalty if the person new text end 20.17 new text begin registers within 30 days of the date of the penalty order. new text end 20.18    Sec. 8. Minnesota Statutes 2010, section 181.723, subdivision 10, is amended to read: 20.19    Subd. 10. Notice requirements. Unless otherwise specified, service of a document 20.20on a person under this section may be by mail, by personal service, or in accordance with 20.21any consent to service filed with the commissioner. Service by mail shall be accomplished 20.22in the manner provided in Minnesota Rules, part 1400.5550, subpart 2. Personal service 20.23shall be accomplished in the manner provided in Minnesota Rules, part 1400.5550, subpart 20.243. new text begin Notice of a penalty order for failure to register must include a statement that the penalty new text end 20.25 new text begin shall be forgiven if the person registers within 30 days of the date of the penalty order. new text end 20.26    Sec. 9. Minnesota Statutes 2010, section 181.723, subdivision 15, is amended to read: 20.27    Subd. 15. Notice to commissioner; review by commissioner of revenue. When 20.28the commissioner has reason to believe that an individual who holds a certificate has 20.29failed to maintain all the conditions required by subdivision 6 or is not performing 20.30services for a person under the independent contractor exemption certificate new text begin a person has new text end 20.31 new text begin violated subdivision 7, paragraph (b); or (c), clause (1) or (2) new text end , the commissioner must 20.32notify the commissioner of revenue and the commissioner of employment and economic 20.33development. Upon receipt of notification from the commissioner that an individual who 21.1holds a certificate has failed to maintain all the conditions required by subdivision 6 21.2or is not performing services for a person under the independent contractor exemption 21.3certificate, the commissioner of revenue must review the information returns required 21.4under section 6041A of the Internal Revenue Code. The commissioner of revenue shall 21.5also review the submitted certification that is applicable to returns audited or investigated 21.6under section 289A.35. 21.7    Sec. 10. Minnesota Statutes 2010, section 181.723, subdivision 16, is amended to read: 21.8    Subd. 16. Data classified. Data in applications for an independent contractor 21.9exemption certificate and any required documentation submitted to the commissioner new text begin new text end 21.10 new text begin under this section new text end are private data on individuals new text begin or nonpublic data new text end as defined in section 21.1113.02 . Data in exemption new text begin registration new text end certificates issued by the commissioner are public 21.12data new text begin ; except that registration information published on the department's Web site may be new text end 21.13 new text begin accessed for registration verification purposes only new text end . Data that document a revocation 21.14or cancellation of an exemption new text begin a new text end certificate are public data. Upon request of the 21.15Department of Revenue or new text begin the new text end Department of Employment and Economic Development, 21.16the commissioner may release to the requesting department data classified as private new text begin or new text end 21.17 new text begin nonpublic new text end under this subdivision or investigative data that are not public under section 21.1813.39 that relate to the issuance or denial of applications or revocations of certificates. 21.19    Sec. 11. Minnesota Statutes 2010, section 289A.31, subdivision 5, is amended to read: 21.20    Subd. 5. Withholding tax, withholding from payments to out-of-state 21.21contractors, and withholding by partnerships and small business corporations. (a) 21.22Except as provided in paragraph (b), an employer or person withholding tax under section 21.23290.92 or 290.923, subdivision 2, who fails to pay to or deposit with the commissioner a 21.24sum or sums required by those sections to be deducted, withheld, and paid, is personally 21.25and individually liable to the state for the sum or sums, and added penalties and interest, 21.26and is not liable to another person for that payment or payments. The sum or sums 21.27deducted and withheld under section 290.92, subdivision 2a or 3, or 290.923, subdivision 21.282 , must be held as a special fund in trust for the state of Minnesota. 21.29(b) If the employer or person withholding tax under section 290.92 or 290.923, 21.30subdivision 2 , fails to deduct and withhold the tax in violation of those sections, and later 21.31the taxes against which the tax may be credited are paid, the tax required to be deducted 21.32and withheld will not be collected from the employer. This does not, however, relieve the 21.33employer from liability for any penalties and interest otherwise applicable for failure to 22.1deduct and withhold. This paragraph does not apply to an employer subject to paragraph 22.2(g), or to a contractor required to withhold under section 290.92, subdivision 31. 22.3(c) Liability for payment of withholding taxes includes a responsible person or entity 22.4described in the personal liability provisions of section 270C.56. 22.5(d) Liability for payment of withholding taxes includes a third-party lender or surety 22.6described in section 270C.59. 22.7(e) A partnership or S corporation required to withhold and remit tax under section 22.8290.92, subdivisions 4b and 4c , is liable for payment of the tax to the commissioner, and a 22.9person having control of or responsibility for the withholding of the tax or the filing of 22.10returns due in connection with the tax is personally liable for the tax due. 22.11(f) A payor of sums required to be withheld under section 290.9705, subdivision 22.121 , is liable to the state for the amount required to be deducted, and is not liable to an 22.13out-of-state contractor for the amount of the payment. 22.14(g) If an employer fails to withhold tax from the wages of an employee when 22.15required to do so under section 290.92, subdivision 2a, by reason of treating such 22.16employee as not being an employee, then the liability for tax is equal to three percent of 22.17the wages paid to the employee. The liability for tax of an employee is not affected by 22.18the assessment or collection of tax under this paragraph. The employer is not entitled to 22.19recover from the employee any tax determined under this paragraph. 22.20 new text begin EFFECTIVE DATE. new text end new text begin This section is effective for payments made after June 30, new text end 22.21 new text begin 2012. new text end 22.22    Sec. 12. Minnesota Statutes 2010, section 326B.081, subdivision 3, is amended to read: 22.23    Subd. 3. Applicable law. "Applicable law" means the provisions of sections 22.24 new text begin 181.723, new text end 327.31 to 327.36 new text begin , new text end and this chapter, and all rules, orders, stipulation agreements, 22.25settlements, compliance agreements, licenses, registrations, certificates, and permits 22.26adopted, issued, or enforced by the department under sections new text begin 181.723, new text end 327.31 to 327.36 new text begin , new text end 22.27or this chapter. 22.28    Sec. 13. new text begin REPEALER. new text end 22.29 new text begin (a) new text end new text begin Minnesota Statutes 2010, section 181.723, subdivision 17, new text end new text begin is repealed effective new text end 22.30 new text begin May 15, 2011. new text end 22.31 new text begin (b) new text end new text begin Minnesota Statutes 2010, section 181.723, subdivisions 6, 8, 9, 10, 11, 12, and new text end 22.32 new text begin 14, new text end new text begin and new text end new text begin Minnesota Rules, parts 5202.0100; 5202.0110; 5202.0120; 5202.0130; 5202.0140; new text end 22.33 new text begin 5202.0150; and 5202.0160, new text end new text begin are repealed July 1, 2012, except they shall remain in effect new text end 22.34 new text begin for the regulation of an individual holding an independent contractor exemption certificate new text end 23.1 new text begin issued before July 1, 2012, under Minnesota Statutes 2010, section 181.723, subdivision new text end 23.2 new text begin 5, until the exemption certificate expires, is revoked, or is canceled. new text end 23.3 new text begin (c) new text end new text begin Minnesota Statutes 2010, section 290.92, subdivision 31, new text end new text begin is repealed effective new text end 23.4 new text begin for payments made after June 30, 2012. new text end 23.5    Sec. 14. new text begin EFFECTIVE DATE. new text end 23.6 new text begin Sections 1 to 10 and 12 are effective July 1, 2012, except that those sections do not new text end 23.7 new text begin apply to the regulation of an individual who holds an independent contractor exemption new text end 23.8 new text begin certificate issued before July 1, 2012, under Minnesota Statutes 2010, section 181.723, new text end 23.9 new text begin subdivision 5, until the exemption certificate expires, or is revoked or canceled. new text end " 23.10Delete the title and insert: 23.11"A bill for an act 23.12relating to labor and industry; clarifying employee classification of independent 23.13contractors; providing a pilot project for contractor registration; providing for 23.14penalties; making labor and industry technical changes;amending Minnesota 23.15Statutes 2010, sections 178.01; 178.03, subdivisions 3, 4; 178.05, subdivisions 23.161, 2; 178.06; 178.07; 178.08; 178.09, subdivisions 1, 2; 181.723, subdivisions 23.171, 4, 7, 10, 15, 16, by adding subdivisions; 289A.31, subdivision 5; 326B.081, 23.18subdivision 3; 326B.092, subdivisions 2, 7; 326B.103, subdivision 3; Minnesota 23.19Statutes 2011 Supplement, sections 181.723, subdivision 5; 326B.0981, 23.20subdivision 4; 326B.46, subdivision 1a; 326B.49, subdivision 1; repealing 23.21Minnesota Statutes 2010, sections 181.723, subdivisions 6, 8, 9, 10, 11, 12, 23.2214, 17; 290.92, subdivision 31; Minnesota Rules, parts 1300.0230, subpart 23.234; 1301.1201; 1302.0600; 3801.3640; 3801.3650; 3801.3660; 3801.3670; 23.243801.3680; 3801.3690; 3801.3700; 3801.3710; 3801.3720; 3801.3730; 23.253801.3740; 3801.3760; 3801.3790; 3801.3800; 5202.0100; 5202.0110; 23.265202.0120; 5202.0130; 5202.0140; 5202.0150; 5202.0160." 24.1 We request the adoption of this report and repassage of the bill. 24.2 Senate Conferees: 24.3 ..... ..... 24.4 John C. Pederson Jeremy R. Miller 24.5 ..... 24.6 David J. Tomassoni 24.7 House Conferees: 24.8 ..... ..... 24.9 Tim Sanders Kurt Daudt 24.10 ..... 24.11 Michael V. Nelson